Forecasting the Top

Elliott Wave Theory has a poor timing component to it. Mostly it’s used on a grand scale “after-the-fact.” I find that it has little predictive capability. So, it’s best to rely on other cycles data to get a sense of where the top of the market might be.

Looking at the subwaves in the contracting fourth wave triangle that seems to be tracing out now, and based upon the length of the waves in place so far (time-wise), I can see a top forming at the end of May.

Drawing on the Bradley Siderograph data, which is freely available online, I see there’s a potential turn coming up around the June 9, 2018 time period. This may coincide with the top of the market, as it seems to sync with my Elliott Wave forecast.

This could result in a “crash” in the early to mid part of September. This is highly speculative, but presents a scenario that is reinforced from two technical tools.

Above is the 2 day chart of the SP500. We’re  currently in the final fourth wave (an unconfirmed contracting triangle — will be confirmed once the D leg up is complete (see the daily chart below of ES).

At the moment, my measurements suggest the top of the fifth wave may be 2960, but let’s round that off to 3000 for a sake of this simulation. In this case, a first wave down in 5 waves will likely drop to just below the 1800 level.

Once this impulsive first wave down is complete, a second wave (in three waves) should trace out to the 62% level, which in this case would be about 2,500.

In the event that we achieve a final top at the end of May, or early June, this sets up a potential third wave crash for September. The first and second wave sequence can easily take two months to unfold (the timing here is somewhat speculative, of course).

The eventual multi-year drop may trace out similarly to 1929-33. In that case, it may look somewhat like the chart below, extending over a longer period to about 2022.

Above is a daily chart of the DOW for the period 1929 – 30. showing a large portion of the ABC wave down that ensured after the top was in. The C wave in the chart is not complete, having eventually bottomed at about $41.00.

You can see that in this chart, the top of the market was in the beginning of September, while the “crash” didn’t take place until a couple of months later (Oct 24). However, the bubble this time around is very much larger, so we may see more time in required for the fulfillment of the wave i/ii requirement after the top.

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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).

On Friday, the fourth wave of the C wave of this D leg of this contracting triangle we appear to be in, dropped to within 3 points of my measured target (2657) and then turned up. Expect a continuation up from here.

The large fourth wave contracting triangle continues to play out, as predicted. I've been projecting about a month (or a bit more) left is this topping process, but the length of time this D wave has taken to trace out is pushing that date back slightly. The Bradley chart above might be closer to the truth.

The target on the upside remains 2780 and the action the latter part of this week certainly support a full wave to the fibonacci target (I address this under the 60 minute chart, below).

I would expect the next wave down (after we reach the 2780 area) to be much quicker, as this market is so near the top (we're seeing a lot of underlying weakness).

After the E wave down is complete, we'll take off again to the upside in a fifth wave, which will simply finish off the pattern. We'll get to a new high and probably more, but don't expect (as I've been saying for a very long time) a large fifth wave that travels any great distance.

Over the next week, we have the fifth wave left of the C wave of the D leg of the contracting triangle.

Summary:  We should head up this weekend in a fifth wave of the C wave of the D leg of the contracting triangle. This fourth wave triangle has the balance of the D leg, the E leg (down), and a final fifth wave to a new high left. That fifth wave up to a new high will be the end of the 500 year bull market.

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