SPY - let's talk about a macro picture
SPY/S&P/ES has been following the Five Wave Up fractal since the lows made in 2009.
I count the top made in September 2018 as a top of the strongest part of the rally, wave C of 3.
Then we got a very quick but deep pullback in wave 4 that bottomed in December 2018.
Off that December 2018 we were supposed to get a rally in wave A of 5 that would retest a previous top made by wave 3 up in September 2018.
From the model chart above we should keep in mind we need to get the final rally in wave 5 that would be structured as a large A-B-C.
Wave A of 5 should retest a previous top made by wave 3 up. Wave B of 5 should hold over the bottom of previous corrective wave 4 down.
And, finally, wave C of 5 has to make a new higher high.
Looking at 90 min chart of SPY below one could argue that the first leg of wave 5 up, its subwave A of 5 topped at 294.95 on May 1, 2019.
Then we should deal with a very difficult question how to treat subsequent a-b-c shaped decline, In the “BEARISH” count below I treat that a-b-c down that bottomed at 273.09 on June 4, 2019 as subwave ( a ) down of that large wave B down. Under that count the rally that topped at 302.23 on July 26 was wave ( b ) up. And to complete wave B down we still need another strong drop in the final subwave ( c ) down.
SPY - 90 min chart updated a 8-50 AM on 8-1-2019 ( "BEARISH")
In contrast, the “BULLISH” count below implies that a-b-c drop into the low made on June 4 was all of wave B down.
That count implies we are in a strong rally of the very final wave C of 5 up. At minimum wave C of 5 has to stretch to 76.4% extension of wave A of 5 up (321.19).
What I do NOT like about that “BULLISH” count is the micro structure off the low made on June 4th. It looks more like wave ( b ) up under the “BEARISH” scenario we talked above. You know, I hate cases when there are two alternative counts pointing in opposite directions. When it happens I stop trading that instrument and wait for picture to clear out.
Another important note is that ES count looks different. Es looks like it is still in wave A of 5, a rally started off December 2018 lows.
SPY - 90 min chart updated a 8-50 AM on 8-1-2019 ( "BULLISH")
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