A Strong Stock Rally Expected

The stock market fell in capitulation on Monday, a ‘c’ of “z” type wave that got everyone beared-up. Monday was the 16 TD low and could be the 20 week low as well (94 trading days of the 100 trading day low +/- 15 trading days). The ten-week went 49/50 trading days in early March, which is normal. As of Monday, we saw 44/45 trading days, which could complete a 10/20 week low pattern (at least 2 ten week patterns).

The Dow 30 looks to have made a possible xyz type of B wave bull flag Monday (at least it could be viewed that way by traders). The Dow topped on April 23 where the SPX topped on May 1, 6 trading days later, making a “b” wave for the Dow, but an irregular “y” wave top for the SPX. It is possible from this configuration that we could see a strong wave of buying into May 21 and then a hard drop into June 5 (110 trading days and 16 trading days from May 13).

So, we are not out of the woods just yet. My preferred count is a strong rally into early July from May 13 then down into late Sept/early October. The normal 4-year cycle has the July top late in the month or even in early August. For this to happen, we need another big drop like Jan-Feb 2018 from May 21-June 5 to finish Wave B. The reason is, C would = A in time in price. This is called the Equality of Waves Principle.

Below, I have my preferred count (on shaky ground as I mentioned) and that is Wave B of “Y” terminated May 13 and it rallies hard into early July. Early July is 9 months (39/40 week cycle) from the October 2018 top. The recent irregular top on the SPX on May 1 has me concerned that I could be wrong as wave ‘z’ would have counted out –xyz- itself, which is not likely with this kind of formation. It could be xyz “x” May 13th and then “y” into May 21 with “z” of Z into June 5th.

If I’m wrong, at least we have a strong wave back up into May 21 to above the last top near SPX 2954 and that would count as “y” of an xyz Z Wave pattern). 2980 beckons this Friday with 2990/3000-ish by May 21. The day after OPEX could sell-off hard as Mercury trines Pluto over the weekend. Mercury trines Saturn on Thursday and that set-up portends a bullish tone for Friday, as we squeeze in between the two aspects. The week looks bullish to me. Whatever comes after that may end up being the rub, we’ll see. It bears watching May 21st through May 28th. If the 28th fails to go higher than May 21st, watch out below!

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