Extension under way

First of all, I apologize for being unable to keep up daily with the blog.

We are in an extension wave that started on April 19, 2013.

Extensions usually subdivide into 5 waves.

This is what has occurred so far:

1st leg up : April 19 - April 25 (1,536 - 1,592)

small pullback: April 26 (1,592 - 1,577)

2nd leg up : started April 26 and has been on going.

Quantitative analysis suggests that this 2nd leg up will end around current $SPX levels and another pullback will occur, perhaps as deep as 1,617 (backtesting the recent breakout area of May 3).

After this pullback, the market will attempt to resume the uptrend. This 3rd leg up may fail at any time and has the potential of reaching 1,725!

We believe that the upcoming FED meeting and the chatter about tapering the bond buying program is what will trigger market behavior in the coming weeks. Also fear of an upcoming tapering of bond buying may cause participants to sell (causing the anticipated pullback mentioned above).