After reaching 2508, SPX consolidated for a few days down to 2489, and when it failed to go lower but broke above 2510 instead, it identified the correction as a re-accumulation pattern which carried a potential count to about 2575. I thought that there would be a phase consolidation taking place between 2530-2540, but the index continued to march higher to the next phase count of about 2550 which was reached last Thursday. Friday’s job report was an occasion to take some profits, as well as to acknowledge a minor cycle low which I initially thought would surely come a few days earlier. Although the index started to move back up on Friday after a correction of only 7 points, it’s unclear if the cycle has made its low (Friday being the ideal date) or if it will extend into early next week. If so, it could reach down to about 2540 before resuming its uptrend toward the higher projection.  

There has been so much momentum behind this move that the daily oscillator, which had shown some divergence at the 2508 top, went on to make a new high by a small margin, thereby eliminating the divergence entirely. This should lead to a higher high, whether we go up from here, or correct a little more first.

In this super-bullish short-term atmosphere, the fear and greed index made a new “extreme greed” all-time high of 95 (max. 100), telling us that the market is as short-term overbought as it ever gets.  

Analysis: (These Charts and subsequent ones courtesy of QCharts.com)

Daily chart  

It takes a lot of buying to push through the top of a channel which has contained prices for a little over six months. As the index stubbornly refused to come down, those sitting on the side lines became more and more fidgety and finally could not resist the temptation of jumping on board. It also most likely took the assistance of massive short-covering to do so. Once in a while, large traders have an opportunity to keep prices in an uptrend until both of the above occur. This was (is) one of them.