Wave 5 extension

That violent reversal on SPX invalidates my 1/18 turn call for end of wave A. I will have to file that under "failed call". I have noted that accordingly in the chart. The turn ended up as a minor consolidation in wave 5 instead of wave a ending and starting a big correction. So the wave 5 extension continues. If we are in a fifth wave extension, we could go all the way up to SPX 1360. I will not make a guess on the targets. Instead i will post an update when the next turn occurs. So now the context switches back to buying-the-dips.

Good luck !

Market thoughts

There is no change to the wave count since the turn call i made last week. 1/18 remains the top of wave 5. If the 1/21 to 1/26 move was impulsive, i could have moved the wave 5 top to 1/28. But it's clear to even a non e-waver (look on the hourly charts) that the move from 1/21 to 1/26 was a corrective 3-legged structure. So technically 1/28 is just a irregular top in the ongoing wave b correction. Anyway, labeling apart, it does not make any difference to the implications of the ongoing correction. Corrections after a 5 wave rally retrace to the wave 4 area. wave 4 area in this case is between 1227-1173. So the market should find support somewhere in that area before the next up leg i.e wave C begins, which should run into the spring/summer.

I had made a call on Gold near $1315 that GOLD would drop about $200 based on many technical warning signs on the daily and weekly charts. There were barely any bearish Gold technicians then and when Gold dropped into a wave 5 bottom last week, there were a barrage of bearish postings on GOLD on many message boards. The brutal reversal on GOLD cleaned out all the late to the party folks. GOLD is still not out of the woods. If we trade above $1358 and hold last week lows, then it will confirm that a bottom is in place in GOLD and we should see new highs on it. More on that next week.

Good luck !