Two weeks ago, see here, I observed the NAS had experienced enough technical damage, to suggest major-4 was in : 1) wave-a to 23.6% retrace of prior 3rd wave; 2) wave-b was 50% retrace of wave-a; 3) wave-c then targeted the 38.2% retrace of prior 3rd wave. All was “by the book” 🙂 But, there was then still too little price data available to be 100% certain. Otherwise the market would be too easy, wouldn’t it 😉
But, there was enough weight of the evidence to go long with confidence, and my premium members were advised to go long on Monday February 12. They got stopped out last week when then S&P broke below SPX2718, as to protect profits and in case the market wanted to drop back to as low as SPX2650 (Futures -ES- got to SPX2683 last week, cash -SPX only to SPX2698). Now they are ready to go long again on the next high confidence signals.
In the update from two weeks ago I also wrote “a break above the 76.4% retrace of the entire move from the ATH to [the] low will be the first serious indication major-4 is in.” We’ll look where we are now: right at the 76.40% retrace. What we can also observe is that the market followed the white projected path rather well in form, but rallied even more than anticipated. That’s good if you are long, which my premium members were 😉
Now the market needs to turn directly south from here to keep the alternate count in red alive, and shorter term the NAS has the following two most likely options as shown below. Given this is still a Bull market (for some time to come), the fact there were already 5-waves up should give the bears some pause.
Lastly, the NAS’ weekly chart below shows how price bottomed exactly in the 23.6-38.3% target zone two weeks ago and has now recaptured all the important SMAs and trendlines. The TIs are pointing back up, and the A.I. gave a buy crossover this week. Price will need to break below the upper orange trendline followed by <20w SMA to suggest a c-wave down is underway. Regardless, what this price chart tells us now is to expect higher prices going forward. Note there was no negative divergence on the RSI5 and MACD prior to the recent correction, which may set up now. In conclusion: the weekly chart is rapidly improving and back in uptrend mode, wanting to see higher prices as well.
Not shown here, but the S&P recaptured it’s 20d and 50d SMA on Friday by closing above them and thus the short-, intermediate- and long-term trends are all back to UP for that index as well, until the charts tells us differently.