In the Wheelhouse

The market has followed my expectations from early November with the SPX striking a high on November 15^th and pulling back Monday to backtest a Ghost Line and a 20/50 moving average Bowtie which has elicited a test of the November 15 high and a push toward the 200-day moving average.

See SPX daily from Tuesday's report here again

Below is an hourly SPX.

4118 is an “idealized” target which is based on the length of the A wave.

The second dashed upward red line is a duplicate of the A wave giving the 4118 projection.

Note that, however, we have already exceeded the ‘time’ projection for an A wave duplication.

Therefore, the high could be in at any point-- so we must be aware that price does not have to go to the upper target just because of the A wave.

At the same time remember from this week’s reports the significance of the 4076-4085 region.

As well, the 50% retracement from the March 29 high is 4064 aligning with the 200-day ma at 4060.

Regardless of what happens in the very near term, we need to be aware that the reward-to-risk ratio is falling.

It is also important to be aware that a VIX buy signal will be triggered when VIX moves back inside the lower Bollinger band. There will be an SPX sell signal when it occurs.

In sum, on Wednesday the SPX continued to push higher breaking the previous high on Nov 15.

This is in keeping with the idea of an A B C corrective rally.

Indeed, we’ve shown an analog this month showing the pattern between 2008 and 2022.

The analog is running out of time and real estate.

Below is a VIX for 2022 vs 2008.

I have no idea what could light the fuse, but it is interesting that the structure of the SPX from its all-time highs can be interpreted as being on the cusp of a powerful wave 3 of 3 decline.

Interestingly, the SPX shows what looks like a third lower high.

Fast moves come from third-lower highs.