More detail on the GE indicator

If you follow the GE post chain back you will see that it gave some very early indication that the bull market had at least one more upward thrust.  In this GE post I gave the model which I have reproduced below and it came with text that basically indicated that we should either expect a short stroke 5th that would probably not break out of the top rail of the 4th (my primary model) or a breakout 5th consisting of 5 full size waves that would take GE to approximately $29.



The $COMPX chart that I recently provided says pretty much the same thing.  Either we are done right here or this is just 1 of 5 and more pain should be expected for shorts ahead.

Note: $COMPX is due for a pullback soon even if it is to go to a higher high.  It has literally rocketed > 500 points without hardly a look back.  Even if it is eventually destined to test 5000, I don't see how it does that without taking a breath.  So at the very least we should see some kind of a-b-c pullback soon and the longer it takes to happen, the less likely that the pullback will just be a-b-c.  If the $COMPX started selling tomorrow, it should pull back to at least the 38.2 fib which is currently at at 4440.40.

Below is the close up detail of the GE model of the 5th wave so far.  Again to get your bearings, this is the 5th that I expected to occur following the clear 4th wave triangle that I called very early on.

In this model, 1-3 is parallel to 2-4, 2 is a complex wave and 4 is a vee wave, the 3rd of 3 contains a fat gap and the 5th wave (so far) is an expanding wedge which has likely short stroked its own 5th wave given the fact that it appears to be an a-b-c formation (which is what we expect for each internal wave of this wedge) with a gap in 3 of "c" (again, expected).  Then it seems to have formed 5 small waves down to the blue line and then bounced back up to the level of the prior 4th. 

If this model is correct then we should see selling in GE at the open which accelerates as a tiny 3rd wave plays out. 

This this model is correct, we should see GE pull back all the way to the prior 4th (horizontal green line @ $25.15).  That is where the market will have to decide if it is going to break down or bounce up into a 3rd, 4th and 5th of the current 5th. 

Again, it is my primary model that GE probably is now going to head down quickly and make a new low.  Maybe it will pause at the green line, maybe it will state its clear intention by gapping lower.  But if it holds the green line and begins to move back up, I would sell TVIX first and then only re-buy TVIX if the chart can break back down below the green line again.  The wave shape should be able to help us a lot there as well.

So now we these close in, real time triggers that we can look at.  It is based off a reliable 4th wave triangle which has been very informative so far.  GE is a proxy for the broader markets. 

Bottom line:  Trust but verify.  Don't try to figure it out in real time as the squiggles on the chart are being formed; your gut instinct is herding instinct and it is not your friend.  Create models - straw men or tin men if you will - and let the market either confirm them or knock them down.

This is going to be an important week from a technical perspective.