The triangle broke up as expected and SPX has made a new ATH with some confidence. This kind of setup delivers a termination move and that’s what we are expecting here. That could fail at any time but the high window runs through to 7th February and we are expecting a high towards the end of the high window.
The usual sequence when a triangle breaks is that there is then a backtest of broken triangle resistance, often back into the triangle, and then the termination thrust (up in this instance) begins. That backtest doesn’t always happen but most of the time it does, so I’m assuming we’ll see that here as long as SPX stays under 2300. SPX 60min chart:
As I noted last weekend, silver has finally joined the party, and has completed quite a full 5 waves up off the lows, and potentially even more. And, as stated last weekend, since everyone was looking for a pullback coming into this past week, the market did just the opposite and continued higher early in the week. So, can we see more of a pullback in the coming week?
Well, I will say that a further pullback in silver would provide us with a really nice inverted heads and shoulders in the silver chart. But, again, that just may be too easy. You see, when the greater market sees the potential for any type of heads and shoulders patterns, especially bearish ones, they rarely play out as most expect. Most of the time, they simply set up the bears on what seems to be an initial trigger of the pattern by a break of the neckline, only to see a strong reversal catching all the shorts by surprise as the heads and shoulders invalidates and turns the market up strongly. This is what I warned about months ago in the GDX, and exactly what happened in the complex over the last month.