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Wednesday, July 19, 2017

Daily update 7/19 Elliot wave 5 up near an end?

Low VIX be damned, full speed ahead.

SPX extended the rally.  Breadth was +70%.  New highs expanded to 239.  Much better then yesterday, but still below where we were months ago.  New lows dipped a bit to 19.  That is still a bit elevated for new highs.

Once again the futures stayed outside the channel overnight allowing the rally to extend. 

The market is getting into the overbought area now.  A pause would not be surprising soon.

The bull pressure lines are showing a good bit of buying on this move up.  Thanks go to Yellen for inspiring buyers. 

I know just a little bit about Elliot wave theory.  Just looking at the SPX monthly chart I noticed the standard 5 wave pattern may be forming.  Here is a marked up chart.

As I understand the theory it is common for wave 5 to be about equal to wave 1.  That gives us a target of 2514 for the end of wave 5.  SPX is only 40 points away at this point so the target is certainly doable.  The sentiment picture lines up with a wave 5.  We even had FANG week on CNBC.

The market gapped up a bit this morning and was milling around until comments from Ryan that congress would take up work on taxes after the Aug. recess sparked the buyers.  There was no selling pressure today as even intraday dips were miniscule.  QQQ closed .08 above its prior intraday high.  That makes my theory that QQQ would not make a new high wrong.  Thank you very much Janet!  IWM played along, but XLF was barely green and IYT ended up red.  I don't have any idea what happens now.  Since QQQ made just a marginal new high it is still possible sellers show up.  You know how those straight line moves sometimes reverse sharply.  If no sellers show up the market should continue the slowly grind higher.


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