I’m expecting an imminent downturn in the US indices, and just about everywhere else.
The small fourth wave from the week before last took 5 days to the downside. I predicted that the fifth wave up would take a similar amount of time, projecting a top either this past Friday or that it could last into Monday. Here we are.
Look for a turn down very early in the week (if we haven’t topped already).
Above is the daily chart of the SP500. (click to expand)
I’ve labelled a possible flat in progress, showing a purple circle A, B, and C label on the chart. The C wave target is shown at 1.618 X the purple (A) wave, but the guideline is that the C wave can extend to 165% of the A wave.
The pattern to the downside can also be a set of zigzags. Less probably options are a triangle, or an ending diagonal.
The count on the upside is complete. Currency pairs are been oscillating up and down for weeks, as has oil. The US Dollar Index has retraced 62% of the previous wave to the upside and is ready for a turn up.
Everything is lined up (or almost lined up) for a turn. It’s now up to the market to follow through.
Elliott Wave Basics
Here is a page dedicated to a relatively basic description of the Elliott Wave Principle. You’ll also find a link to the book by Bob Prechter and A. J. Frost.
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US Market Snapshot (based on end-of-week wave structure)
Here's the latest daily chart of ES (emini futures)
Above is the daily chart of ES (click to enlarge, as with any of my charts).
We're still sitting near the top of a B wave that's risen to about the 76% level of the height of the previous set of waves down from the all-time high at October 3, 2018. Almost all the other assets I cover on a daily basis are hovering at inflection points. The "greed factor" is elevated as we've all but finished a small 5th wave up to a new high at about 2836.
The next major move is to the downside.
After a fourth wave down last week, this week, we tracked a small fifth wave to a new high. I'm unsure of the short term direction (whether we have one more slight high to go) but other than that, this corrective pattern up is done.
As I've been saying, the wave up from Dec. 26 is clearly corrective and, as a result, must fully retrace. This is supported by the US Dollar Index, the major USD currency pairs, WTI Oil, along with DAX and other international exchanges.
Summary: My preference is for a dramatic drop in a C wave to a new low that should begin this week. The culmination of this drop should mark the bottom of large fourth wave in progress since January 29, 2018 - over a full year of Hell. It may be a dramatic drop that lasts multiple months, and will target the previous fourth wave area somewhere under 2100.
Once we've completed the fourth wave down, we'll have a long climb to a final new high in a fifth wave.
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