I've been claiming that we're "near the top" for almost a month now. Yet, every time we have another bullish day, I feel more confident that my analysis is correct. I last posted about the overall market here. I feel that the market will print a long lasting top in the next few days (perhaps even today), and that we should soon start a sharp decline.
The above daily chart of SPY highlights my elliot wave count. As I mentioned in earlier posts, I think we are in an ending diagonal since early Nov. 2008. We are currently near the peak of Wave-iv. You can see that since the Mar. 2009 low, price action has unfolded in 3-waves. Wave-a was a standard 5-wave rally, whereas Wave-c appears to be an ending diagonal. You can see that there is substantial resistance in this zone:
- the upper trendline of the 5-month ending diagonal
- the upper trendline of the Wave-c ending diagonal
- the 61.8% fib extension of Wave-a
As usual, time will tell if I'm right, but many signs point in the direction of lower prices in the coming days.