World Cycles Institute

Finishing the Fourth

The Final Fourth

I’ve been quite vocal in the Trader’s Gold subscription service about my disdain for fourth waves. Of all the wave patterns (corrective and otherwise), fourth waves are the least predictable.

That’s because fourth wave patterns of this size are typically made up of combination sub-patterns (zigzags, flats, and triangles). You need to be able to decipher the pattern early enough to take advantage of it.

Our current position at the top of a 500 year bull market adds to the complexity of determining the sub-patterns and the structure of their waves, because it’s a fight between the bulls and bears and the volatility tends to be very high.

The most probable pattern for the SP500 and ES seemed to have been a flat (which I highlighted here last weekend), although with flats, the B wave needs to retrace 90% of the A wave. We didn’t quite get there. We turned early and in an area that was not a fibonacci ratio level, which is highly unusual.

The C wave of a flat comes down in 5 waves. I knew that the next most probable pattern to the downside was a zigzag of some sort and could likely lead to a combination (zigzag, flat, or triangle) but the highest probability was a drop in a manner similar to the C wave of a flat (zigzags are the most common corrective pattern).

Well, it did, but we dropped in a rare triple zigzag combination (REALLY rare!) Double zigzags aren’t that common, but triples are one of the rarest of combinations. On top of that, they’re notoriously difficult to predict when you’re in them. The waves appear relatively flat, which makes identifying the subwaves a real challenge.

My experience with them (which is somewhat limited because, well, they don’t show up often) is that you don’t really know until you’re in a “triple” until you’re in the final zigzag. That’s partly because flats, single zigzags, and triangles are so much more common.

Well, here we are near the bottom of a triple zigzag. We have further to go to the downside this week as we finish up this extraordinary, hard-to-trade fourth wave. The opportunity for a short is there for those so inclined; we need to reach a new fourth wave low.

Zigzags are corrective, so the prognosis, as I’ve been saying all along is reinforced by the fact that: We have a final 5th wave to go up to a new high. It looks like we might get the turn this week.

On the Nasdaq side, the jury’s out. We may have an expanded flat. The other option is an ending diagonal, but it’s very early to consider that option, and it looks like the C wave down will drop far enough to negate the potential of the ending diagonal pattern playing out. For the Nasdaq related indices, we’ll need to wait for the market to tell us where it’s ultimately going.

 Down They Come (as predicted)

Above is the daily chart of Tesla (TSLA). I’ve shown this chart before and there’s little change, other than the fact that it continues to move lower. This puts Tesla in the third wave to the downside which will drop to at least 216.45. There will be much more downside to follow.

I would expect the fifth wave down to reach the previous 4th wave at about 180.00. At that point, there should be a second wave bounce.

Above is the daily chart of Facebook (FB). Everyone’s talking about Facebook.

I’ve posted this chart a couple of times upon calling the top. Last weekend, I warned that the second wave was ready to keel over into a third wave, which it did. The third wave should reach 141.74.

A fourth and fifth will follow and I expect then to descend to the 115.20 area to complete a first wave down (of 5 waves) before bouncing into a larger degree second wave.

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The Market This Week

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).

Last weekend, we were looking for the top of the B wave of the fourth wave. We found it, but it didn't turn at a measured objective. It also didn't make the 90% plus level, so technically, it was not a flat, but it came down like a flat and still has more to go.

It will reach a new fourth wave low before turning up in the fifth and final wave to a new all time high. That will be the final top of the market.

The are multiple measured objectives for the turn—the more probable ones are identified on the screen

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{ 45 comments… add one }
  • Tom C. March 23, 2018, 6:58 pm

    energy chart for next week
    https://ibb.co/bT01zn

  • Verne Carty March 24, 2018, 1:36 am

    Thanks Tom! I was really confused until I noticed that you had noted on the charts that the pattern was inverted. I get it! 🙂

  • Jeff Trimble March 24, 2018, 7:20 am

    Peter T

    Thanks for the time you put into all the information. Please continue to comment during the week. I enjoy your input responding to the other contributors.

    • Peter Temple March 24, 2018, 7:51 am

      Jeff,
      I have rather heavy restrictions on my time right now, so it’s not always possible for me to pay attention to this area. It’s a high risk market at the moment, and it takes me much longer than normal to do the analysis I do daily for my Trader’s Gold members, along a similar challenge of prepping for the weekly Chart Show. But I check in here from time to time, or when there’s a major change in the market (or to my weekend analysis).

  • Ed March 24, 2018, 7:44 am

    Peter G,

    The “moon phasing” of which you mentioned on the very last post of last week’s thread allow for a +/- number of days on either side of the March 31st full moon?

    In other words, Could we encompass Joe Longwill’s April 4th potential low/turn date that he has mentioned several times?

    • Peter G March 25, 2018, 2:44 pm

      My mention of the moon phasing and its possible reversal of importance for new moon and full moon, Ed, simply came from the observation that this recent decline did not begin near the full moon as might be expected. I do not claim any further expertise on the matter. I know how important lunar phasing has been during previous market crashes and thought if the roles were reversed here, perhaps the March 31 full moon might prove to be a turn if we have panic selling into that time zone. I also remember the Puetz research I reiterated above that claimed that in prior crashes in the March-April time zones, all panic phases of selling were over by April 5.

  • Bill rider March 24, 2018, 7:28 pm

    Peter T,

    Don’t you think we go and fill 2750 gap first before going 2420 target.

  • Joe Longwill March 26, 2018, 4:16 am

    I don’t know much about the crypto ” tether ”
    I’m wondering though if it’s becoming a crypto us dollar ?
    Might be something to research anyways .
    Paragraph below borrowed from
    https://www.ccn.com/cryptocurrency-market-slumps-again-as-bitcoin-remains-below-8500/

    But, Ethereum has not been able to sustain a high daily trading volume. In fact, Tether, a cryptocurrency that is hedged to the value of the US dollar, has been the second most liquid cryptocurrency in the market, with a daily trading volume of $1.4 billion.

    Tether is always an interesting indicator to consider when evaluating the state of the cryptocurrency market because the vast majority of cryptocurrency traders use Tether, instead of fiat money, to hedge the value of cryptocurrencies.

    Binance, the world’s largest cryptocurrency exchange, process cryptocurrency-to-Tether pairings, allowing users to hedge cryptocurrencies in periods of extreme volatility. Often, abnormally high daily trading volume of Tether signifies instability in the cryptocurrency market, and an increase in the number of users hedging the value of cryptocurrencies to reserve currencies.

  • Joe Longwill March 26, 2018, 4:19 am

    Peter g
    Thank you for your input 🙂

  • Willem March 26, 2018, 8:12 am

    Hi Peter,
    Thanks for the info and I don’t know where I can get this (correct) information. So keep up the good work. I updated the website and Monday is the High and we start on the same day a (last) decline in to Thursday. http://www.prognoseus500.nl/

    • Willem March 27, 2018, 9:40 am

      Friday seems to be a (very) LOW after closing. Monday and Tuesday are up. But with a lot of volatility. Next LOWs can be 6th(watch the movement caused by the jobsreport that can be u hughe UP. If not the 10th cold be the LOW. My indicators stop there. I expect the LOW on Friday after closing. Monday and Tuesday it wants to go up But Monday is not much and for Tuesday it is still waiting

    • rotrot March 27, 2018, 9:45 am
      • Willem March 28, 2018, 6:35 am

        Hi Rotrot,
        Yes my age is counting – “I expect the LOW on Thursday after closing”.
        🙂
        Next week shows much volability

        • Verne Carty March 30, 2018, 5:20 am

          Yes indeed! I am expecting UVXY to blow past its 200 day for the first in a VERY long time… ?

  • Ed March 27, 2018, 1:07 am

    Joe,

    Any further comment on your A B C (A) mentioned last week? Do we need a new low over February or can it still be a A B C (A) without that low exceeding February low?

    Peter T is looking or was looking for that new low exceeding February’s low. I like it better when both of you agree.

  • Red Dog March 27, 2018, 10:52 pm
  • Joe Longwill March 28, 2018, 1:18 am

    Ed
    For what it’s worth .
    The Dow did make a new closing low below the
    Feb lows a few days ago . We got a huge rally that followed
    Yet with the April 4 date still ahead of us and the fact that
    We’re in a mercury retrograde cycle which tends to produce
    A low at its mid point ( this surrounds April 4 th as well ) and
    I’ll add Peter g input .
    I’d say Peter t is more on top of the wave count than I am.
    My bias is timing first and the wave count second .
    Peter t is a wave count first timing second ( my thought anyways )
    Markets tend to swing all over the place with mercury retrograde
    So the present market action should be expected .
    With only a few trading days to go ( 6 by my count ) I think
    It’s now time to start narrowing down where price matters more
    So than timing .
    I’m not a big moving average guy yet many traders do watch
    The 200 dma. Also I’d be looking at combinations of extensions
    Such as where does wave C equal wave A . Also I’d be looking
    At where any wave C equals 2.2 to 3.2 of any wave A .
    In short a break below the Feb lows on a print basis can
    Be considered as a completed A B C down or ( if we’re developing a triangle )
    I’d label it as A the Feb lows B the Feb highs and C now to below
    The Feb lows and that A B C would be labeled wave A .
    If this holds true then the minimum retrace is a poke back
    Above the Feb highs ( basis the Dow ) in a 3 wave move .
    The initial wave A of that bounce would fall short of the Feb highs
    The B wave drop would fail to make a new low and wave C up
    Would go above the Feb highs yet fail to make a new all time high.
    Take a look at nvda over the past few months .
    Also as a guide only look at the daily or weekly charts
    Of the nasdaq 100, the spx as well as the Dow in the year 2000
    I say this only because I see similar cycles today as back then.
    The difference today though is the nasdaq then vs now
    I’m heading home in a few days and will have more time
    To focus on the markets .
    April 4 to me is where this present Dow sub cycle ends
    But I am in no way bullish for the year. A decent bounce
    I expect yet come August-Sept the bearish cycles kick
    Back in in earnest. Expect a reprieve only .
    Note: another coincidence with the year 2000 ( Aug Sept I believe
    Was the monthly closing high in Spx and new all time high in NYA )
    Similar cycles at play back then as today .
    Follow the wave count in detail a low should be coming

  • John March 28, 2018, 2:26 am

    From today on I see us go up into April 3..

  • Ed March 28, 2018, 6:52 am

    Peter G and Joe,

    Does the noticeable pickup in 1% daily swings not to mention the 2-4% daily swings tell you anything about the future direction that we might expect? With limited price data it seems to me that 2008 had somewhat similar daily volatility.

    • Peter G March 28, 2018, 10:24 pm

      Typically, this kind of volatility is seen nearer market bottoms than tops, but don’t take that as a suggestion we are at a bottom. There is a pretty good indicator using Bollinger Bands BB and the VIX index. When the VIX closes above the upper BB, then closes back inside, that is often a good buy signal. It did that on Monday. But when it fails, it can lead to accelerated declines. If you want a further decline from here, then you want the VIX to close back above the upper BB and the indexes to close below their lower BBs.

      • Verne Carty March 29, 2018, 5:43 am

        Quite true about VIX and its B bands. There has been a huge change in that paradigm however, and that is where VIX is trading with respect to its 50 day SMA. Both VIX and UVXY are now clearly in uptrends with the latter challenging its own 200 day for the first in a very long time. The times…they are a’changing…!

  • Joe Longwill March 28, 2018, 7:17 pm

    Ed
    The crazy swings are indicative of mercury retrograde
    So I’m not going to make any claims here just going
    To say what my gut tells me .
    Possible washout to the downside coming next week then
    A rally. There is probably bullish divergences setting up.
    I have no idea where the 14 day rsi sits on the Dow yet
    It rarely has a closing below 30 let alone 27 .
    Price and wave count is going to matter as we enter next week.
    My thoughts for what its worth .

    • Ed March 28, 2018, 8:53 pm

      Thanks Joe!

    • Verne Carty March 29, 2018, 5:35 am

      Joe, just want say a big “Thank You!” for posting information with clearly stated REASONS, that even a non-astro ignoramus like me can understand! 🙂

  • Willem March 29, 2018, 7:14 am

    If I look to the big red line we shout be making a little HIGH before opening. Think abouth 8:30-9:00, then we make slowly and a faster going decline til nearly the end of day.
    If this is not O.K. I stop with this info.
    Still my indicators give this information

    • Peter Temple March 29, 2018, 10:45 am

      Willem,
      I think you’re correct, but I think the timing is off a bit. I see a big drop coming, but I think it will last through next week, starting perhaps today. What do you see going forward?

      • Peter Temple March 29, 2018, 11:09 am

        I found your charts page and that answered my question. Tks.

      • Verne Carty March 29, 2018, 9:07 pm

        I think Peter T is right on the money.
        They kept prices propped up until literally 45 minutes before the close.
        There were very clearly determined efforts to arrest any impulsive declines prior to close to the end of the session.
        I saw on the five minute chart shooting star double tops that were negated by a new high. Then a second shooting start that was again negated by a massive cash dump, and finally, an island reversal pattern that was followed by an impulsive wave down completing with about 30 minutes left in the session. We then had what appeared to be an expanded flat corrective wave two, and as the session was ending commencement of a third wave down. Absolutely incredible how precise the timing was. I have never seen anything quite like it.
        I was also expecting an earlier reversal but if that summary is correct, futures should confirm start of the third wave down for Monday, and Peter T’s expectation for a steep fall most, if not all of next week. Have a great week-end everyone, and yes it was good to see LizH back. I will go check out those moving averages.

        • Peter Temple March 29, 2018, 9:13 pm

          Uh-oh, just as I’m changing my prognosis. I do think we have a wave down, but in a smallish, bullish contracting triangle, and then I think we’re going into a larger contracting triangle to finish this fourth wave. It’s been one bugger of a fourth wave to figure out. As I’ve been saying to my subscribers, I think NQ is in an ending diagonal, and if that’s the case, the turn up in ES/SPX should be this weekend or Monday. Check the RSI. More on the weekend.

          • Peter Temple March 29, 2018, 9:16 pm

            Yeah, I caught that little wave down. It was a perfect impulsive wave down (each segment measured perfectly). Then a second wave up exactly 62% … and then a “three.” And out I got!! Yikes. Big sign there.

          • Verne Carty March 29, 2018, 9:42 pm

            Yes it was intetesting the cash indices all took out the initial impulse low but ES failed to do so. An intetesting divergence so I am hoping the cash session is trailblazing…

  • John March 29, 2018, 11:31 am

    I see a top on April 4, and a bigger one April 11.

    • Peter G March 29, 2018, 5:44 pm

      Dear John, (Yes, it’s a Dear John letter:) )
      Just a day earlier, you said a top on April 3. Now you “see a top” on April 4. I don’t know if others agree, but unless you share info on reasons why “you see,” the information of what you see is of very little benefit. Are your tops based on cycles, on astros, on gut feeling…what?? Please elucidate…

      • Verne Carty March 30, 2018, 5:06 am

        It would indeed be helpful to forum reader if opinions were accompanied by facts and reason.
        Petter T is short term bullish BECAUSE he saw what he believes to be a corrective three in ES instead of an impulse. I am bearish BECAUSE I saw a clear imlulse down from tbe highs, a 62% corrective expanded flat for a second wave, and a movement below the end of the impulse in all the cash indices just before the close. While ES did not make a new low, I consider the long wick to also be sigificant as it has of late been in most cases reliably signaling imminent reversals. Recent market action has clearly been designed to shake out weak hands holding non-conviction bearish positions. Just one man’s opinion!
        Did anyone else pull down ten-bagger in Tesla? Wow!! ?

    • Liz H March 29, 2018, 7:29 pm

      John, I can understand why you said 4/10 as a swing high. Probably the same reason why March 13 was a swing high? April 5 too as a possible swing high (I see it in another fractal but as a dead cat bounce) but I’m apprehensive.
      Go to SPX chart, plot the following SMAs: 20, 50, 100, 200.
      Now look at Aug. 5 to 7, 2015 and compare it to March 21-23.
      Then look at the consolidation from Aug. 10-14, 17, 18, 2015 and compare it with the consolidation from March 26. Stay safe.

      • Peter Temple March 29, 2018, 8:06 pm

        She’s back! Yey!

      • Ed March 29, 2018, 9:42 pm

        Liz H,

        Very interesting!! Thanks for sharing! Post more!!!!

  • Joe Longwill March 29, 2018, 6:11 pm

    Verne
    Your welcome 🙂
    I am looking forward to being home and being able to look
    At the internals of this market .
    I look at things such as , the 10 dma of the daily $TRIN
    I like to see a closing above 1.40 to give an overbought reading and
    Then a close back below 1.40 to give a buy signal .
    As for the NYSE $add , I have noticed that some data sources give different
    Readings yet for me I like to see a 10 day moving average below neg 1000
    And also prefer to see bullish divergences near bottoms . A typical low in the market
    Would be with the 5 day or 10 day moving average turning up yet the Dow
    Having a down day .
    Additionally I use several occilators that I cannot see .
    The 14 day rsi is also included
    Then it’s price
    With no internal data I only have time to go by so until next week
    My thoughts are just opinion .
    I need the data to prove my timing

  • Joe Longwill March 29, 2018, 9:33 pm

    Not sure if I overlooked this or if it’s true
    Link posted
    Is this actually true ?
    https://www.inc.com/minda-zetlin/super-blue-blood-moon-eclipse-is-tomorrow-morning-heres-why-its-worth-setting-your-alarm.html?cid=sf01001&sr_share=twitter
    The “Super Blue Blood Moon” happens very early tomorrow morning, and if the skies where you live are clear enough, it’s probably worth dragging yourself out of bed a bit earlier than usual so you can see it. As you probably know, the term “blue moon” merely means the second of two full moons in a single month–tomorrow morning’s moon won’t look blue at all. But it will look blood-red, thanks to the rare combination of a lunar eclipse and a “supermoon”–a full moon that’s closer than usual to the Earth and thus appears large (although in this case it won’t look that much larger than normal).

    The entire eclipse event takes several hours, as the moon passes first through the outer part of the Earth’s shadow, and then the penumbra, or darker part of the shadow, which is what turns it red. It will be visible (weather permitting) in the entire United States, and parts of Australia as well. If you live in the United States, here are the best times to watch, according to a handy timetable published by The New York Times. (You can also find very detailed information about the lunar eclipse in your specific location here.)

  • Joe Longwill March 29, 2018, 9:38 pm

    I question the term ECLIPSE in the above not the full moon .
    Nothing else to comment on at this point .
    Staying hedged and will make my trading decisions next week

  • rotrot March 30, 2018, 4:01 am

    https://worldcyclesinstitute.com/still-counting-on-a-flat/#comment-28759
    Winski made it clear that he expected a change-in-trend after the market close on March 29…we shall soon find out…

  • John March 30, 2018, 4:56 am

    Hi Liz, nice to see you back.

    Peter, my dates are based on astro cycles and April 3 or 4 one of these dates..
    Look what happens with the AEX, the SP follows… just like the low on March 28.
    We made that low in the morning. Also the top on March 22.

    Good luck to all have a nice Easter.

  • Verne Carty March 30, 2018, 5:12 am

    For the astro experts, would one expect market highs to accompany a full moon? And would a super moon imply a more significant high?

  • Peter Temple March 30, 2018, 3:08 pm

I welcome questions or input about Elliott Wave, cycles analysis, or astrological input relating to any market. However, due to a heavy schedule, I may not have the time to answer questions.

I reserve the right to remove any comment that is deemed negative, disparages the Elliott Wave Principle, is otherwise not helpful to blog members, or is off-topic.

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