FKLI - Where Exactly are We at ?? (Dec 18)

Hi all.

Had been away from market the past few days, got tied up with some personal matters.

From the previous peak of 1,657.5, looks like the bears can only take it to 1,645, the nearest support, before the bulls come back roaring today, pushing price up 17.5pts to close the day at the high of 1,664.

I have been mentioning repeatedly that the Wave C3 is becoming super-extended. It is still progressing, indeed.

I figure the wave counts might be a little too complex, for those who are not familiar with it. Not to mentioned I described it in words, & the fact that it keeps on extending into complex sub-waves.

So, I come out with a solution for that. 

As the old saying goes: 'A picture speaks a thousand words'....

I pull out an illustration of a typical 3rd wave extension, & place it side-by-side with my updated FKLI wave counts, for easy reference.

Here's what I got:

FKLI - 3rd Wave Extension of 3rd Wave Extension (Dec 18)

The wave extension illustration (image, LHS), shall represent the whole of rebound Wave C, from Dec 14 low of 1,595.

We have since went through its sub-wave (1) & (2).

Within the current extended sub-wave (3), the smaller 3rd wave is also extended, all the way to 1,657.5.

Due to the complexity of the extended wave (3), wave principle has it that the ensuing wave (5) will be simple & shall not see further extension.

Based on today's close, obvious resistance overhead will be at 1,667 | 1,670 | 1,677 (Nov peak). 

That shall mark potential end of current developing small wave (5), which is also the end of the higher degree sub-wave (3).

After which (refer: wave extension illustration), 

We still have two more waves to unfold, Wave (4) & (5), completing the bigger rebound Wave C.

Which means we might actually get a new peak before the year's close ??

With the typical December window-dressing phenomenon, a new peak is highly possible, with just about 15pts away from the Nov peak of 1,678.

Nonetheless, this year we have potential party-spoiler, the US Fiscal Cliff.

Recent Cliff-sensitive US market fluctuates wildly to headlines coming out of either the GOP-, or the President's camp.

With <10 trading days away from the looming Dec 31 deadline,  I believe market will continue taking cue from the US budget talk progress. 

I'm guessing the two parties might well strike a deal, of small achievement, & employ the main stream media to orchestrate on that to calm the market down, for a Merry X'mas & Happy 2013.

When the X'mas & New Year 2013 fiesta is all over, US citizens will wake up & realize that all was but a lie.

With all the spending cuts in effect by then, automatic layoffs, especially in US military, will hit the employment data hard. Market will adjust to reflect the cruel reality, eventually.