Friday’s analysis came with the warning that the session may print a green daily candlestick, which is what happened.
Summary: The downwards trend is not in doubt but short term how high a bounce goes is unclear. A new main hourly wave count expects upwards movement for another three days to a target at 2,099 to complete minor wave 2. This would be confirmed above 2,071.88. The alternate hourly wave count expects an acceleration of downwards movement towards a target at 1,988 (short term). This would be confirmed below 2,025.91.
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 is complete and lasted 19 weeks. Primary wave 2 is over lasting 28 weeks.
An expectation for duration of primary wave 3 would be for it to be longer in duration than primary wave 1. If it lasts about 31 weeks, it would be 1.618 the duration of primary wave 1. It may last about a Fibonacci 34 weeks in total, depending on how time consuming the corrections within it are.
Primary wave 2 may be a rare running flat. Just prior to a strong primary degree third wave is the kind of situation in which a running flat may appear. 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.
Within primary wave 3, no second wave correction may move beyond its start above 2,111.05.
DAILY CHART
Click chart to enlarge.
If intermediate wave (C) is over, then the truncation is small at only 5.43 points. This may occur right before a very strong third wave pulls the end of intermediate wave (C) downwards.
The next wave down for this wave count would be a strong third wave at primary wave degree. At 1,423 primary wave 3 would reach 2.618 the length of primary wave 1. This is the appropriate ratio for this target because primary wave 2 is very deep at 0.91 of primary wave 1. If this target is wrong, it may be too high. The next Fibonacci ratio in the sequence would be 4.236 which calculates to a target at 998. That looks too low, unless the degree of labelling is moved up one and this may be a third wave down at cycle degree just beginning. I know that possibility right now may seem absurd, but it is possible.
Alternatively, primary wave 3 may not exhibit a Fibonacci ratio to primary wave 1. When intermediate waves (1) through to (4) within the impulse of primary wave 3 are complete, then the target may be calculated at a second wave degree. At that stage, it may change or widen to a small zone.
The invalidation point at the end of this week is moved back up to the start of minor wave 1. If minor wave 2 is incomplete, then it may not move beyond the start of minor wave 1 above 2,111.05.
If minor wave 2 continues higher, then it may end when price finds resistance again at the bear market trend line. First, it needs to break above resistance at the short term bear market trend line.
MAIN HOURLY CHART
Click chart to enlarge.
This main wave count is new and has some support from classic technical analysis.
Minor wave 2 may be still unfolding as an expanded flat correction. Within the flat, minute wave a is a complete three, a zigzag. Minute wave b is also a three, a double zigzag, and at 1.30 length of minute wave a is nicely within the normal range of 1 to 1.38.
The subdivisions of minute wave b fit perfectly on the hourly and five minute charts. Within the double zigzag, minuette wave (x) is brief and shallow and minuette wave (y) moves below minuette wave (w) deepening the correction and achieving its purpose. The structure has a downwards slope and looks like a reasonable double zigzag.
At 2,099 minute wave c would reach 1.618 the length of minute wave a. This would see minor wave 2 end with a slight overshoot of the bear market trend line and close to the round number pivot of 2,100, both of which should provide very strong resistance.
If this wave count is right, then we may be offered a gift from the market next week for the perfect short entry to ride primary wave 3 down.
A new high above 2,071.88 would invalidate the alternate below and confirm this main wave count at the hourly chart level.
ALTERNATE HOURLY CHART
Click chart to enlarge.
This was the main wave count in last analysis. It is relegated to an alternate now for two main reasons:
1. Minuette wave (ii) is seen as a rare running flat. This reduces the probability of the wave count.
2. At the weekly chart level, On Balance Volume is no longer clearly bearish short term.
If minor wave 2 is over, then it is a more brief zigzag. Within downwards movement from the start of primary wave 3, this wave count sees three overlapping first and second waves.
Minuette wave (ii) has a complete structure but subminuette wave c has failed to move beyond the end of submineutte wave a at 2,060.61. It is truncated by 2.26 points. This is possible, but it does not have a very good probability. Downwards movement at the end of Friday’s session looks to be too large to be part of subminuette wave c, so this looks like a new wave.
At 1,988 minute wave iii would reach 2.618 the length of minute wave i.
The targets for minor wave 3 remain the same. At 1,969 minor wave 3 would reach 1.618 the length of minor wave 1. If price gets to this first target and the structure is incomplete, or if price keeps falling through this first target, then the second target will be used. At 1,897 minor wave 3 would reach 2.618 the length of minor wave 1.
BULL ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
Cycle wave IV is seen as a complete flat correction. Within cycle wave IV, primary wave C is still seen as a five wave impulse.
Intermediate wave (3) has a strong three wave look to it on the weekly and daily charts. For the S&P, a large wave like this one at intermediate degree should look like an impulse at higher time frames. The three wave look substantially reduces the probability of this wave count. Subdivisions have been checked on the hourly chart, which will fit.
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 still do not have confidence in it.
The invalidation point will remain on the weekly chart at 1,370.58. Cycle wave IV may not move into cycle wave I price territory.
This invalidation point allows for the possibility that cycle wave IV may not be complete and may continue sideways for another one to two years as a double flat or double combination. Because both double flats and double combinations are both sideways movements, a new low substantially below the end of primary wave C at 1,810.10 should see this wave count discarded on the basis of a very low probability long before price makes a new low below 1,370.58.
DAILY CHART
Click chart to enlarge.
If the bull market has resumed, it must begin with a five wave structure upwards at the daily and weekly chart level. That may today be complete. The possible trend change at intermediate degree still requires confirmation in the same way as the alternate hourly bear wave count outlines before any confidence may be had in it.
If intermediate wave (2) begins here, then a reasonable target for it to end would be the 0.618 Fibonacci ratio of intermediate wave (1) about 1,920. Intermediate wave (2) must subdivide as a corrective structure. It may not move beyond the start of intermediate wave (1) below 1,810.10.
In the long term, this wave count absolutely requires a new high above 2,134.72 for confirmation. This would be the only wave count in the unlikely event of a new all time high. All bear wave counts would be fully and finally invalidated.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is a bearish engulfing candlestick pattern at the last high. This has occurred at the round number of 2,100 which increases the significance. Volume on the second candlestick is higher than volume on the first candlestick, which further increases the significance. That it is at the weekly chart level is further significance.
Engulfing patterns are the strongest reversal patterns.
Now this pattern is followed by another red weekly candlestick. The reversal implications of the pattern are confirmed.
This is a very strong bearish signal. It adds significant weight to the expectation of a trend change. It does not tell us how low the following movement must go, only that it is likely to be at least of a few weeks duration.
Last week’s candlestick has a long upper shadow and is again red which is bearish.
There is also a Three Black Crows pattern here on the weekly chart. The first three red weekly candlestick patterns are all downwards weeks. The pattern is not supported by increasing volume and only the third candlestick closes at or near its lows; these two points decrease the strength of this pattern in this instance. That the pattern occurs at the weekly chart level increases its strength.
Last week On Balance Volume broke below the purple trend line giving a bearish signal. At the end of this week, OBV is breaking above this line giving a bullish signal. The bearishness of last week’s signal is now negated.
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.
The hammer of Thursday’s candlestick is working to show a trend change, so far from down to up. It should be expected that price may find resistance initially at the sloping blue line and after that at the horizontal line about 2,080 and finally at the horizontal line at 2,100.
The Head and Shoulders pattern has not been confirmed with a breach of the neckline. Price cannot move below and stay below it.
There was some support for the rise in price for Friday’s session by volume. This usually indicates that the rise in price is not finished.
ADX is now slightly declining indicating the market is not trending. ATR at the end of the week is also slightly declining in agreement.
On Balance Volume has found strong support at the purple line. This line has very strong technical significance. OBV is coming up to touch the pink line, but this line does not have much technical significance as it is short and only tested once. If OBV moves through the pink line, then it may stop when it finds resistance at the yellow line which has stronger technical significance.
RSI is close to neutral. There is room for price to rise or fall.
Stochastics is returning from oversold.
VOLATILITY – 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 (green lines). The decline in volatility did not translate to a corresponding increase in price. Price is weak. This divergence is bearish.
BREADTH – 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 prior upwards movement.
From November 2015 to 20th April, the AD line made new highs while price 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 (orange lines).
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.
The AD line is now declining and has breached a support line (cyan). There is breadth to downwards movement; more stocks are declining than advancing which supports the fall in price.
The bullish divergence noted yesterday disappeared also for the AD line and did not yield a green daily candlestick for Thursday’s session. Again, this is an illustration of why divergence should be noted as one piece of evidence; on its own, it is not definitive.
ANALYSIS OF LAST MAJOR BEAR MARKET OCTOBER 2007 – MARCH 2009
Click to enlarge.
In looking back to see how a primary degree third wave should behave in a bear market, the last example may be useful.
Currently, the start of primary wave 3 now may be underway for this current bear market. Currently, ATR sits about 19. With the last primary degree third wave (blue highlighted) having an ATR range of about 18 to 76, so far this one looks about right.
The current wave count sees price in an intermediate degree first wave within a primary degree third wave. The equivalent in the last bear market (yellow highlighted) lasted 39 days and had a range of ATR from 16 – 27.
To see some discussion of this primary degree third wave in video format click here.
Click chart to enlarge.
This chart is shown on an arithmetic scale, so that the differences in daily range travelled from the start of primary wave 3 to the end of primary wave 3 is clear.
Primary wave 3 within the last bear market from October 2007 to March 2009 is shown here. It started out somewhat slowly with relatively small range days. I am confident of the labelling at primary degree, reasonably confident of labelling at intermediate degree, and uncertain of labelling at minor degree. It is the larger degrees with which we are concerned at this stage.
During intermediate wave (1), there were a fair few small daily doji and ATR only increased slowly. The strongest movements within primary wave 3 came at its end.
It appears that the S&P behaves somewhat like a commodity during its bear markets. That tendency should be considered again here.
Looking more closely at early corrections within primary wave 3 to see where we are, please note the two identified with orange arrows. Minor wave 1 lasted a Fibonacci 5 days and minor wave 2 was quick at only 2 days and shallow at only 0.495 the depth of minor wave 1.
Minute wave ii, the next second wave correction, was deeper. Minute wave i lasted 3 days and minute wave ii was quick at 2 days but deep at 0.94 the depth of minute wave i.
What this illustrates clearly is there is no certainty about second wave corrections. They do not have to be brief and shallow at this early stage; they can be deep.
This chart will be republished daily for reference. The current primary degree third wave which this analysis expects does not have to unfold in the same way, but it is likely that there may be similarities.
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.
To the upside, DJIA has made a new major swing high above its prior major high of 3rd November, 2015, at 17,977.85. But DJT has so far failed to confirm because it has not yet made a new major swing high above its prior swing high of 20th November, 2015, at 8,358.20. Dow Theory has therefore not yet confirmed a new bull market. Neither the S&P500, Russell 2000 nor Nasdaq have made new major swing highs.
This analysis is published @ 10:47 p.m. EST on 21st May, 2016.
Interesting change of pace from the other guys. They have as an alternate a top in May, and an impulse down for intermediate one ending in September 1 (same as our primary one down) and a flat completed April 20 for intermediate two. Bottom line is they now have Lara’s main count, one degree lower as their alternate. Fascinating!
The main count is still bullish, and sees the Feb lows as the end of intermediate four, with minor one of intermediate five done, and minor two underway.
So they see the flat as a running flat too? Interesting.
Yep. They must have been peeking!
For several months Steve had the bearish count with the top in May as his main count while Prechter called for new all time highs in his publication. The last few weeks without saying why all of a sudden the short term update also started give a more bullish label to the counts. I rib them mercilessly about what wonderful contrarian indicators they are. The funny thing is that Steve initially also cited some very sound reasons for thinking a top was in. Not sure why he changed his perspective, although I could hazard a guess or two..after all he does report to Mr P…. 🙂
Very hard to see how anyone paying attention to what has been going on in the economy could be expecting new all time highs, to say nothing of all the technical alarm bells blaring for the last year or so now…
Just closed out my Sunday night futures shorts, picked up 6.1 basis points. Have to celebrate when you can – what a long wait though!
Dumped 50% short after hours on pop higher in UVXY.
Will see what pre-market / early trading looks like tomorrow with intention to dump the rest.
Intend to get back in either below 2026 or near upper target whichever happens first.
Today looks like Aug 14th, 2015. Recent trend matches pretty well and fits a iii, iv, and v to come.
Yes it does doesn’t it? UVXY posted a higher low at 24.97 and a green candle on the same day as the fifth wave up in SPX which printed a corresponding red candle to end the impulse up, August 18 last year. As someone said, while history does not always repeat, sometimes it rhymes…
Thanks Vern & Lara for responses!
I am trying to fine tune the trading knowing the manipulation that is ongoing in the markets he FED and other central bankers. I feel we can not be certain about an outcome until it is very close or unfolding in front of us. This will be helpful as what I might think is long term for actions to unfold might not be long enough for the markets. Short term nimble trading perhaps is the best.
Absolutely Ris. We have to trade what we see. Every time I try to get comfortable in a short side trade with expectation of the trend continuing I end up giving back most of my gains. The impulses down are completing intra-day so you simply have to quickly cash in you gains until the down trend really takes hold.
Tell me about it :/
I closed my short for a small profit just before markets opened.
I’ll SOH until upwards movement touches the bear market trend line. If it does that is. Then I’ll enter short again.
I plan in buying 1/2 full load the actual shares of UVXY, as opposed to options at the next low, hopefully at the end of minutette three up, and the second half with what I hope will be an outside reversal day at the end of minuette five. The pull of minor three down should make the end of the terminal wave very evident I expect.
Updated main hourly wave count.
Looking at subminuette b on the five minute chart I expect it’s some kind of combination. It’s a mess, but it’s over.
At 2,044 subminuette c = subminuette a, and minuette (ii) would be close to the 0.382 Fibonacci ratio which is at 2,046.
So just a little more downwards movement to either 2,044 or maybe even 2,038 to finish the session and complete a zigzag for minuette (ii) would make this wave count look good.
Tomorrow up for minuette (iii). Just as Rodney says.
Thanks Lara! 🙂
15min. SPX chart, possible count. Just for this little formation of the last 3 days.
sorry, have the “iv” on the wrong side
Yeah, I have that count as an alternate atm – looks all out of proportion to me but breaks no rules and this move is currently very shallow.
I still suspect we are seeing a 2nd wave with a final thrust lower maybe, but it certainly looks like it could be a 4th wave as well atm imho.
Hasn’t even retraced 38.2% yet!
Please do keep the counts coming Peter – is nice to have someone to bounce intra-day EW ideas with 🙂
We’re in a tiny “up” corrective wave, within a down corrective wave from April 20th, within a corrective larger down from May 2015. This is why everyone is confused, counts are changed all the time, waves looks confusing…
Sorry, still NOT buying that this is a IV down from May 2015!
No one will know for sure until the price action shows us.
Other non-technical evidence tells me what I need to know in this specific situation.
SLOW MOTION BORDOM!
How very much like the banksters to unleash an impulse down to shake out the bulls going into the close, with a face-ripping minuette three up tomorrow to devour any one jumping on the short side today. I’ve got just the thing for that scheme….
A very nice bearish call spread to be exited on the bearish side at the close. 🙂
This move down, like most moves these days, not looking at all impulsive; hardly worth the trouble imo…
Maybe that SPY 204 alert saw something invisible….! 🙂
Things setup nicely for the SPX…
200 Day MA @ 2010.91 (daily chart) AND THE
200 WK MA @ 1841.75 (weekly chart) to both be taken out on a move below 1810.10 by P3 Wave.
That was not possible on the last two waves down there! This may create the waterfall needed to get to the 1423 target.
Lets start with a close below 2049!
2048.04 SPX Close
VIX up .67 on basically a flat day!
I am curious to see if UVXY behaves itself properly tomorrow. It should tell us exactly when minuette three up ends with a new 52 week low, and when minuette five does with a higher low. The price action with these lower degree waves has been a bit more nuanced but the end of impulses should be really easy to spot.
Wave (b) triangle (1min MACD hovering around zero)? Think we need Lara’s keen eye to untangle this mess! 🙂
Would be a perfect whipsaw for another impulse down for C followed by yet another immediate reversal to the upside. I guess minuette one did take about a day and a half so the duration is not too much our of kelter. The current price action certainly seems corrective.
VIX divergence continues.
I don’t think we are going to see multiple new 52 week UVXY lows like last time. The window is probably going to open and close quickly.
Zoomed out it looks quite strange to me albeit 2nd waves don’t have to be sharp. Very shallow sideways action (more like a 4th wave atm) – don’t know exactly what to make of it!
Time will reveal all
Triangles quite common for fourth wave but I have no idea how one would count it….
wave B within a zigzag down for minuette (ii)
My guess is that the main count is right on track. We are not retracing price but still in the low degree 2nd wave. Tomorrow is up for three. Then 4 & 5 of c of Minor 2 completes on Wednesday as she projected.
When in doubt, I have found it is best to stay with her hourly count until clearly invalidated or changed by her. So, I wait.
Yep – I’m trying to time the best exit point for my short position. If triangle playing out I want to wait for the thrust lower before bailing. Want to get a better entry if the market is going higher. A triangle would suggest that this move down will be fully retraced if it plays out so it quite a nice structure for my current setup.
That’s how I was looking at it too Olga, then this thrust down well below b of the possible triangle invalidated it.
Something has to give in the next 20 min one way or another!
265 million in volume at the moment..setting up for lightest day of year
Dow Jones daily zoomed up chart shown. Notice it closed below the neckline of the head and shoulders, then had a throwback up through it, but now has confirmed the head and shoulders pattern with several days closing below the neckline. Compare then to the SPX where it too has closed below the neckline, has a throw back upward right now. Another potential place to enter short is when the Dow Jones comes back up (if it does) to touch the neckline as resistance. That is about 105 points up from here…or about 12 points on the SPX which would be the one downward sloping trendline from the April 20th high. The DJ certainly does not have to go up and touch the neckline.
We actually have a clear divergence between SPX and DJI so far as the break of the neckline of the H&S pattern is concerned. DJI held the break but SPX did not and is clearly now trading above the neckline, as opposed to coming up to retest.
Technically, it never really broke the neckline as it closed back above it the same day of the break imo…
The SPX did close below the neckline on May 19th. The close that day was 2040.04, but the neckline on that day was up at ~2042.60.
I used the lows of May 6 and 18 to draw the neckline at 2039.45 and 2034.49 respectively so we have the neckline positioned a bit differently. Either way SPX clearly more bullish…
Just got an alert that SPY hit 204 and I simply do not see it on the chart. Usually even if the price does not reflect it you will see a spike when a big short trade entered. Most interesting…
I don’t see 204 either.
Low during normal trading 205.14
looks like flag from a classic TA perspective to me. Makes me think we go up in the pm. waiting for confirmation, but that’s what I am seeing.
I think the bullish flag or pennant is flown during a clear uptrend…i.e. a continuation pattern…
agree, very short term, but I trade the ES, so I have to be short term. 🙂
Got it! 🙂
Despite the persistent and relentless buying, CPB continues to steadily work its way downwards with lower lows and lower highs. At some point the buyers or algos propping it up will throw in the towel and it will gap down…
Poss current action. The move down from the high is in 5 impulsive waves but overlapping – not sure if it qualifies as an expanding diagonal?? (Diagonals in 1st wave positions certainly not my strong point)
Really starting to look way out of proportion for either a second or a fourth wave imo…
Good to see the VIX Rising on basically a flat market.
Yeah, that is really interesting. The VIX divergence with the market continues as well as its divergence with UVXY which is signaling medium to long term bullishness. A bit unusual it has not made a new 52 week low as it should ahead of a third wave up to complete a second wave at minor degree. If we are still sideways in the next hour I am back to SOH…sometimes the best trade is no trade and now seems to be such a time…the mixed signals continue…
I don’t know what to make of this so far today???
It is entirely unnatural, inscrutable, manipulated…dangerous to traders of both bullish and bearish disposition. Who in the hell sits around repeatedly dumping cash into a stock (CPB) each and every single time it dips below 60.00?…not your average trader or investor that is certain. This market action stinks to high heaven and I am keeping my distance until we get some clarity…
Since it is in a downtrend, the more times CPB hits that shelf the weaker it becomes. I expect it to break next time it is met….
Campbell Soup?
That is a dividend stock… should get killed if interest rates rise. But then again… if Soup is all you can afford to eat going forward, it may do well.
LOL
That is just the point. It should be doing great in the current environment… 🙂
Well… the low of the year was $45.23 back in August and the high recently $66.75 (5-12)… I would say it has.
Vern,
You have been here a lot longer than I have been a subscriber but I was looking at last drop in Feb and wondering how timely our EW predictions lined up with that event. Just trying to figure out with so much manipulation and markets running on fumes not fundamentals where and what weightage TA has beyond day trades.
We have been expecting a strong sustained third wave down for many months now but the move down generally has turned out to be part of a larger correction. As you can see from the analysis of the last few months, our expectation of a sustained move to the downside since the August lows turned out to be a huge ABC zig-zag correction for primary two. While I don’t think the banksters can ultimately alter the larger trend, I do believe their intervention in the markets result in more complex wave forms developing and thus making it very difficult to make directional trades confidently. Impulses have consistently been completing intra-day, and rather than being the building block of a larger continuing trend downwards, have more frequently marked the termination of the move and followed by sharp corrections in the opposite direction, a situation clearly hazardous the trading health of bull and bear alike, unless you stick with a guerrilla war-fare approach to trading the markets and consistently take profits as soon as they materialize. On-going whipsaws seem to be the order of the day for these markets, unfortunately something the EW analysis cannot always account for in the short term.
Ris, to answer your question:
It wasn’t until the 10th March that I published the current wave count which expected primary 2 to move price higher, expecting it was likely to end at least slightly above 2,116.48.
Prior to that the wave count had expected the upwards movement from the low of Feb 11th was a smaller correction within primary 3 down. Initial expectation on 17th Feb was for it to end about 1,987.
On 23rd Feb I expected it could be over, but it wasn’t. The strong upwards day of 1st March was a surprise. By 10th March price forced the alternate, which is now the main count, to see it all as primary 2 and a flat correction.
I am not sure how this jives with the main wave count but we have to conclude the market is consolidating against a move higher. It does seem a bit protracted for a small degree second wave….
Buying a small contingent of this week’s SPY 206 calls for a buck…stop at 204, STC at 207…
In a few hours of trading, Minor 2 of the main bear hourly count will be as long in duration as was Minor 1. At some point, it begins to look wrong. Second waves typically are looking to correct in price and often deeply. This 2nd wave of the main hourly has already corrected 61.8%. So there is no real need to go deeper. To continue well beyond the duration of Minor 1 gives me pause to the ‘look’.
Gotta go. Back later.
Yep. I hear ya. We are not in a third wave down, and not in a third wave up, and we should be in one or the other. Maybe something else is going on….
We have a small impulse down. I am wondering if that is a break out of a fourth wave and we need one final wave up to finish the current correction…?!
Some seriously deep pockets defending CPB 60 pivot. Market stalemate continues accordingly….remaining on the sidelines for now…
UVXY should be making a new 52 week low ahead of an impulse up to complete minor two and that is not happening. It seems this possible minuette two gettng a bit long in the tooth….
Interesting attempt to keep CPB from breaking support at 60.00. What happens here will be a good indication of what is on deck in broader market…
Another huge red flag is big divergence with VIX…moving up with market…
I am not sure what the conclusion is of this clue. But I know it is strange. VIX was up +6% at the open which was flat for SPX. I was thinking perhaps we are seeing all those who were trying to control options expiration are now rearranging their portfolios for what they see ahead.
Perhaps unwinding for a day or two before Mr. Market show his cards?
This past two weeks is exciting and disappointing all wrapped up together.
The road is long,
with many a winding turn …….
Oh yeah…” The long and winding road, tha-a-at leads, to your door…” 🙂
I think either a massive bull or bear trap is being sprung today. I suspect this strange indirection will continue the rest of they day and overnight futures will tell the tale…I am out for the immediate time being; nothing to see here imo…
This is definitely a sucker’s move higher. Dead giveaway is MM index ETF calls DECLINING with market move higher; not at all surprised…
CPB keeling over…not looking good for the bullish case…
UVXY headed for new 52 week low. Will re-load first 1/2 batch at 12.75 with contingent order…
Second wave was a double zig-zag; we are seeing quite a few of those very much in keeping with active banksterism…
CPB bouncing off support shelf and heading back up towards open gap. I expect it to turn ahead of the broader market so it will be interesting to see if it reverses today…looking forclear impulsive five down to signal reversal…
Looks like another lazy, deceptive second wave ahead of a spurt higher for minuette three. Minuette three really should complete today, with yet another “turn around Tuesday” tomorrow if the pattern holds….
NDX futures in the green so despite the reversal in European markets after positive futures, this is good news for the main count. I think it is safe to conclude we will not see a third wave down of any kind today. 🙂
Sometimes looking at individual stocks can provide clues to the market’s direction when other signals become unclear. CPB has hit this support shelf at least five times in the last few months and revisited it again on Friday on high volume despite the broader maket rally. I am watching it closely to see if, when, and how it finally breaks.
8M shares on Friday’s down day with an opening gap! The breakdown is not far away. Perhaps, per the main count, a move up to fill the gap and then down she goes.
Yep. Closed at 63.98 on Thursday. If it closes that open gap it will be a very low risk entry for a short side trade.You will not find a more reliable bell-weather on the overall state of the economy. A break of that shelf means we are in a recession, never mind the government’s fantasy numbers….
Market signals continue to be erratic. Both DAX and CAC futures were up well over 1% (FTSE was also positive bu t not by as much)but price now solidly in the red. US futures slightly lower so it could simply be an indication of a bit lower movement to complete minuette two as per the main wave count but personally I am quite suspicious. The destruction and/or distortion of once reliable price discovery mechanisms by relentless CB meddling , in my opinion makes the current markets a dicey place indeed. The last time we saw jacked-up futures with an open in the red was a bad time to be long. It sure is starting to look like all the buying from last Thursday and Friday already starting to be unwound. Certainly anyone going long intra-day Friday who did not take profits will be underwater this morning, just as was the case for short-side trades last Thursday. I remain on the sidelines pending Mr. Market’s decsion as to where he is headed.
Where can I find these futures prices and also monthly expiry prices?
Hi Mally. Futures prices and option chains with expiration dates should all be readily available from your broker. Talk to customer service about how to pull up that information when logged into you account.
European markets’ futures higher; US markets likely to follow. The third wave up tomorrow will offer a much better short entry. I will be looking to get positioned on minuette four up with half of trading capital and the remainder as we move past the third wave high on way to completing minuette five. I think we will see an extended three that lasts the entire trading session Monday and the fifth wave on Tuesday.
Unless we see futures down triple digits, minor three will not have arrived imo…
I’ve gone short in Sunday night futures. Looks like drop is happening to me.
It is putting up a good fight. Let’s see if can make back above the 50% Gann line.
I’m still short – if price proves the move down from Fridays high is in 3 waves I’ll bail and re-buy at either 2026 or near target highs if the market takes off higher.
Atm the move down has lower highs and lower lows but that might change as soon as market opens. If this move down is shallow, it’s possible it’s a 4th wave of the move up from 2026, but it is starting to look wrong so that’s a bit of a risk.
I am watching the $GDOW. The reversal was less significant than SPX which is purple as a point of reference. Sometimes the $GDOW works as an early warning system. Maybe harder for the FEDS to manipulate. Based on this possibility, I wonder if SPX will instead struggle for 2-3 days until it succumbs to downward – third wave – black hole gravity overtaking it….
https://youtu.be/bO_rbg_fWaE
(Star Trek XI Uss Enterprise Gets Caught In Black Hole)
If we get a five wave up to complete minute C of minor five per the main wave count, we may also see a high volume day with another doji or spinning top signaling distribution at the top. If we get that with early divergence in VIX and hopefully UVXY as well, that could also be an early signal. Let’s hope we can avoid the infamous reverse split…
I agree the new main count explains the price action better than does the alternate. I am becoming more convinced that we are not going to see the kind of deep retracements that we saw on Thursday when minor three down gets going. Each and every single time we thought the third wave was unfolding the single consistent feature this year has been that deep intra-day retracement with corresponding hammer candlestick or at least a long lower wick. At this point and after how often we have seen it, that kind of price action ought to raise red flags.
If minor two is continuing higher, the one thing I am quite confident of is that UVXY will print at least one more 52 week low, and possibly more.
I am keeping dry powder until three green UVXY closes after it’s next 52 week low. Additional surprises may well be in store and as attractive as an upside trade appears, I will be again watching from the sidelines….
I don’t think the chart on the alternate hourly bear chart has the candlesticks from Friday May 20th. Although when I “Click to enlarge” it is the updated chart. The new main count does bring me some relief as it more matches some other indicators I watch and other analysts I read.
You are right, sorry Rudy, part of my code wasn’t updated.
It’s fixed now.
First today.
That was fast!