Potential Terminal Patterns and Invalidation Points

With the blow-off in stocks the last few days occurring on good news with a backdrop of extremely bullish sentiment readings, it appears a lot of indicies may be completing terminal patterns. The 6/3/14 projected swing high inverted and became a swing low, which is most evident in the Russell 2000 chart.

Timing wise, something I hadn't posted earlier may be important. 6/6/14 is 1440 (144x10) tds from the 9/19/08 spike top and 550 (55x10) tds from the 4/2/13 top. This presents a compelling Fibonacci time relationship. Historically, this sort of order-of-magnitude Fib time-series relationship has marked some important turns. I have no idea if it will have an impact in this blow-off environment, but sentiment seems ripe. We'll see.

Following is an update to the ending diagonal count on the DJIA posted recently. Since the market never pulled back and now appears to be in a 5th wave thrust over the upper trendline, I've modified the count a bit and noted the invalidation level on the chart.


The count on the SPX has different swing points but also appears to be an ending diagonal.


The following two charts of SPX show some additional geometry and trendlines that typically would indicate at least short term reversal points, if not the final waves up in the markets. In my analysis there are potentially important projections to 1950 area and, if that is exceeded, the 1965 area looks particularly interesting.


The SOX Index has an incredibly large divergence with most other indicies - it is nowhere near all-time highs. It has multiple projections for a potential intermediate or long-term top in the 630 area (+/- 10 points), which is not too far above Friday's close.


Lastly, the VIX chart also appears to be in a terminal falling wedge pattern that is almost complete. If that pattern is correct, it implies the VIX will move much higher in the coming months.

Kim Rice 6/8/14