Current Allocation: 100% F Fund.
Friday was a very tough day for the F fund. I’m hoping the bottom is in but, a close below 109.10 will trigger an alert so stay tuned this week…
The market continues to tick higher and, in the short term, it looks like there is no end in sight! According to my count, the market is likely to move higher in the short run… However, if we take a step back and get a wider perspective, the risk becomes pretty obvious.
In the Sunday Update from 17 July 2016 I put up the chart below. It was the first look forward based on the Elliott Wave count from the last major low of 2009.
The next chart is another look at the S&P500 (C fund) since the 2009 low; this time back in November 2016.
Here’s the chart as it looks today!
We are definitely in the last remaining stages of the 5th leg in the rally that began in 2009. In the big scheme of things, we are much closer to a major top than a bottom. Having said that, I don’t think we’re there quite yet. Let’s take a close look at the 5 leg that began at the low in early 2016 and the 2 most likely counts that may complete this rally.
The first calls for a short term move higher to complete step 3 and then a relatively short correction/consolidation before making a final run higher into 2018. This possibility can best be seen in the C fund chart below.
The second possibility can best be seen on the S fund weekly chart. This possibility also calls for a short term move higher but it would be the final move in the 5th leg.
There are other possibilities but these are the top 2 right now. Knowing that, how can we prepare? The next correction will either be the beginning of a major, long term down trend or a last consolidation before pushing higher into 2018. Either way, the very long term picture is bleak. It will likely look something like this…
Enjoy the remainder of the rally but, don’t be caught holding the bag when the bottom falls out…
Have a great week!