The count is that Intermediate wave (2) is tracing upwards and a new all-time high will not be encountered on the SPX although this doesn’t mean that other indices such as the NASDAQ may in fact record a new high. We shall see. The NASDAQ does not have an impulse down from its October 29 peak. It looks corrective suggesting the all-time highs will be challenged.
One interesting chart to gauge on how much of this sharp rebound has staying power or not is looking at the NYSE breadth thrust indicator. A movement from beneath .40 to above 61.5 in a short amount of trading days indicate a broad “breadth thrust event” which signals stocks have likely farther to run.
We have yet to have this “event” despite the near vertical climb in record time. Today would be the 15th day since the market was beneath .40. As you can see, the previous events over the last 6 years have been indicative of rally power to carry on.
Much past 13 days and this signal becomes weaker and weaker as a future indicator of rally staying power. I don’t think today was enough to push it over 61.5 (I will not have the data until tomorrow). This still has the earmarks of a very sharp wave (2) that will likely put the fear in future shorts and burn out the rest of the buying power to keep the market afloat. This sets up a truly potential illiquid market and a “flash crash” situation. Short squeezing is going on and once that has fully dissipated, and the bulls realize the world’s economy took a big wound, well, wave (3) down should be historic
