Downwards movement continues towards the target. Now that there is more structure in this downwards wave to analyse the target is calculated at a lower degree.
Summary: The target for more downwards movement is 2,612. If this target is wrong, it may not be quite low enough. The 200 day moving average may provide support; it is at 2,584 today.
Always practice good risk management. Always trade with stops and invest only 1-5% of equity on any one trade.
The biggest picture, Grand Super Cycle analysis, is here.
Last historic analysis with monthly charts is here. Video is here.
An alternate idea at the monthly chart level is given here at the end of this analysis.
An historic example of a cycle degree fifth wave is given at the end of the analysis here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.
Within cycle wave V, the third waves at all degrees may only subdivide as impulses.
Intermediate wave (4) has breached an Elliott channel drawn using Elliott’s first technique. The channel is redrawn using Elliott’s second technique as if intermediate wave (4) was over at the last low. If intermediate wave (4) continues sideways, then the channel may be redrawn when it is over. The upper edge may provide resistance for intermediate wave (5).
Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81. At this stage, it now looks like intermediate wave (4) may be continuing further sideways as a combination, triangle or flat. These three ideas are separated into separate daily charts. All three ideas would see intermediate wave (4) exhibit alternation in structure with the double zigzag of intermediate wave (2).
A double zigzag would also be possible for intermediate wave (4), but because intermediate wave (2) was a double zigzag this is the least likely structure for intermediate wave (4) to be. Alternation should be expected until price proves otherwise.
DAILY CHART – TRIANGLE
Click chart to enlarge.
This first daily chart outlines how intermediate wave (4) may now continue further sideways as a contracting or barrier triangle. It is possible that minor wave B within the triangle was over at the last high, which would mean the triangle would be a regular triangle. Minor wave C downwards may now be underway and may be a single or double zigzag. One of the five sub-waves of a triangle is usually a more complicated multiple, and the most common sub-wave to do this is wave C. It looks like minor wave C may be unfolding as a double zigzag, at this stage, and this is how it will be labelled. Within the double zigzag, minute wave x should not make a new high above the start of minute wave w at 2,801.90.
Minor wave C may not make a new low below the end of minor wave A at 2,532.69.
The target calculated today at the hourly chart level for minor wave C to end is now at 2,612. But this target may not be quite low enough if minor wave C comes to end about the 200 day moving average.
Intermediate wave 2 lasted 11 weeks. If intermediate wave (4) is incomplete, then it would have so far lasted only seven weeks. Triangles tend to be very time consuming structures, so intermediate wave (4) may total a Fibonacci 13 or even 21 weeks at its conclusion.
Because this is the only daily chart which expects price to continue to find support at the 200 day moving average, it is presented first; it may have a slightly higher probability than the next two daily charts.
HOURLY CHART
Click chart to enlarge.
If a double zigzag is unfolding lower, then the first zigzag may be complete. The double may be joined by a three in the opposite direction labelled minute wave x.
The second zigzag in the double may now be continuing lower. A target is calculated which expects the most common Fibonacci ratio between minuette waves (a) and (c). Within minuette wave (c), no second wave correction may move beyond the start of its first wave above 2,689.74.
DAILY CHART – COMBINATION
Click chart to enlarge.
Double combinations are very common structures. The first structure in a possible double combination for intermediate wave (4) would be a complete zigzag labelled minor wave W. The double should be joined by a three in the opposite direction labelled minor wave X, which may be a complete zigzag. X waves within combinations are typically very deep; if minor wave X is over at the last high, then it would be a 0.79 length of minor wave W, which is fairly deep giving it a normal look. There is no minimum nor maximum requirement for X waves within combinations.
The second structure in the double would most likely be a flat correction labelled minor wave Y. It may also be a triangle, but in my experience this is very rare.
A flat correction would subdivide 3-3-5. Minute wave a must be a three wave structure, most likely a zigzag. It may also be a double zigzag. On the hourly chart, this is now how this downwards movement fits best, and this will now be how it is labelled.
The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double usually ends close to the same level as the first. Minor wave Y would be expected to end about the same level as minor wave W at 2,532.69. This would require a strong overshoot or breach of the 200 day moving average, which looks unlikely.
HOURLY CHART – COMBINATION
Click chart to enlarge.
The target, channel and subdivisions for this idea are exactly the same as the first hourly chart. Both daily charts expect a double zigzag is unfolding lower.
DAILY CHART – FLAT
Click chart to enlarge.
Flat corrections are very common. The most common type of flat is an expanded flat. This would see minor wave B move above the start of minor wave A at 2,872.87.
Within a flat correction, minor wave B must retrace a minimum 0.9 length of minor wave A at 2,838.85. The most common length for minor wave B within a flat correction would be 1 to 1.38 times the length of minor wave A at 2,872.87 to 3,002.15. An expanded flat would see minor wave B 1.05 times the length of minor wave A or longer, at 2,889.89 or above.
When minor wave B is a complete corrective structure ending at or above the minimum requirement, then minor wave C downwards would be expected to make a new low below the end of minor wave A at 2,532.69 to avoid a truncation.
Minor wave B may be continuing higher as a double zigzag. At this stage, this would be the most likely structure to achieve the height required for minor wave B.
The subdivisions of this possible double zigzag are relabelled today. This wave count is still possible, but looks less likely today. The X wave is usually relatively brief and shallow within double zigzags, and here minute wave x has made a new swing low that now looks a little too deep and time consuming for a normal X wave within a double zigzag.
This wave count would require a very substantial breach of the 200 day moving average for the end of intermediate wave (4). This looks unlikely.
DAILY CHART – ALTERNATE
Click chart to enlarge.
It is possible still that intermediate wave (4) was complete as a relatively brief and shallow single zigzag.
A new all time high with support from volume and any one of a bullish signal from On Balance Volume or the AD line would see this alternate wave count become the main wave count.
The degree of labelling within minor wave 2 is today moved down one degree; the first expanded flat may have been only minute wave a. Minor wave 2 may be continuing lower as an expanded flat. A target is calculated for minute wave c to reach the most common Fibonacci ratio to minute wave a. If this target is wrong, it may not be low enough. Minor wave 2 may end lower about the 200 day moving average, which today is about 2,584.
Minor wave 3 may bounce strongly up off there.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week moved price higher with a higher high and a higher low, but the candlestick is red and the balance of volume is down. At this time frame, it looks like there may be more support for downwards movement than upwards within the week, but it would be better to look inside the week at daily volume bars to draw a conclusion.
The pullback has brought ADX down from very extreme and RSI down from extremely overbought. There is again room for a new trend to develop.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Assume until proven otherwise that the gap at the open of today’s session is a breakaway gap from a small consolidation, which may provide resistance while it remains open.
Volume is bearish. ADX is bearish. On Balance Volume gives a bearish signal. This all supports the wave counts which see intermediate wave (4) incomplete.
Look for price to find support about 2,600. If Stochastics reaches oversold at the same time price finds support, then a bounce there would be expected.
VOLATILITY – INVERTED VIX CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.
Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.
Bullish divergence noted in last analysis has been followed by a downwards day. It is considered to have failed, but it was noted that it was weak.
The downwards movement in price today has normal corresponding increase in market volatility.
BREADTH – AD LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. This has been so for all major bear markets within the last 90 odd years. With no longer term divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market.
All of small, mid and large caps last week completed an outside week. All sectors of the market at this time appear to be in a consolidation.
Breadth should be read as a leading indicator.
Bullish divergence noted in last analysis has now been followed by a downwards day. It is considered to have failed, but it was noted to be weak.
The downwards movement in price today has a normal corresponding decline in market breadth. The fall in price has support form falling breadth, and this is bearish.
DOW THEORY
All indices have made new all time highs as recently as eight weeks ago, confirming the ongoing bull market.
The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:
DJIA: 17,883.56.
DJT: 7,039.41.
S&P500: 2,083.79.
Nasdaq: 5,034.41.
Charts showing each prior major swing low used for Dow Theory are here.
Published @ 08:04 p.m. EST.
I have been out most of the day. Wow, the bears are continuing their push down. I have been looking for SPX 2500 or below all week. I am guessing many rolled their eyes and thought I was crazy as we started this week near 2800. Well, we are not quite there yet, 56 points to go. I think we will see it sometime next week. Then I’ll be looking for signs of a reversal upwards.
Have a great weekend all. Especially nice to see Olga comment once more. How is your band, Olga?
Hi Rodney – many thanks for your kind words – I’m often lurking in the shadows 😀
Very busy with other things atm but the band have a full schedule for Isle of Man TT (end of May) so looking forward to catching up with all the guys again then.
Hope all well with you 🙂
This looks very strong. We may be headed for a reasonable overshoot of the 200 day MA.
The last overshoots were 9th Feb, 2018. That one was small.
Prior to that there was a big overshoot on 27th Jun, 2016. That was big. Price closed below the average, but could not print a full daily candlestick below it.
My definition of an overshoot is part of a candlestick above or below. My definition of a breach is a full candlestick above or below and not touching.
Been fun being in the trenches with you guys again this week. Back to the spreadsheets next week…
Have a great weekend everyone!
Adieu!!! (ps: nothing like spreadsheet magic…)
You too Verne. Have a great rest and relaxation.
What the bulls do NOT want to see is an acceleration toward the 200 day SMA…!!!!
More down coming…here’s my model that I’ve been using all day long, and the market just keeps right on tracking to it. Love it when it works that way!
Hi Kevin
whats your downside target?
sorry Eric, didn’t see your post until now long after the tumble is over. I would have said 2588 (kid you not) because there was/is a significant 78% fibo sitting there, if you run all the major retracements. and indeed I’ve been told it took off upward immediately after the day session bell. Decent size 4 due, then ANOTHER 5 down! That’ll shake their boots Monday, it should be fun. THEN…we are just about to a screaming bull period. A real chance to push it a bit.
We could get that cap. spike in VIX by the close….! 🙂
Based on what DAX did today, looks like they are stringing the bulls along into the close….lol!
This mid-day upswing is looking corrective to my eye at the moment. Is is a really odd-looking upward turn, or another “coiling” move ahead of more downward drama?
(Very) small degree leading diagonal perhaps (5 min chart)? If we get a 3 wave pullback now (which is often deep after an LD ime) I will be going long with a stop at todays low.
Oh my….! It’s Olga!!! Hi ya!!!!!!!! 🙂
Hi Verne 🙂
Stop by again and more often! 🙂
Solid 3 dropping away from the 2, per Hoyle! Awwwwwesome.
Yep. It was a coil…
I see a possible 5 wave structure complete now on SPX 5 minute, starting at Mar 21 high. Shorter 3 than 1, and a shorter 5 than 3. Price is approaching the downtrend line. We’ll see if the hourly starts triggering long in a bit, the trendline gets busted, and swing highs start to get exceeded…or the steady sell off continues.
Aren’t meandering markets fun? Still, looking again like the 3 hours of sideways/up was a 2 now completed, and a 3 down is kicking off.
Insta-love of MotiveWave. What an incredible product. Made the purchase. Doing fine with general use and setup. My problem now…moving over my custom indicators from ThinkScript to Java for the MV API. Aiiich. Java is soooo much base complexity for doing something as simple as indicators; thinkscript is AWESOME. But no platform is perfect. Which leads to the question: anyone out there have strong Java chops, and be willing to convert my few short pages of thinkscript code for me? Reasonable compensation can be provided. I can work it out myself, it’s just going to take 20-40 hours or more, while someone with java chops can probably do it in 1-2 hours. Time I’d rather spend on other things. Lemmeknow if!! TIA.
I posted this earlier this morning and it went into moderation after I edited it so it will show up again later.
Courtesy of Chris Kimble, another version of what we around here like to affectionately refer to as “The Coil”
Yikes! That is one huge python! ?
https://kimblechartingsolutions.com/2018/03/dow-jones-bounce-due-way-21000-level-says-joe-friday/?utm_source=ActiveCampaign&utm_medium=email&utm_content=Dow+Jones-+Bounce+due+on+the+way+to+21%2C000+level%2C+says+Joe+Friday&utm_campaign=Daily+Kimble+Blog+Posts+RSS
Thanks, nice summary of the alternatives (surprise, down…or up!! but in either case, first up after this impending bottom).
My custom trend indicator (combination of ADX and CCI) shifted to DOWN (at the mild reading, I have an additional “strong” reading possible) at the weekly timeframe for SPX, today. First time since October of 2016…
Looks to me like we have one more impulse down to complete this leg. I now suspect it will complete Monday in the A.M., followed by an upside blast…
Sounds goot to me! My SPXU short is working well…
Welcome. Chris Kimble’s take highlights the interesting fact that the market is a fractal. We have been seeing vignettes of that proposed larger coil play out repeatedly on smaller time frames. Interesting! 🙂
Waiting for this C wave down to complete…then going long with triggers. I see it’s completed the 4 and is in the 5 down now…patience, Skywalker!!!
You think this is the last 4 before the target?
Not certain Peter. I’m going to let my one hour stochastics and macd trigger me in; if they both do a bullish crossover, I see it as very high probability the C down is done. Nyet!!! I will say my one caution is that I also closely track GS, a trading favorite. It’s 5 wave down seems less complete. Nonetheless, I will take the one hour buy triggers on SPX. (My 5 minute has signaled long, but I’m not trading that here. I want higher timeframe confirmation; the 5 minute could easily suck me into a small 4 wave up!
SPY and DIA both triggered buys on the hourly…but interestingly, DJIA and SPX haven’t. Not quite sure what to make of that. Discretion here is probably the better part of valor. I want the cash indices triggering…
The Force is strong in you…
the dark side tells me to get short now and ride this down to the target…
as I said somewhere else, that is exactly what I did, hope you are in and in the green now! I think there’s a fair amount of down to go here. I wouldn’t be surprised at some panic selling before the day is out, either.
Revising my view…now I’m quite suspicious this 5 wave move down off the March 21 high is NOT close to complete, still in the wave 3 down perhaps. This sideways/up action being a possible 2 of the 3rd wave down, meaning…lots more to come. And that’s much more consistent with my read of the GS situation. What do others think?
I am with you on this one Kevin. I am thinking we will be headed well under 2600. But I am not playing the short side at all. Rather, I am looking for a long entry point. I do not want to play wave D up of a triangle either. Therefore, I suspect I will be on the sidelines for several days or a week or more.
I am, however, long NUGT.
Best of luck with NUGT, that’s one insanely volatile ETF!
I now have SPX in “bear mode” in EVERY timeframe, weekly, daily, hourly, and 5 minute! I got on board short…
Come on Rod…that is where all the fun is!
When was the last time you saw a DJI bull run up of over 700 points??!
But seriously, look for the VIX spike and lower high to plan your long entry.
You know the drill…. 🙂
Courtesy of Chris Kimble, another version of what we around here like to affectionately refer to as “The Coil”
Yikes! That is one huge python! 😀
https://kimblechartingsolutions.com/2018/03/dow-jones-bounce-due-way-21000-level-says-joe-friday/?utm_source=ActiveCampaign&utm_medium=email&utm_content=Dow+Jones-+Bounce+due+on+the+way+to+21%2C000+level%2C+says+Joe+Friday&utm_campaign=Daily+Kimble+Blog+Posts+RSS
VIX notched a high of 50.30, more than double its low for that day of 22.42, on Feb 6 as SPX completed a third wave down. VIX went on to make a lower high (41.06) on Feb 9 when the index completed the fifth wave of the impulse down. The index range on Feb 6, the day the third wave completed was roughly 2593 to 2701. The index made a lower low of approximately 2533 on January 9, while at the same time VIX notched a lower high, confirming the fifth wave. (Kudos to Rodney for making that observant call!).
Here is what I find quite interesting. While we have not made a lower low today than at the end of the third wave on Feb 6, we have certainly made a lower high, yet VIX shows not a sign, at least not to me, of anything remotely resembling capitulation. This is most noteworthy. Despite the distance the indices have fallen over the last several days, the level of complacency in the market is truly stunning. Anecdotally it is evident in the comments traders are making, and certainly demonstrable in the relatively muted response of VIX, compared to where it traded last Feb 6. Granted it was up 5.48 at 30.68% on Thursday, we still have nothing even remotely resembling panic. In fact on Wednesday we had the weekly theft from traders when VIX saw its typical spike down intra-day to 16.36! (Stink bids placed on Tuesday in anticipation of this weekly event returned an instant double. It is really amazing that you can do this just about every week!) This is a time, in my humble opinion, to expect surprises to the downside. I thought we could see a reversal tomorrow but price may prove me wrong. RUT only on Thursday joined the other indices in penetrating its 50 day so this party may be just getting started!
Perhaps. I however have in a solid #1 position the main calling this overall move a C down of a overall 4th wave correction, and it could very well be approaching doneness in the next hour. Certainly this C down is very very close to finishing from an EW perspective. That said, in fact it could all be part of the evolving massive 3 wave down (because this isn’t an intermediate 4, but the start of a massive bear market)…we’ll see. At this phase of the economic cycle, there’s just little chance (IMO) that this market has topped in a major cyclic manner ala 2008, 2001, etc.
Yep! As I said, bullishness abounds…! 🙂
Morning!! or Evening
Hope you all have a great Friday!!
Good evening Paresh. I’ve had a fabulous day. May you all too.