I just added the chart above. The trendline (red) conecting the top from late 2007 top to what I sees as the top of wave [B] comes in at 1,156 - very close to the 1,158 target area.
Sorry for not updating the last couple of days, but I have been very busy.On Friday I said that we should see a top near 1,134, that level was taken out yesterday. The clear break above 1,134 has opened up two possibilities:
First: The rally from 1,011.52 is a second A-B-C correction - Wave A rallied from 1,011.52 to 1,129.23. The decline from 1,129.23 to 1,040.40 was wave B and the rally from 1,040.40 to ? is wave C. If wave C is equal to wave A then wave A should end at 1,158.11.
Second: An inverse Shoulder/Head/Shoulder bottom might have been building and the break and close above the neckline at 1,128 yesterday might have triggered the formation for a rally higher towards 1,245.71.
I favor the first option for two reasons. First - the last part of the rally hasn't been confirmed by the MACD indicator, which have created a negative divergence. That in itself isn't enough to sell this rally, but it does warn, that a top might be forming any time now.
Second - The rally from 1,011.52 does look corrective and wave equality between wave C and A comes in at 1,158.11. However if we break clearly above that levels then the second possibility becomes the preferred picture.
Just to make it clear: I prefer a top near 1,158.11 for a break below 1,128 and more importantly 1,123.98, which would invalidate the inverse Shoulder/Head/Shoulder formation an force the bulls to close their long positions.
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