Wednesday Road Map

Today’s tape seemingly took a lot of bears by surprise – personally my wave counts indicated that a retracement was on the horizon – which is why I suggested that yesterday (with a black line). So, where do we go from here? Well, I have a few ideas…

Don’t worry – no GPS required 😉

Let me run you through those three possibilities:

Soylent Blue (a.k.a. instant bear gratification): We are in the process of completing the c wave of a Minuette (ii) of Minute {iii} of Minor 3 of Intermediate (1) of Primary {3}. We may be done but this one could run until about 1.618 x the length of the a wave, getting us to about 1067. We should fall off the plate after that and don’t stop until below SPX 1000.

Soylent Green (a.k.a. the impatient bear): We are completing wave (a) of Minute {ii} of Minor 3 of Intermediate (1) of Primary {3}. Which basically means we ride this thing up a little more – probably until the 1095 mark. After that it’s the express elevator to the ground level (i.e. below SPX 1000).

Soylent Orange (a.k.a. revenge of the bulls): We completed Minor 1 late May and are now in a large flat which nearly failed today, but is technically still possible. This puts us at the onset of Minute {c} of Minor 2 of Intermediate (1) of Primary wave {3}. That one would drive us a lot higher and we might run a boat load of stops and not stop until about 1130ish – could get ugly.

When do we know?

Well, I give Soylent Blue about one day to sort itself out – if we are not heading lower by Thursday morning it’s lights out for that one. Soylent Green is the next runner up and only a breach of 1100 would probably convince me of Soylent Orange. Reason being is the rather muted A/D ratio which closed at around 1.5 today. The EUR/JPY also did not confirm the vehemence of the equity rally, the daily Zero was barely bullish, and we all know who was doing the buying today. The boyz had some fun today, that’s all I’m going to say about it.

I have warned you guys about snap backs. You will have to live with them, because if we are right and this is Primary {3} any snap backs will be punished hard and fast, especially the further we descend. It’s easy to get seduced into playing every wiggle but it’s practically an almost guaranteed way to shoot yourself in the foot – things are simply moving too fast. Personally I didn’t see anything today that would make me question my long term plan. However, I am mentally prepared for a strong counter rally should it present itself (i.e. Orange).

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