Short term view - toping has started a bigger pullback is expected.
Intermediate term view - after a pullback one more high is expected followed by a correction for 2-3 months.
The move from November is now too long... it force you to count an impulse currently in iii of 3 as the most obvious count. But is weird Bullish Percentage and Percent of Stocks above MA50 are making double divergence, MACD and the histogram with divergences on the weekly chart and all this in iii of 3 when the move should be the strongest????? Very strange, usually you see such thing around intermediate term tops.
Looking at the price behavior, the indicators and other indexes there is high probability that we will see one more high around late January so no need to guess the pattern. There is time to exit longs and enter shorts no need to hurry.
I am not comfortable with this count, but I will just follow the market. I have switched to the bullish count and I will keep an eye on some alternative patterns.
In the previous post you can see this bullish count and some alternative patterns for most of the US indexes.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it is possible the wave to extend with one more wave higher, iii of 3 always look like they will never end. It depends on what will happen on Monday/Tuesday if the trend line is broken or not. If the trend line holds one more "christmas rally", if not the "christmas rally" will be just a retracement to test the broken trend line.
Intermediate term - the bullish pattern is shown on the chart. The histogram with divergences pointing to a move lower, MACD still has not turned lower. This translates to a move lower, but one more high before a bigger move lower.
Long term - switched to the impulse pattern. This is either the end of the bull market V(red) or the top of wave III(green) and we will see one final mania phase in 2018.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - looking at the indicators I see that the indexes are nearing a intermediate term top, but there is no reversal signs. We need a few more weeks to see toping process and the indicators to start reversing. You do not short vertical move higher you are waiting for a test of the top with divergence or lower high.
McClellan Oscillator - around zero, a trough is expected than one more peak with divergences.
McClellan Summation Index - buy signal, but big divergence.
Weekly Stochastic of the Summation Index - buy signal, reached oversold levels.
Bullish Percentage - double divergence.
Percent of Stocks above MA50 - double divergence.
Fear Indicator VIX - look like it is bottoming.
Advance-Decline Issues - a lot of weakness compared to price.
Percent of Stocks above MA200 - another red flag huge divergence.
Day 29 of the 40 cycle. It is time the indexes to turn lower for a 40 day cycle low.
Week 6 of the 20 week cycle
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown and combo have been finished this week as expected. Now we have a green light for a pullback:)
The weekly chart - we have sell setup at 6 one more high to finish it in January looks good.