S+P gets a short reprieve: days not weeks.

Yesterday's top call on the S+P was premature obviously.  But not by much I think.   What I thought was going to be treated as the final rail bump actually fell short.  The market decided that it was not the 5th rail bump but rather the A wave of the 5th.  Now the B and C waves of that 5th rail bump have played out and it resulted in a nice throw over of the expanding triangle. 

Nobody can predict such daily moves with 100% accuracy but it is fun to try.  In the name of financial entertainment, I'm predicting that the S+P 500 begins a massive roll over within the next few trading days.  It should lead to a major, major retracement.

There are two likely outcomes.  First, the lower probability which is shown below.  This model suggests that the recent 5 waves up was the C of 5 wave and that the S+P is now topped out.  I give this model a 20% chance of happening relative to the 2nd model which appears a the bottom of this post.  The reason I think this first model is low probability is that the C wave is never supposed to be the weakest/shortest of a sequence.  As you can see from below, the A wave which just barely missed kissing the rail was longer than the 5 waves up which my first model labels as C.  So by EW rules, this first model should not occur.  I only put it here because it would be an easy mistake to miss the fact that C is supposed to be the longest wave and without that factor to consider, this first model would likely be my primary choice.

My primary model is shown below.  If the first model had 20% chance then I give this one 75% chance and 5% chance that something else will happen.  My primary model shows a pullback to test that support line from above.  That test will likely hold to form 2 of C of 5.  Then another good move up for the S+P to get all the sheeple sucked in with the belief that perpetual prosperity is possible by the printing of preposterous paper. That wave is marked as 3 below on the red line.  So it would be 3 of C of 5.  Then a 4th wave and one more push into 5 of C of 5.  The the carpet gets pulled out and the VIX takes off and a well deserved panic sets into the herd.

One final way it could end would be for the current 5th of C to extend itself far enough so that C would in fact be the longest wave without the need for 2 more red waves up.  It's possible but it will not serve up max pain and so I think it falls into the 5% range. 

I think that's enough pompous prognostication by me for now.  Keep in mind that I consider (and always have) minute by minute, day by day prediction of the herd movements as nothing more than my brand of financial entertainment.  But this time I put a few bucks on the asymmetrical bet call VXX in order to keep it interesting and, hopefully, more entertaining.  Time will tell.