SPX has spent 54 market days (83 calendar days) from its November 3 low. It appears that Wave [c] is impulsive and Wave [c] equals Wave [a] at 2305.50, so we have near equality in the final probe to the top.

This is a typical zigzag formation that I hope we have seen the last of. There is no short entry above the Cycle Top and trendline at 2291.27.

ZeroHedge comments, “The trend in 'actual' earnings has been dismal.. but the trend in 'hope' has been exceptional. Will hope prove right?

The gap between 'history' and 'hope' is now almost 400 S&P points (and almost 5,000 Dow points) - With VIX heading towards single-digits, the market seems very sure that earnings will realize the 'hope' in a straight line.”

We have heard virtually nothing about earnings in the past two weeks.

VIX is now at its lowest point since July 3, 2014, more than 2.5 years ago. Did you know that the VIX was not traded for 40 minutes today? It shows quite clearly in the hourly chart. Someone was interested in getting the maximum out of this rally in stocks.

TNX went higher along with stocks. This move is beginning to look more like a correction than a Wave 5. It appears to be complete, or nearly so. We may look for the beginning of the next decline in yields.

ZeroHedge reports, “In what was almost a carbon copy replica of yesterday's 2 Year Treasury auction, moments ago the Treasury sold $34 billion in 5 Year paper, with rates all comfortably positive in the repo market, which explains why the 1.988% high yield once again tailed the When Issued of 1.976%. The tail of 1.2bps was the biggest since last July.”

More to come in the Mid-Week Report.

Regards,

Tony

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