Headlines scream "Worst December since 1931" while anxiety returns for investors. Where does today's decline fit in the big picture? What expectation can allow for individual planning and risk management to navigate potential turmoil? In this week's chart I zoom out for perspective and provide milestones to monitor.
Applying Elliott Wave to estimate market movement provides a basis for estimation of potential outcome(s). October's corrective process has a purpose and evolves by upeeling layers of prior upward wave movements. The most common correction after wave 5 is to return to wave 4 of the lower degree. A cascading process helps explain why declines are met with contra-trend bounces, but are then followed by further declines.
My charts reflect colored layers for target areas of cascading declines. They reflect unraveling of upward wave degrees from 11/2006, 2/2016 and then 3/2009. Of importance are the areas below the lower degree wave 4 levels (Feb 2018 and Feb 2016). At present the process has corrected for the upward move since 2/2016 by returning to wave 4 (2/2018) as indicated by wave A. Support can be expected briefly for wave B and the process should resume downward to address the move since 3/2009 at the area at 2135 or below (orange line).
Comparable strength of to previous declines helps with identifying the magnitude for expected price change. I use PPO to compare intensity across time periods as indicated by the yellow arrows at bottom. The current decline has not reached the same depth as corrections in 2/2016 or 8/2011. Expectation is those levels will be reached as the current correction unfolds.
I wrote back in late October and early November about how comparing declines to previous gains helps with perspective. This week's chart zooms out to reflect how small the current correction looks in context of the upward move since 2011. It also provides reference for further decline in context of the target area of wave 4 of the 3/2009 upward move.
On a housekeeping note:
Whether selling or buying, planning and targeting are essential parts of risk management and strategy. Applying them to your personal situation is a must.
Applying Elliott Wave to estimate market movement provides a basis for estimation of potential outcome(s). October's corrective process has a purpose and evolves by upeeling layers of prior upward wave movements. The most common correction after wave 5 is to return to wave 4 of the lower degree. A cascading process helps explain why declines are met with contra-trend bounces, but are then followed by further declines.
My charts reflect colored layers for target areas of cascading declines. They reflect unraveling of upward wave degrees from 11/2006, 2/2016 and then 3/2009. Of importance are the areas below the lower degree wave 4 levels (Feb 2018 and Feb 2016). At present the process has corrected for the upward move since 2/2016 by returning to wave 4 (2/2018) as indicated by wave A. Support can be expected briefly for wave B and the process should resume downward to address the move since 3/2009 at the area at 2135 or below (orange line).
Comparable strength of to previous declines helps with identifying the magnitude for expected price change. I use PPO to compare intensity across time periods as indicated by the yellow arrows at bottom. The current decline has not reached the same depth as corrections in 2/2016 or 8/2011. Expectation is those levels will be reached as the current correction unfolds.
I wrote back in late October and early November about how comparing declines to previous gains helps with perspective. This week's chart zooms out to reflect how small the current correction looks in context of the upward move since 2011. It also provides reference for further decline in context of the target area of wave 4 of the 3/2009 upward move.
On a housekeeping note:
- The Butterfly harmonic has been removed as the target was reached as expected (2417).
The corrective wave ABC has been expanded to illustrate the correction's full expectation now that wave A is nearly completed.
The 50d sma remains below 200d sma.
The lower trendline from 8/2011 through 2/2016 has been breached indicating risk of further weakness.
Whether selling or buying, planning and targeting are essential parts of risk management and strategy. Applying them to your personal situation is a must.