It’s been a long sloppy mess the past few months as anyone trying to trade anything but the range has been slapped around. Markets yesterday put in a breakout move higher finally, but until there is some proof of strength it would be very wise for the bulls to be cautious. A few terminal structures in multiple markets have appeared and are nearing a point of completion. Exhibit A is the NYSE Composite. This is what us in the Elliot Wave world know as a ending diagonal, but regular technician would call it a rising bearish wedge.
The next index that we’ll address is the S&P 500. Although not a diagonal, the structure that proceeded the present wave, a triangle, warns that the thrust out move is a final gasp at trend continuation. The other interesting thing is that waves 1 and 5 tend towards equality when the third wave is extended. Presently that number sits at 1910.
Finally is the Dow Jones Industrial Index which has been putting together a broadening top. All three of these markets are pointing to some more upside, but with the terminal patterns that they are displaying it would seem that risk is presently skewed in the bears favor.
In conclusion, though most of the markets are tacking on new all time highs, they find themselves in a rather precarious position from a technical and Elliott Wave standpoint. It would likely be in ones best interest to not chase this breakout. Good luck out there peeps.