Just one of the numerous ways of counting and projecting the recent SPX price action. In this one, price would stay sideways for much more time, inside a larger flat or some EW combination pattern, forming a classical rectangle, this way supporting a larger long term uptrend.
... but is not confirmed by the patterns on RSI or MACD both of which show rising highs instead of diverging highs which is what one would expect in a wedge.
mikeoakster
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Exactly.
And the first wave of y is a five.
kunsan
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I agree that the whole thing is a sequence of threes, and there are too many possible counts to make one confident of any position. You might be right, or there are a number of other alternatives that might also be right. Personally I've chosen to stand aside and wait for a pattern that gives a high probability of success. That might be in a few days, a few weeks or a few months... Until then I think it's just a guessing game.
mikeoakster
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That is probably wise for an investor, not necessarily for a trader...
kunsan
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@mikeoakster, I've seen many people count that first wave as a five, and it might be of course. But I've looked at it many times and I see a three where c=a. My feeling is that we are rising in threes, not fives, and might be trying to trace out a large rising wedge that will take the market to a marginal new high in the 2890 area. If so, what we've had so far is a small three to 2791 with higher readings on daily MACD and RSI which suggests a higher high to come which I think might be wave c of abc making large wave A (or 1) of a rising wedge. If SPX falls over the next week or so to overlap the previous peak at 2742 (and does so in falling wedge format) then that will be enough I think to confirm that we are in overlapping threes.
Hope you don't mind me sharing these thoughts.
mikeoakster
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Hi, kunsan. I appreciate your comments.
Where does your sequence of threes start? Are you considering a triple zigzag as a possibility to reach new highs, is that it?
kunsan
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Mike, my basic belief is that a 4th wave triangle ended at 2595 (your point 'x'). However this was not wave 4 of 5, but wave iv of 3 of 5. The proper wave 4 of 5 (from the 1811 low) should be a new marginal high in the 2890 area.
From the end of the triangle (point x) I think we've seen a three wave upwards advance, which will be confirmed if the current correction falls to overlap 2742 (I see wave 'y') as a three.
To reach a new marginal high I suspect (but don't actually know of course) that the market will trace out a rising ending diagonal. Wave 'y' is the first part of that diagonal, now we're in wave 'b' (or ii) which will be confirmed by overlapping 2742. This wave 'b' needs more time, perhaps another week or so and might extend down to 2720 or even 2700. After that, we should get the next part upwards in the rising wedge.
The higher highs on MACD and RSI daily suggest higher prices to come, and a rising wedge should show declining peaks in the MACD and RSI.
All of this is pure conjecture of course.
Oh, and if this proves to be correct, we have a larger 4th wave decline to come after the new marginal high, which could be short and sharp.
mikeoakster
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Now that the current drop has invalidated the nested 1-2 count, your ending diagonal could be a possibility.
mikeoakster
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Correction of the degree labeling at the diagonal: