When we have these long runs higher, bears need to be watchful of jumping the gun too early. After weeks of floating higher without much pullback, bears are itchy to pull the trigger on the first short signal they get. We can see how in 2007 this happened; what seemed to be the top ended up being a bear trap a month later when we printed new highs.
At some point in the next week or two, I think many sell signals will get triggered … MACD, Oscillators, RSI, Stochastics, MOBO bands, trendline breaks, you name it. Now unless we get some catastrophic crash news, it is likely to be some kind of relatively minor correction as many bulls who missed this huge run up will try to jump in and buy it up. In EW terms, maybe a zigzag, or flat (possible running flat formed today? chart not updated). We may even get a head and shoulders pattern, but the key is to be patient and stay nimble. If you feel like jumping the gun on the first short signals you see, you can still make a few points to the downside but don't expect it to be the big kahuna for swing traders.
As for targets, looking at a volume profile of this last run up gives us SPY 117 as a good possible support level in the case of a pullback. After that, I think we could run up unto the 125-126 range where I think we top out. After that, whether we drop to make new sub-666 lows or just start another major leg higher, is anyone's guess.
For anyone who cares about EW anymore, I based the 125-126 target of SPY on this count (about SPX 1255) as a max limit for this count's validity.
