Upwards movement was expected and how the session began.
Thereafter, downwards movement remained above the invalidation point on the hourly chart.
Summary: This is still a bear market rally until proven otherwise. A final fifth wave up is required to complete the structure. The target is 2,124. The invalidation point for this rally is 2,134.72. A short term target for a small third wave up is at 2,119, which may take a few days to get there.
To see last published monthly charts click here.
To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.
To see detail of the bull market from 2009 to the all time high on weekly charts, click here.
New updates to this analysis are in bold.
BEAR ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.
Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.
Primary wave 1 may be complete and may have lasted 19 weeks, two short of a Fibonacci 21. So far primary wave 2 has completed its 26th week. It looks unlikely to continue for another 8 weeks to total a Fibonacci 34, so it may end in about two to three weeks time. This would still give reasonable proportion between primary waves 1 and 2. Corrections (particularly more time consuming flat corrections) do have a tendency to be longer lasting than impulses.
Primary wave 2 may be unfolding as an expanded or running flat. Within primary wave 2, intermediate wave (A) was a deep zigzag (which will also subdivide as a double zigzag). Intermediate wave (B) fits perfectly as a zigzag and is a 1.21 length of intermediate wave (A). This is within the normal range for a B wave of a flat of 1 to 1.38.
Intermediate wave (C) is likely to make at least a slight new high above the end of intermediate wave (A) at 2,116.48 to avoid a truncation and a very rare running flat. However, price may find very strong resistance at the final bear market trend line. This line may hold price down and it may not be able to avoid a truncation. A rare running flat may occur before a very strong third wave down.
If price moves above 2,116.48, then the new alternate bear wave count would be invalidated. At that stage, if there is no new alternate for the bear, then this would be the only bear wave count.
Primary wave 2 may not move beyond the start of primary wave 1 above 2,134.72.
DAILY CHART
Click chart to enlarge.
Intermediate wave (A) fits as a single or double zigzag.
Intermediate wave (B) fits perfectly as a zigzag. There is no Fibonacci ratio between minor waves A and C.
Intermediate wave (C) must subdivide as a five wave structure. It is unfolding as an impulse.
Intermediate wave (C) does not have to move above the end of intermediate wave (A) at 2,116.48, but it is likely to do so to avoid a truncation. If it is truncated and primary wave 2 is a rare running flat, then the truncation is not likely to be very large. As soon as price is very close to 2,116.48 this wave count looks at the possibility of a trend change.
The next wave down for this wave count would be a strong third wave at primary wave degree.
The blue channel is drawn about intermediate wave (C) using Elliott’s technique. Minute wave ii today overshot the channel and closed below the lower edge. This is only a small cause for concern for the wave count because the S&P does not always fit neatly within channels. Sometimes it breaches channels only to turn back and continue in the prior direction.
I have invested more time today to see if there could be another way to label the subdivisions within this impulse upward of intermediate wave (C) and meet all Elliott wave rules. I cannot see an alternate at this stage which can put the end of minor wave 3 anywhere else. My conclusion is minor wave 5 is most likely incomplete, or it is over at the last high and intermediate wave (C) is severely truncated by 41.41 points. This is possible, but the probability is extremely low.
At 2,124 minor wave 5 would reach 0.618 the length of minor wave 3. Intermediate wave (C) would avoid a truncation and the wave count would remain valid. Primary wave 2 would fulfill its purpose of convincing everyone that a new bull market is underway, and it would do that right before primary wave 3 surprises everyone.
Within minor wave 5, no second wave correction may move beyond the start of its first wave below 2,022.49.
Within the impulse of intermediate wave (C), minor wave 2 is an expanded flat and minor wave 4 is a zigzag. These two corrections look to be nicely in proportion.
HOURLY CHART
Click chart to enlarge.
At this stage, there looks to be a five up followed by a three down on the hourly chart. The mid term picture looks clear in terms of structure; the trend should still be up.
At 2,119 minute wave iii would reach 1.618 the length of minute wave i.
Along the way up, a new high above 2,066.79 would add confidence to this wave count. That is the high labelled minuette wave (b). A new high above the start of minuette wave (c) could not be a second wave correction within minuette wave (c), nor could it be a second wave correction within a new downwards trend. At that stage, the downwards wave labelled minute wave ii would be confirmed as complete and it would look strongly like a three wave movement.
A first and now second wave should now be complete within minute wave iii. The downwards movement for minuette wave (ii) so far looks like a three on the hourly chart. If it continues any lower, it may not move below the start of minuette wave (i) at 2,033.80.
If price moves below 2,033.80, then the invalidation point would move back down to the start of minute wave i at 2,022.49. It is still possible that minute wave ii could continue deeper as a double zigzag. However, the probability of this is very low. Although the probability is low, it does mean that only a new low below 2,022.49 would indicate a potential trend change.
If this wave count is invalidated at the hourly chart level, then the alternate bear wave count would be more likely.
ALTERNATE WEEKLY CHART
Click chart to enlarge.
Primary wave 1 may subdivide as one of two possible structures. The main bear count sees it as a complete impulse. This alternate sees it as an incomplete leading diagonal.
The diagonal must be expanding because intermediate wave (3) is longer than intermediate wave (1). Leading expanding diagonals are not common structures, so that reduces the probability of this wave count to an alternate.
Intermediate wave (4) must continue higher and may find resistance at the cyan bear market trend line. Intermediate wave (4) may not move above the end of intermediate wave (2) at 2,116.48.
ALTERNATE DAILY CHART
Click chart to enlarge.
Within a leading diagonal, subwaves 2 and 4 must subdivide as zigzags. Subwaves 1, 3 and 5 are most commonly zigzags but may also sometimes appear to be impulses.
Intermediate wave (3) down fits best as a zigzag.
In a diagonal the fourth wave must overlap first wave price territory. The rule for the end of a fourth wave is it may not move beyond the end of the second wave.
Expanding diagonals are not very common. Leading expanding diagonals are less common.
Intermediate wave (4) must be longer than intermediate wave (2), so it must end above 2,059.57. This minimum has been met. The trend lines diverge.
Intermediate wave (4) may be over. If it is over here, then intermediate wave (5) must move below the end of intermediate wave (3), so it may not be truncated. Because the diagonal is expanding intermediate wave (5) must be longer than equality in length with intermediate wave (3). It must end below 1,768.69.
The final fifth wave of minute wave v is seen as an ending contracting diagonal. It does not have a very typical look though. The trend lines converge, but only just. The final fifth wave of the diagonal has not overshot the (i)-(iii) trend line and falls slightly short. This reduces the probability of this part of the wave count.
Leading diagonals may not have truncated fifth waves. Intermediate wave (5) would most likely be a zigzag, must end below 1,810.10, and must be longer in length than intermediate wave (3) which was 306.38 points.
BULL ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV may be a complete shallow 0.19 regular flat correction, exhibiting some alternation with cycle wave II.
At 2,500 cycle wave V would reach equality in length with cycle wave I.
Price remains below the final bear market trend line. This line is drawn from the all time high at 2,134.72 to the swing high labelled primary wave B at 2,116.48 on November 2015. This line is drawn using the approach outlined by Magee in the classic “Technical Analysis of Stock Trends”. To use it correctly we should assume that a bear market remains intact until this line is breached by a close of 3% or more of market value. In practice, that price point would be a new all time high which would invalidate any bear wave count.
This wave count requires price confirmation with a new all time high above 2,134.72.
While price has not made a new high, while it remains below the final bear market trend line and while technical indicators point to weakness in upwards movement, this very bullish wave count comes with a strong caveat. I do not have confidence in it.
DAILY CHART
Click chart to enlarge.
Intermediate wave (2) is seen as an atypical double zigzag. It is atypical in that it moves sideways. Double zigzags should have a clear slope against the prior trend to have the right look. Within a double zigzag, the second zigzag exists to deepen the correction when the first zigzag does not move price deep enough. Not only does this second zigzag not deepen the correction, it fails to move at all beyond the end of the first zigzag. This structure technically meets rules, but it looks completely wrong. This gives the wave count a low probability.
If the bull market has resumed, it must begin with a five wave structure upwards at the daily and weekly chart level. So far that is incomplete.
At 2,143 minor wave 5 would reach equality in length with minor wave 1.
Within minor wave 5, no second wave correction may move beyond the start of its first wave below 2,022.49.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume data on StockCharts is different to that given from NYSE, the home of this index. Comments on volume will be based on NYSE volume data when it differs from StockCharts.
Price has been trending upwards for 39 days. The 13 day moving average is mostly showing where downwards corrections are finding support, but with an overshoot this week this support may be breaking down. Price is finding resistance at the horizontal trend line about 2,075.
As price moves upwards, it comes overall with declining volume. The trend is weak. It is not supported by volume, so is unsustainable.
ADX is now declining, indicating the market is no longer trending. This happens about the time of a trend change. The +DX line is still above the -DX line, but only just. A trend change has not been indicated yet.
ATR consistently declined while price moved higher. Normally, during a trending market ATR increases. This trend is abnormal. With declining ATR, the trend looks weak.
ATR is now flattening off. It should be expected that ATR will again start to increase. If it can’t do it when price is moving upwards, it may again do it when the next downwards wave arrives.
On Balance Volume is now contained within two purple short term lines. A break out of this small zone, above or below, may precede price direction. For OBV to give a clear bearish signal it needs to break below the pink line which has strong technical significance.
RSI has not managed to reach overbought during this trend. I would have expected upwards movement to only end when RSI reached overbought and then exhibited divergence with price at the final high. This may yet happen. If it does, I would have some confidence in calling a trend change.
Stochastics did reach overbought and did exhibit divergence with price. This indicates weakness in price at the end of upwards movement.
INVERTED VIX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volatility declines as inverted VIX climbs. This is normal for an upwards trend.
What is not normal here is the divergence over a reasonable time period between price and inverted VIX. The decline in volatility is not translating to a corresponding increase in price. Price is weak. This divergence is bearish.
BULLISH PERCENT DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is strong hidden bearish divergence between price and the Bullish Percent Index. The increase in the percentage of bullish traders is more substantial than the last high in price. As bullish percent increases, it is not translating to a corresponding rise in price. Price is weak.
This looks like an overabundance of optimism which is not supported by price.
ADVANCE DECLINE LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
With the AD line increasing, this indicates the number of advancing stocks exceeds the number of declining stocks. This indicates that there is breadth to this upwards movement.
From November 2015 to now, the AD line is making new highs while price has so far failed to make a corresponding new high. This indicates weakness in price; the increase in market breadth is unable to be translated to increase in price.
It remains to be seen if price can make new highs beyond the prior highs of 3rd November, 2015. If price can manage to do that, then this hidden bearish divergence will no longer be correct, but the fact that it is so strong at this stage is significant. The AD line will be watched daily to see if this bearish divergence continues or disappears.
The 200 day moving average for the AD line is now increasing. This alone is not enough to indicate a new bull market. During November 2015 the 200 day MA for the AD line turned upwards and yet price still made subsequent new lows.
DOW THEORY
I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.
I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.
At this stage, if the S&P500 and Nasdaq also make new major swing lows, then my modified Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.
The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.
These lows must be breached by a daily close below each point.
S&P500: 1,821.61
Nasdaq: 4,117.84
DJIA: 15,855.12 – close below on 25th August 2015.
DJT: 7,700.49 – close below on 24th August 2015.
Russell 2000: 1,343.51 – close below on 25th August 2015.
This analysis is published @ 12:30 a.m. EST on 10 April, 2016.
Former fed insider proposing some serious changes
http://www.bloomberg.com/politics/articles/2016-04-11/former-yellen-adviser-proposes-sweeping-reform-of-fed-system
I find the following very interesting
“The Fed system, which sets interest rates for the U.S. economy, is made up of a Board of Governors in Washington and 12 regional Fed banks. It was created by an act of Congress, yet private banks hold stock in the regional Fed institutions as a result of the way the capital structure was set up when the Fed was born more than a century ago.
“The Federal Reserve is the only central bank that I know of that isn’t a fully public central bank,” Levin said in an interview.
Levin said the 12 regional banks should become fully public entities, meaning they have to somehow eliminate or repurchase the stock they have issued to private member banks. He also proposed banning anyone affiliated with financial institutions overseen by the Fed from serving as a regional Fed director.”
Another nugget from the article
““The Government Accountability Office should produce a regular annual review of all aspects of the Fed’s policies, procedures, management, and operations,” Levin wrote in his proposal. The Fed has strenuously objected to calls by Republican lawmakers that monetary policy decisions be subject to GAO audit. In the interview, Levin said the GAO should focus on the management and operations of the Fed system, “not so much on monetary policy.”
“Part of the financial crisis was due to mismanagement in the division of supervision at the Fed,” Levin said in an interview. GAO reviews would provide assurance to the public and Congress that the “Fed is a well-managed organization,” he said.
“
This is how I see a possible triangle at this stage.
And with two small green doji in a row now on the daily chart I’m going to discard the idea that this is a third wave up. That looks wrong.
I like this idea as it perfectly fits the price action. Did you mean to say “validation”
reasonably above 2075.07?
Lara,
I think I understand your chart. I am not sure why it would be invalidated ‘reasonably above’ 2075 though. Please elaborate in tonight’s update if you include this triangle count.
I am sure it was an oversight Rodney. 🙂
The only potential problem I see with the triangle is that it would imply at least another week of upward movement for the completion of minor five and considering the current market extremes, that seems like quite a bit of time before the downside break arrives….
I saw your comment after I pushed ‘post’. Confirmation is probably correct.
I have been waiting for 2100+ for more than a week. I am guessing the longer it takes to arrive the less probability of it occurring. That is not based on any data; just some reasoning.
Even though I have ‘skin’ in the game, I feel like I am SOH. Patience is not an easy virtue to develop, at least not for me. But impulsiveness has cost me so much money, that I have learned to endure watching paint dry.
So I wait to fill up a few more wagons once we make a move, left or right. Triangles have a way of causing pain to traders. I would much rather see the move to 2100 happen. I will get to pay less for the cargo.
We wait for Lara’s analysis and we wait for tomorrow’s open. In the meantime have some fun.
PS – Perhaps the correct word is ‘invalidation’ because wave five must be shorter than three ??
If it were a matter of meeting an EW rule, I think she would have been very specific at what value the rule would have been violated, instead of the more general “reasonably above”…
I am so sorry everybody. The chart was published too quickly.
That price point needs to be removed.
It should be confirmation reasonably above 2,075.07.
Reasonably above that point upwards movement couldn’t be wave D of a barrier triangle. So the triangle would be complete and minor 5 would be underway.
to 19th April to be precise
Fifth waves out of fourth wave triangles sometimes end at the point in time at which the triangle trend lines cross over, this one would be 19th April.
Now ‘yer talkin’! I did not know they had that time relationship but that makes absolutely perfect sense to me. Thanks for that tidbit Lara. Very critical information for prudent planning.
“Reasonably above that point upwards movement couldn’t be wave D of a barrier triangle. So the triangle would be complete and minor 5 would be underway.”
Precisely what I thought you meant! 🙂
SPX Volume Higher Today (911.952 Million) than Friday and SPX closed at the low of the day.
Not a peep from the Fed Board meeting today and that meeting did take place @ 11:15AM.
Obama is currently Twisting the arm of Yellen to get Democrats elected in 2016.
They got more suckers into the rally through the morning, distribution written all over this market…
AA Revenue Misses but earning beat… More financial engineering! Follow the Revenue for all these announcements.
Stock down in after hour trading.
SAP had same issue last Friday earnings announcement.
Awright…I guess we see the bankster face-ripping rally executed tomorow starting with over-night futures to smack down all the eager beaver cubbies enticed into short trades today… 🙂
Have great evening everybody!
PS VIX gap filled at 16.04….
Vern,
Just a thought, I have now seen 3 EW analyst looking for rally into 2133-2200 range and I am sure there are plenty of others out there with similar expectations. So, you really think market will let these people short it at the top. I don’t think so. Now consider the bulls that got trapped and shorts who bailed out when the rally looked so strong for most of the day.
I think this market want to correct sooner than what most technical folks are thinking or expecting.
I agree. The market remains quite overbought and surprises should come to the downside. I really like Lara’s triangle as I am expecting some sort of intra-day reversal after a strong enough move up to convince the crowd that we are headed to new recovery highs. That is exactly what often happens at the conclusion of a triangle- a thrust in the trend’s direction as they are ussually the next to the last wave. I would not be surprised at a final run at SPX 2100 to close out the rally. Futures should give us a clue this evening…
Vern,
I expect that to happen out of this correction and new ramp into June or July timeframe.
That would be a huge surprise to me personally. This is a seasonally weak time of year, and many market indicators are already quite extreme. Possible, but I think improbable…if minor four ended today, it would have lasted about three weeks…an additional three weeks for minor five up in and of itself would be a stretch so I would expect it to conclude more rapidly…
This move smells like a bear trap… 🙂
I am not too excited about holding those short term long positions overnight but I am sticking with Lara’s main count until proven otherwise. I will view those positions as upside hedges. UVXY starting to show BB compression so it won’t be too long now methinks…
We really should be seeing a sharp move out of this triangle formation quite soon. I suspect it is going to break to the upside. Any sharp move down I think is going to be a head fake and quickly reversed up to finish the rally…talk about watching paint dry! 🙂
NUGT really exploding out of that upper BB. Reversal should be equally spectacular; 65 puts down to 1.65 and may go as low as 1.50 today…
Speaking of triangles, you have to be extremely patient and wait for them to really break. Thrusts from triangles can be one of the most reliable and profitable trades you can make so long as you are willing to wait for them to complete. In the majority of cases they will be the penultimate wave, with the final wave continuing in the direction of the previous trend, which in this case is up….
These can sometimes be a false signal but I just got a data spike showing an SPY decline to 202.00. If someone just massively shorted that index it could be a heads up….VIX should start heading North and not look back….
We are starting to see compression in the BB of the major indices…
I think we are in Lara’s bull wave count, but just with a much shorter, if not truncated 5. We could be in wave 4 of 5 now. A small pop up to come then down, down, down!
On the one minute chart the waves are starting to have a three-wave look to them…another possible ending diagonal for minute five?
VIX, UVXY a d TVIX are all displaying a rounded bottom formation on the hourly starting in mid February. Projected target for each at a minimum just to complete the formation. (If the targets are exceeded by a drop in the SPX below 1810 then the targets goes way higher.)
VIX 31+
UVXY 60+
TVIX 13.50+
Verne, since you are our UVXY expert, any thoughts on these targets.
Perhaps a bit conservative. I would expect a bit bigger pop if we do see a P3 impulse down. UVXY finding good support on trendline from 18.58 low…
Funny! We broke it the minute I posted…go figure…!
Make me a fibber will ya? 🙂
Climbed right back inside the trendline…interesting!
I actually based the targets for a move only to 1800 or so. If we go to 1500 I would expect much more upside to VIX, UVXY and TVIX.
I think a lot of folk will be expecting 1800.00 to provide support and a triple bottom so we could see a bounce there. If it occurs with a spike in the VIX it may hold, but not if it’s a P3 impulse down imo….
Remember for the possible P1 down last August VIX spiked to a multi year high of 53.29. That unusual intensity was what got me first wondering if were not seeing an early clue of the start of a primary degree decline. If that is correct, I think expecting that high to be eclipsed on the next wave down would be reasonable…that kind of spike meant there was some serious insurance buying and the market is now approaching its old highs with even more elevated optimism…the flagging momentum on this final move up is a huge red flag, even for a possible third of a fifth up…
If we can push above 2075 to 2100 or so, we should get a very strong divergence on MACD at the 4 hour chart and the daily. We will see this divergence in other indicators as well. This is shaping up to be a classic TA set up with an EW count to support it or visa-versa.
Tops generally do not form on a spike. Rather, they are more rounded and thus prolonged. Bottoms more often than not finish with a spike down. We have a long term rounded top formation since the low in October 2014. We are about to complete that rounded top formation which should be followed by a plunge. The target would be the top minus the neck line then deducted from the neckline. IE 2130-1820 = 310. 1820-310 = 1510 target for completion of rounded top.
Sounds about right to me for the initial impulse down of a possible P3 wave.
UVXY trendline from April 6 low at 18.58 just about crossed 20.00 today. A strong move below should signal move up to complete possible minute three…
If main count correct, another deep second wave just completed. We should see a strong small degree third up past this morning’s highs. Retrace not looking much like an E wave of a triangle imo…
UVXY doubled back to fill gap from last Friday…
So far VIX has not filled its own gap at 16.04 from last Thursday. Coiling in preparation for a spike…it would seem…
Adding to NUGT puts with open bid @1.90 for around 2.20 cost basis…
Filled at 1.90. Contingency order to sell half at market when NUGT hits 70.00
Break of 2062.93 high this morning will be five up three down…
NUGT breaking above upper BB. Second close below should be a safe reversion to the mean trade. Buying April 22 65 puts for limit of 2.35 with bid/ask @2.25/2.55…
Filled a@ 2.35…
Futures price has cleared 2050 so a revisit to 2075 is a reasonable expectation. It does appear that minute three will continue without an initial pullback. Will trade move to the upside and exit at the end of the impulse up. Final short traded will be laddered in at the start of minute four…
Paul has a fabulous idea below, which would explain a lot.
We could be seeing a fourth wave triangle grind sideways, with a final fifth wave pop up to complete this whole rally.
It explains the channel breach (fourth waves, especially time consuming ones, sometimes breach channels, that’s why Elliott had a second technique to redraw the channel when they do that), it explains ADX saying the market is consolidating, and it explains a lack of momentum.
If the final fifth wave up is about 0.618 the length of minor 1 it would be 74.51 points in length. Just enough to take intermediate (C) to slightly above (A), avoiding a truncation only just.
Chart below after Peters comment.
If futures continue to point slightly lower towards tomorrow’s opening, I will be buying the UVXY August 15 20.00 strike puts, and the SPY August 15 205.00 strike calls. Both should easily return at least 100% over 48 hours.
The only time a trader has any advantage over market makers in short-term trades is at the initial counter-trend move ushering in the strongest portion of an impulse wave. If minute three up gets going tomorrow, it fits the bill.
NOT August but April expiration. Sorry about that…a total brain you-know-what! 🙂
I’m looking at after hours movement on my trading platform and it’s up quite a bit, up to 2,059 at first in a sharp spike, now grinding lower at 2,054 last.
The Political arm twisting of the Fed begins following its unscheduled meeting of the board Monday.
This is why the Fed should be audited or abolished!
Obama Announces Unexpected Meeting With Yellen Following Tomorrow’s “Expedited Procedures” Fed Meeting
http://www.zerohedge.com/news/2016-04-10/obama-announces-unexpected-meeting-yellen-following-tomorrows-expedited-procedures-f
How to get a Democrat elected President?… twist the are of the Fed.
They are up to no good, mark my words!
Sadly for them, their machinations are going to backfire…why?
Even the somnolent masses are starting to realize that the emperor has no clothes, new or otherwise!
Based on futures action, we will probably see minute three up get going tomorrow. The start of the strongest portion of the push up in minute one began the day with a slight decline in SPX and a strong intra-day reversal and push to new bear rally highs to complete minute one in four more days of upwards movement. UVXY opened with a very brief move just above the previous close but posted a fat red candle and continued lower as minute one unfolded. The same pattern will be repeated tomorrow in all likelihood. As long as futures remained muted, a short term trade higher seems in order.
In looking at the Daily chart, it sure looks like the trend broke the lower channel line and has a little more time for sideways to lower prices.
I find channel lines incredibly powerful indicators. Once broken, they take time and price to recover.
Just a thought …
Kevin
SPX has an annoying habit of breaking those lower channel lines and clambering back inside them. It’s a tendency that is almost tradeable everytime it happens…
Lara, wondering if we could build a ST triangle for the 4th – a 50pt move out of the apex would fit the general targets. I am struggling to determine if it is a valid scenario since SPX 1-4 did not overlap on the potential B wave – although your pattern summary indicates there could be one 5 wave move within a triangle – thx for your thoughts if you have time.
with chart
Thank you Paul, that’s a fabulous idea!
That explains the choppy sideways movement, explains ADX and ATR… it makes a lot of sense.
And the subdivisions fit… with the exception of B upwards. That looks like a five on the daily and hourly time frames. But it could be a double zigzag. Minuette (v) of minute i on my hourly chart does look a little like a three.
I’ll have this idea as an alternate. It would mean there is only a final fifth wave up to go.
If the fifth wave up out of the triangle is about 0.618 the length of minor wave 1 that would take upwards movement to just above 2,116.48. Just.
That could be perfect.
Thanks Paul!
Ok, another question on the larger timeframe. If this is a triangle and it extends to ATH, could this move be a C wave for large B – with large C to come and complete Primary IV. That would resolve the “truncation” issue back in Oct 15 and clear out all the bear stops for a C wave back down – no?
Quite a few analysts are saying that until we take out the Feb 11 lows, a triangle of some sort could be in play. A big C wave down sounds plausible as we are in such an over-bought condition right, now it’s very difficult to see how the market could move much higher without working that off ,either by protracted sideways action a strong move to the downside…
The market is trading like it’s waiting for some sort of announcement…perhaps some more FED jawboning…?!
That would see minute iii over at the high I have for minor 3.
Then the problem becomes how to see the subdivisions of minute iii. You could make that fit I guess, but it would look wrong on the daily chart.
It’s the first idea I tried when I played with the labelling within intermediate (C) and discarded.
ok, thx 🙂
From a trading psychology perspective, that structure would be ingenious at confounding both bull and bears with the reversal in wave e after the d wave. I will trade it as such. Filled on SPY 206.5 calls at 0.63. Filled on UVXY 19 puts at 1.12.
Joseph has been pointing out the full scale propaganda assault about all the folk short the market. I sometimes wonder if these folk think we are stupid, or they know most of us are. I guess it is also possible that some of these analysts believe their own propaganda. What intelligent person looking at the bullish percent index would go on the airwaves with such a completely ludicrous assertion??!!
What do you think…delusion or deception? 🙁
Vern,
I firmly believe this is the last desperate attempt by the Wall Street to suck retail investor and off load the inventory. Some people are saying that markets closed lady 5 out 6 Friday higher so the bill have the belief in the uptrend.
I don’t doubt the 2130ish as the target but that is likely to happen post a reasonable drop as the markets have gone up too fast. So reasonable expectation would be for markets to sell off into this earning season and perhaps build from earning to move to 2130ish or higher.
Eventual fall in the markets will then be timed around September/October , retail investors won’t doubt since it is normal ..
We could see a rebound in intermediate two of primary three down peaking sometime in the fall with a substantial re-tracement of intermediate one down, which I think is going to be very deep, as would be expected for a third wave of primary degree.
In the short term, I am hoping we see a small dip on Monday before we head up for a small degree third wave top the next day or two. I will post a UVXY chart showing the start of minute one up that explains why I am hoping to see an early intra-day reversal to the upside…there is something electric in air…
surprise