Reconciling the Larger Count
Over the past week (and particularly this weekend), I’ve spent several long hours going through big picture counts on the major exchanges and sub-indices. I’m going to share my thoughts in a video (below), which looks at the final 5th wave of the NYSE, SP500, and NDX to see how they correlate and what the probable path forward is to a final top.
There aren’t any surprises, based upon the counts I’ve been presenting, but correlating two different exchanges that have differing structures (which have to top at the same time,), can bring with it some challenges — just staying on top of the changing counts.
Exchange counts can’t get out of alignment with their sub-indices on a grand scale, but the structures are often so different at market tops (where you can see non-confirmations, where volume is thin, and where there are forces are work trying to keep sectors up and prevent the inevitable crash), that it can be a real challenge keeping a valid count so that you can predict the probable outcome in a specific sub-index. All the attempts to avert the eventual market demise will fail, but the cool thing is, it doesn’t affect the Elliott Wave structure to a point where rules are broken.
Remember Elliott Wave analysis is all about probabilities, and you don’t have set-ups all the time, but it can be a valuable tool in identifying important inflection points and high probability outcomes.
It’s often extremely difficult to follow and atone for some of unexpected ups and down. However, in my years of technical analysis, I’ve learned that there’s a technical reason for everything that happens in the market. It’s a question of putting in the many hours it takes to do the work, uncovering the clues across several indices.
The big lesson here is (as I’ve been saying) is that you cannot be successful in market analysis if you’re not looking across the entire market in order to determine the highest probability direction of a single index.
The Big Picture Count
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)
This chart is posted to provide a prediction of future market direction. DO NOT trade based upon the information presented here (certainly NOT from a daily chart).
Above is the daily chart of ES (click to enlarge, as with any of my charts).
We've been sitting at the top now for about three weeks. As my Trader's Gold folks know, we've been in an expanding triangle for two weeks (this is an ending pattern).
ES has risen to well above 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 near inflection points.
As I've been saying over and over like a broken record, all major asset classes are moving as one. That requires them all to reach new B wave highs before they can turn down together. It's been like herding cats and has taken much longer than expected.
IWM (Russell 2000) still needs new interim highs before everything heads down in a dramatic capitulation — we're now about a dollar away from that top.
All these indices are showing signs of exhaustion, with gaps that are being left unfilled.
The next major move is to the downside.
The wave up from Dec. 26 is clearly corrective and, as a result, must fully retrace to the downside. This is supported by the US Dollar Index, the major USD currency pairs, WTI Oil, along with DAX, TSX, and other international exchanges.
Summary: My preference is for a dramatic drop in a C wave to a new low that should when all these asset classes I've identified have reached their targets. The culmination of this drop should mark the bottom of this 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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