This Santa Rally was way more extreme than I anticipated–going higher than even where we were pre-Fed rally. The wave count normally would not allow for that, but I should’ve anticipated that as seasonally, the few days before Christmas — there is some kind of Santa rally. It’s just that it went way higher than I had expected — the tell was the overnight action between December 22 and 23 as pointed out in the orange arrow.
In a prior blog post, I noted that 2036 would have to hold overnight — yet over night, it did not budget at all with a typical a-b-c 4th wave. Instead, it was a consolidation — which should’ve been a hint to me that we would get an extension. So that extension began another series of 1-2-i-ii — that extended beyond that ES2045 and towards 2059.
The turn finally happened in the last few minutes of trading on December 24 — that’s what the Santa Rally is over. Still waiting for a break back below 2047 for further confirmation that the next 5-wave pattern will develop towards the downside.
Zooming out, I’m seeing the potential for an A-B-C wave 2 flat in the S&P where December 17 2070 was the top of A, December 19 1992 was the bottom of B, and December 24 2060 was the top of C in a larger wave 2.
The same thing happened in October 2014.