Weekend Strategy Review Charts 9/17/17

Posted by OMS  at September 17th, 2017

The attached charts show the Bullish Triangle Scenario for the Dow (DIA) and a Rising Channel for the SPX.

Given the strong gap move up on the DIA on 11 September, I must consider the move to be wave 3 in a 5-wave sequence. So once wave 3 up completes, there should be a small wave 4 retracement and then a final wave 5 rally to a top.

The SPX is in a slightly different pattern and could be close to topping. The thing to watch this week is for a break of the lower trend line, currently near 2,485. If this happens, the SPX will likely begin a decline to the 2,420 level or lower. However as long as the SPX stays above the lower tend line, its likely the markets will continue to chop higher.

One thing that bothers me about the pattern on the SPX is the complex 3-3-5 zig-zag that has formed for wave 5 up. Normally you don’t see a zig-zag in an impulse wave. So IF the labeling I show is incorrect, then the decline to 2,420 would only be wave ‘D’. This would mean that another rally leg (wave ‘E’ up) would start from near 2,420 which would put off the final top until early 2018.

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