If you’ll remember in October of 2022 when the SPX had declined 27% since the January all-time highs. It seemed the sentiment and market news were uber bearish with back drop of the Federal Reserve hiking rates by an unprecedented .75 points at its FOMC meetings at the time.
Around the December lows, we began discussing in my trading room what the sentiment of traders and the financial news media would have to be once we finally arrived in the gray target box for this corrective rally I thought would persist till summer time. I was clear, that for this forecasted subsequent c-wave down (Red Arrow on Right side of Chart), that sentiment would have to be uber bullish in our B-wave target box. What would transpire afterwards would be a decline of 30% to 40%, so a decline of this magnitude would have to catch traders off guard. Some sort of event driven catalyst. Now, many months later, to listen to CNBC, it appears we’re now in a new bull market.
As an Elliottition, this type of sentiment was expected. Even required, as to what comes next. If my analysis is correct, we are soon about to embark on a c-wave decline that would eventually breach the October lows.
Additionally, if I am correct, once this c-wave does conclude (around 3,000 -2700 ES), it will take at least couple years or more for price to return to the area of where we are today.
So, while everyone is uber bullish, the main data point to consider is price pattern and the MACD indicator.
For this entire pattern to be impulsive and give us a chance to get to new highs this would mean we’re now in a wave 3 of an impulsive trend. Wave 3’s are the strongest portion of a 5-wave impulsive trend pattern and they never take place on negative divergence. Wave 3’s persist until negative divergence is broken.
If we’re to break the stark negative divergences that have held since the October bottoms (see indictor portion of the chart above) price has little room for any sustained consolidations or declines. No forecast is guaranteed. When forecasting price patterns and trader behavior, support and resistance still apply. SO, to be fair, NO KEY LEVELS OF SUPPORT HAVE BEEN BREACHED that would give us any indication we've topped, or at minimum, the rally is cracking.
However, as of now, the MACD indicator is telling us that with each advance of price, we're achieving that on less and less strength. Maybe that changes soon, anything is possible...but in the absence of that, new all-time highs are simply wishful thinking.
Around the December lows, we began discussing in my trading room what the sentiment of traders and the financial news media would have to be once we finally arrived in the gray target box for this corrective rally I thought would persist till summer time. I was clear, that for this forecasted subsequent c-wave down (Red Arrow on Right side of Chart), that sentiment would have to be uber bullish in our B-wave target box. What would transpire afterwards would be a decline of 30% to 40%, so a decline of this magnitude would have to catch traders off guard. Some sort of event driven catalyst. Now, many months later, to listen to CNBC, it appears we’re now in a new bull market.
As an Elliottition, this type of sentiment was expected. Even required, as to what comes next. If my analysis is correct, we are soon about to embark on a c-wave decline that would eventually breach the October lows.
Additionally, if I am correct, once this c-wave does conclude (around 3,000 -2700 ES), it will take at least couple years or more for price to return to the area of where we are today.
So, while everyone is uber bullish, the main data point to consider is price pattern and the MACD indicator.
For this entire pattern to be impulsive and give us a chance to get to new highs this would mean we’re now in a wave 3 of an impulsive trend. Wave 3’s are the strongest portion of a 5-wave impulsive trend pattern and they never take place on negative divergence. Wave 3’s persist until negative divergence is broken.
If we’re to break the stark negative divergences that have held since the October bottoms (see indictor portion of the chart above) price has little room for any sustained consolidations or declines. No forecast is guaranteed. When forecasting price patterns and trader behavior, support and resistance still apply. SO, to be fair, NO KEY LEVELS OF SUPPORT HAVE BEEN BREACHED that would give us any indication we've topped, or at minimum, the rally is cracking.
However, as of now, the MACD indicator is telling us that with each advance of price, we're achieving that on less and less strength. Maybe that changes soon, anything is possible...but in the absence of that, new all-time highs are simply wishful thinking.
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