intelligent_investing
Short

S&P500: to impulse or to not impulse that is the question!

SPCFD:SPX   S&P 500 Index
Two weeks ago I shared my view on the TVC:SPX in that it was either following a standard impulse patterns higher or it was following an ending diagonal pattern. I mentioned back then "The first sees (grey) minute-iii complete soon then wave-iv (orange target zone) and then wave-v to complete (green) minor-3." Ideally I would have liked to see wave-iv reach TVC:SPX 3075-3040, but all we got was 3091 though this pullback materialized indeed "soon" as the low was in three days after my update was posted... So, the pullback was right on cue, but shallower then anticipated. It happens, as it's impossible to get it right all the time, and note the TVC:SPX is now already trading at the same level as two weeks ago: 3115... In addition, because the pullback was so shallow the subsequent rally fell also short as an ~100p rally would have been ideal but "all we got" was ~65p. This is common, as it means too many buyers jumped in at these higher levels, causing buyers exhaustion (i.e. when everybody has bought/is long, all that's left to do is to sell/go short).

So, although the jury is still out there on which of the two larger patterns is evolving, we now know the market did five waves (grey, minute-i,ii, iii ,iv,v) up off the October 3 TVC:SPX 2855.94 low, completing (green) minor-3/c. The 3 is for the impulse, the c label is for the diagonal. So the Bulls want to see the green "alt: 4" complete at ideally TVC:SPX 3042: the 100% retrace as in a standard impulse pattern wave-3 often reaches the 161.80% Fib-extension of wave-1, measured from wave-2 , and then wave-4 should drop down to the 100% Fib-extension before wave-5 does (ideally) a nice 5=1 extension to the 200% Fib-extension. The latter is in this case at TVC:SPX 3229. So, last night the Futures market reached TVC:SPX 3158, which is exactly the 1.618x extension and started today's decline. A BINGO for the standard impulse pattern so far. This patterns is exemplified by the orange arrows. Ultimately, price will need to move and close below last week's low at TVC:SPX 3091, to confirm wave-3/c has completed, but the daily charts look weak, market breadth is negative, and sentiment readings have been frothy for weeks, so all suggest this should be accomplished over the next few days.

The alternate is that we thus only saw three (green) minor waves up and that completed (red) intermediate wave-c of the diagonal, and wave-d is now underway. Note, I label the diagonal in letters to distinguish it from the impulse. Price will have to move and close below TVC:SPX 3040 and especially below 3022 to tell us the diagonal pattern is in play. Thus there's still some ways to go... If that happens, then the current decline will be labeled as red wave-d and it should drop to ideally TVC:SPX 3005+/-15. Now that still means there will be at a minimum a wave-e to complete (black) major wave-3 at around TVC:SPX 3200, followed by another wave-4 and 5 (grey arrows).

Thus, the current decline is one way or another still a great buying opportunity, and we'll just have to monitor the price action carefully to better determine when and where this musical dance of chairs ends.

Trade Safe!
it should be noted that the gap on SPX/SPY at the 2940/294 area has not been filled. This is relevant because historically this index does not leave gaps open of such size for any extended period of time. Part of me still believes the 5 waves up from the December low, followed by an abc, followed by what looks like a 3-3-5 is just a larger corrective B-wave up in either an expanded flat or a running flat that began in Jan,2018. At this point then the C leg of said flat would need to commence in this area and be 5 definitive waves down. It'll be interesting regardless.

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intelligent_investing VelvetHammersTrading
@VelvetHammersTrading, Yes, I've seen this count before (Gilburt et al featured this count for the whole year now...) Here's my take: it can be right but most likely not.Why? This count has required to move the goal post further and further north each and every day. At some point one has to then realize it is not correct or very low odds (remember insanity is doing the same thing over and over again, expecting a different outcome..?!?). Also, this count requires a massive 700p correction. Such large corrections are always foretold by diverging readings in (at least) the weekly NYAD. Like there was in September 2018 and July 2015. Now there's no such divergence. Thus don't expect a large correction. Remember it is all about the probabilities of possibilities and it is up to the market forecaster to pick the most likely scenario. In addition, the markets trend up longer term (otherwise what's the point of having a stock market in the first place...) So this means that one's Elliott wave basis is always to five waves up and three waves down. I've shown in my recent updates this five waves up sequence is clearly developing so that should be your basic/preferred count. Thus, based on the weight of the evidence this larger ABC count is the least likely and I've therefore abandoned it months ago. When i did that it became much easier to track and forecast the markets, which my premium members have benefited from obviously. This then in turn tells me it was correct to but this count way back on the back burner.
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nice chart.will see
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