We certainly did break out above the upper line of the wedge as drawn in yesterday’s blog , but that does not necessarily mean that we are going to a new high. The last , give or take 3 days we had about 700 points up, interrupted by 500 down and then, later today again 700 points up. That is the signature of a corrective move which is not bullish.
What could be happening is that the wedge is simple longer than first anticipated. Wave 2 was a zig-zag and even though it is quite normal for waves 2 and 4 to take the same form, I would still prefer alternation which would lead to an irregular flat or a triangle. A little bit of overlap is normal for this “diagonal” so that does not tell us much. Of course, we could actually be in a third wave of the initial bear market. For this to become bearish in a serious way, the wave from the 2 would have to become a third wave. We will see.