Good morning!
S&P has reversed. I fact it topped back in May which I correctly forecasted using MSFT stock, but more proof is coming this week. I just wanted to share the full labelling starting from 2000 - quite interesting to look at it.
One thing that is striking when we look at the structure: there has been no upward looking impulse since we topped in 2000. All that we are observing is a set of three-wave structures contained within one another.
Three-wave structures are weak "chess pieces" - they can be consumed by the market very fast - meaning that they are usually substantially or fully retraced.
The dominating structure in the present setup is a flat, and I wanted to review its properties from EW perspective:
A flat consists of three waves A, B, and C:
- Wave A is a three-wave structure
- Wave B is a three-wave structure
- Wave B ends at or near the start of wave A (meaning that it's long enough, often even overshooting A)
- Wave C is an impulse
- Wave C is usually 1.382 or 1.618 of A
- Wave B usually ends at 0.886 retracement A, otherwise may extend to 1.382 or 1.618 of A.
We have all those rules in place for the structure that's forming since 2000:
- We started with a flat structure between 2000 and 2008, which ended with an impulse, delivering a 3-3-5 pattern of a flat. This is our wave A.
- Then we went on and advanced to the present highs in what's so far has been a zigzag. This is our wave B. It's been long enough, brought us to a new high, most people even think that this is a true advance. So far, however, it's been just a three wave structure - a weak one.
- Wave B advanced to precisely 1.618 of A. An impressive tendency to stick to fib rations!
- What's left is an impulsive wave C, which is hopefully starting right now, as we speak. Wave C should be large enough to substantially retrace the whole structure.
Given all of the above I believe there is a lot of downside in S&P in the next year. We can easily see S&P reduced in half, drop below 1000 or lower. In the beginning we need to watch the price action that will unfold in the next couple of months- we are first supposed to retrace wave 5 of the last advance, bringing us to approx. 1800, then there will be some sort of a deep correction, and then much more downside.
S&P has reversed. I fact it topped back in May which I correctly forecasted using MSFT stock, but more proof is coming this week. I just wanted to share the full labelling starting from 2000 - quite interesting to look at it.
One thing that is striking when we look at the structure: there has been no upward looking impulse since we topped in 2000. All that we are observing is a set of three-wave structures contained within one another.
Three-wave structures are weak "chess pieces" - they can be consumed by the market very fast - meaning that they are usually substantially or fully retraced.
The dominating structure in the present setup is a flat, and I wanted to review its properties from EW perspective:
A flat consists of three waves A, B, and C:
- Wave A is a three-wave structure
- Wave B is a three-wave structure
- Wave B ends at or near the start of wave A (meaning that it's long enough, often even overshooting A)
- Wave C is an impulse
- Wave C is usually 1.382 or 1.618 of A
- Wave B usually ends at 0.886 retracement A, otherwise may extend to 1.382 or 1.618 of A.
We have all those rules in place for the structure that's forming since 2000:
- We started with a flat structure between 2000 and 2008, which ended with an impulse, delivering a 3-3-5 pattern of a flat. This is our wave A.
- Then we went on and advanced to the present highs in what's so far has been a zigzag. This is our wave B. It's been long enough, brought us to a new high, most people even think that this is a true advance. So far, however, it's been just a three wave structure - a weak one.
- Wave B advanced to precisely 1.618 of A. An impressive tendency to stick to fib rations!
- What's left is an impulsive wave C, which is hopefully starting right now, as we speak. Wave C should be large enough to substantially retrace the whole structure.
Given all of the above I believe there is a lot of downside in S&P in the next year. We can easily see S&P reduced in half, drop below 1000 or lower. In the beginning we need to watch the price action that will unfold in the next couple of months- we are first supposed to retrace wave 5 of the last advance, bringing us to approx. 1800, then there will be some sort of a deep correction, and then much more downside.
