Triangle wave IV recently completed and current leading diagonal primary wave 1 nearing completion. The diagonal should have 3-3-3-3-3 structure, and it appears to be about to finish the last leg this week or next; maybe right after Labor Day. Primary wave 2 could be a significant correction, setting up a nice Santa Claus rally in November. We'll see.
Cheers -
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getting really close...
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Wow!
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Hard to tinker with such a nice call because I'll probably just get it wrong, but based on the current structure, my downside target is 2706 to 2687. This could change, and I will adjust, but as of right now that's my view. Anticipation of the U.S. mid-term elections in 3 weeks will probably have at least some impact. Anything can happen of course, but it's hard to imagine a strong rally before then. If it falls below 2591.25, the overall idea of a leading diagonal wave 1 with wave 2 correction is invalidated, and I would expect further downside. Cheers -
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Did not expect such a big rally in wave 4 a few days ago, but that was a pretty bullish sign, and then price came within 5.25 points of the downside target (2692.25 vs. 2687) this morning and has rallied over 40 points from there in 5 waves on the lower time frame. Awesome!
@cpandiella, I know, right? Lolz. I don't smoke, but...I need a cigarette.
Steady_Study
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@DaveKoehler, - Wonderful call. Santa claus rally stops at 2880, or is it just indicative? Sorry the 'plus' sign covers the arrow. Thanks.
DaveKoehler
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@Steady_Study, Thanks for the comment. If it works out like I expect, SP500 will move up soon, and the Santa Claus rally would just be part of that move; so beyond 2880 most likely. But I'm not sure that will happen just yet. This correction needs to finish up, and could certainly over-achieve to the downside. I expect one more move down to about 2650, but can't forecast it yet; that's just a hunchy guess based on the original analysis.
If it makes a low equal to or slightly lower than the recent one at 2712 (2650 would count), and then makes a high that is higher than whatever high was made just prior to making that low, that would be a great first sign that it's over and ready to go up. I would be biased long at that point.
If it falls below point (E) on the triangle at 2591, then my original overall idea that it was a leading diagonal followed by a wave 2 correction would be invalidated (wave 2 cannot go below the start of wave 1), and I would expect either further downside or more sideways correction.
I'll post an updated chart when it clears up a little bit.
Steady_Study
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@DaveKoehler, - Thanks Dave for taking the time to pen down your thoughts - appreciate it! I think the path you lay is quite clear (esp the point where you would go long again). Yes, I think the 26xx levels could get reached this week. Upside action seems weak so far.
So, if I understand you right, you look at Jan highs as wave 3 top, and Sept highs as wave 1 of wave 5, with Santa Claus rally getting us to wave 3 of 5 - am I correct? If so, whats your target for wave 5 of 5? (assume script goes per plans, on the long side) :)
Thanks again. Look forward to your updated chart!
cocawater
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Hi Dave,
today is a disaster...
DaveKoehler
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@cocawater, Yep; looks pretty scary. But still, it's technically just a correction until it drops below 2591. Mid-terms less than 2 weeks away...expect uncertainty.
cocawater
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Man.....This is sick !!!!
DuCaminvest
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wow
DaveKoehler
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The moment of truth! A turnaround near 2940 would definitely be interesting. It's not hard to imagine either; with the US FOMC meeting next Wednesday, I can imagine some selling leading up to that. Then it could continue to the downside for a bit.