A Market That Just Won't Quit

Despite attempts by many, including myself, to find a top in this rally, the market seems content to keep marching higher.  Since August I believed that we were in wave (X) of [X], but the action in the Qs this week seems to negate that view as almost the entire weekly bar is above the 2011 highs.  And now we have a weekly squeeze long signal in the Qs as well to go along with already existing signals in the SP500 and the Russell 2000.  The last time there was such a confluence of weekly signals was 2010, which led to a 19 week rally after the signal week.  

I will look at a new wave count next week, but the best interpretation is that the November low completed the combination correction.  This means the Qs are now in wave [iii] of 1 of (A) of [Y].  Wave [ii] ended at the December low.  Typical fib projections of wave [i] put a target for the Qs at 65.58 to 69.94.  I suspect 65.58 will be seen at least before wave [iii] ends.  A 2 to 3 week correction in wave [iv] should follow as a flat, expanded flat or triangle (I would bet on a triangle given the market strength), and then wave [v] with a target between 69.07 and 74.47.  If wave [Y] = wave [W], wave [Y] will end somewhere around 90, but if speculative fever takes over, we could see a retest of the 2000 highs.

  

There will be pullbacks of course, but until we begin to see some distribution the only place to be is long, with perhaps a few exceptions.  As things heated up this week I began to add new long positions and will continue to do so until I see a reason not to.  I had exited STX with a 26% gain off of its pullback to the 50ma, only to see it rocket higher another 30%.  This was a pretty good clue that my original view was wrong.

There are those who continue to wait for the mythical wave [3] down, but I believe those hopes will be dashed when the SP500 eclipses the 2011 highs over the next few weeks.