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SPX Update: Bulls May Get Their Santa Rally


Presently, there continue to be indications that this rally still has farther to run.


And zooming in even more, here's an attempt to break down the smallest waves, along with a whole bunch of info on some key price points. 1426 +/- should be watched as a possible turn level.

Click to enlarge

The bear count is still alive and well, and as I mentioned, there's no way to definitively rule it out yet. I just don't like it as much, which is more a function of my own trading experience (and many years of practicing Elliott Wave) than anything. But I'm still only handicapping it slightly at this point (let's call it 55% in favor of the bull count, 45% for the bears) – and there is still the potential for a wave (ii) peak as long as the market holds beneath 1464.

Click to enlarge

Finally, just a quick bonus chart of the Philadelphia Bank Index (INDEXDJX:BKX), along with a couple trade trigger levels. The BXK may be hinting at a bigger rally over the short-term than the structure is currently projecting on SPX.

Click to enlarge

In conclusion, I am continuing to give a slight edge to bulls over the long-term, but the bears are still technically in the game and trade beneath 1343 at any point in the foreseeable future would be very bearish and cause me to capitulate any bull hopes. I continue to expect higher prices for the time being, and while there are some signs that a correction may be due soon, there's yet nothing to indicate a major top is near. While there will surely be corrections along the way, I tend to think that bulls will probably get their Santa rally -- and I'll continue noting the key downside levels which could change that expectation as it becomes appropriate. Trade safe.

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