Quick update before the open…
VIX call per the bearish Gartley was dead on. VIX fell another 8% since the call, closing at 16.23 — down from 19.09. The hourly charts confirm a continued fall over the near term. My original target of 15.10 looking safe for the moment. Very bullish for a continued rally in stocks.
SPX performed even better than expected per the falling wedge and the bullish Gartley, up strongly yesterday with scant pauses. We should get one this morning after a few points on the open.
If we continue to trade at the fib levels, we should open at 1345, run up to 1348-1350, then pull back to around 1338-1340. Good level to buy in, IMO. If there’s enough time left in the day, we should resume climbing past 1350, backtest that trendline for a few, then onward and upward.
My original target remains 1381.50. But, a note of caution is in order. Anytime you’re dancing on a razor’s edge, as is this market, the slightest slip could be disastrous. We’ve had many unforeseen disasters over the past few months, each of which sent the bulls scurrying. And, Gartley patterns don’t always reach their targets.
We could see a major top within the next 10 days. My inclination is that the 3% pullback we got last week wasn’t THE 87-day cycle low; a larger one awaits. If we can reach 1381 (or the vicinity) before the end of May, we still have time within the 105 day window to start a 10% or more correction.
Tight stops are essential as we continue on. Raincoat and umbrella time.