SP500 Headed Higher

Today's rally was nice but lower volume ruled out a confirmed follow-through day. I believe the SP500 is headed higher toward 1133 to 1150 in wave (c) of [a] of B of an upward correction that should last well into July. After reaching the target zone, we will likely see a pullback or consolidation for much of June which should bring the market back down to the 200ema before moving higher in wave C. My calculations put the target for wave C at 1190 to 1220.

Should we see a move to the proposed target it would confirm that we are in a flat correction as I have suggested. Failure to sustain above the 5/27 high followed by a move below the 5/25 low would be a significant turn for the worse, but with pessimism continuing to rise I will be surprised to see such an outcome.

One way that the market could move below the 5/25 low which would be bullish is if we are still in wave [c] down in an ending diagonal that terminates later in June. We will just have to wait and see how this plays out, but for now I am going with the more near term bullish view.

Notice that we are near a MACD buy signal. Although generally I require the 50ema to have a positive slope to accept a MACD buy signal, I have found that signals off of a flat to rising 200ema to often be valid, so I will be taking a 1/2 long position on a move above the 5/27 fractal buy signal high.

Short term longs may be initiated now with the view of exiting in 3 to 5 days. Smaller size would be prudent given the downside risk. Intermediate long positions should not be initiated at this time.