Update (after the bell, Thursday, Jan 14)
Above shows the dilemma we have as at the end of the day on Thursday. Above is a one hour chart of the SP500.
I’m showing the “mess” as the top as a truncation of wave 2 up. Wave (5) on the chart is the truncation wave. If this is the case, the next wave down would be wave (1) yellow (although it’s a corrective wave). Then we had an ABC flat up to the top of wave (2) yellow. That would make this wave down wave (3) yellow. To make the crash scenario feasible, you have to decide that wave 1 is a truncated wave and therefore doesn’t need to be motive. Because, is certainly is not, and this crash scenario requires motive waves.
I have also placed the ABC blue letters to show the the wave (3) yellow down actually reads better as a corrective wave. However, if we disregard that mess at the top and pretend we have wave 1,2,3 down, then the next wave down would be 5 and retrace to either 38% or 62%. I’ve placed these two levels on the chart (horizontal lines). This crash scenario all depends upon a truncation having taken place with wave (5).
That aside, if we have a traditional wave 1 (full wave) configuration down, then we may get a very large wave 5 down after a 38% retrace. So our watchlist going forward is first to see if the market turns over at about 1967. This is my preferred count, based on us having experienced a truncation (it is dependent on the scenario with the NYSE below).
I’ll have a fuller update on the weekend with a video.
If wave 5 turns at 38% (we may see that happen tomorrow), it would lead to an even more important update on the weekend.
Let’s take a look at the NYSE tonight. This is the 4 hour chart.
It shows much the same setup as the major US indices. However, it’s not really tradable and so (as far as I’m concerned) doesn’t show the animal spirits that the others do and on top of that, is far larger. In fact, it’s the largest stock market cap in the world. I tend to give it the weight it deserves.
Bob Prechter came out today with his monthly Theorist, in which he described in deprth the same two possibilities I’ve outlined here (either the start of a crash, or a fourth wave triangle to a new high). He’s leaning towards the larger fourth wave triangle and a new high. You can find my charts and video scenario on this scenario below.
However, the NYSE has come down too far to make the fourth wave triangle a viable alternative. I always look to this index to give me the truth, and it’s the reason I’ve now discounted the triangle and gone back to the truncation, which is the only thing that makes any logical sense to me from an Elliott wave count perspective.
This is why my preferred count is a smaller fourth wave retrace to 38% with a fifth wave down on the immediate horizon. The next option is a rise to the 62% level, but let’s handle that scenario if we get there, because that would put us in the area of the first wave, which is a hard Elliott wave rule, meaning it’s not allowed.
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Update (After the Bell, Jan 11)
Above is a 4 hour chart of the SP500 showing the symmetrical triangle left after today’s session. Not that much has changed. If the D wave is .618 X the B wave, which is typical, then the target for this wave (a wave in 3) should be about 2057 in the SPX.
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Original Post (jan 10): The last week (from December 31) has been a challenging week in terms of the conflicting signals in the market. I knew the market was coming down, but with the structure, also knew that it was NOT a terminal drop. In other words, the Elliott Wave structure (waves in 3) has been telling me we’re going to retrace this wave down. It’s been frustrating figuring out the ultimate structure.
Before the new year, the US indices suggested a truncation, because the flat (3-3-5) combination which seemed to be unfolding from Aug. 24 did not complete the fifth wave. In fact, it made a textbook truncation at the previous high. But the wave down was then in 3 waves (after a truncation, the wave down should pick up the original market intent, if heading down in a trend, and be in 5 waves, signalling it was a motive wave). It was also not long enough and came down in a tentative manner—suggesting other than a motive drop.
Finally, on Thursday, the market showed its hand and I suggested a fourth wave triangle. On Friday, it all but confirmed that idea by continuing the drop, which I forecast, but coming down to a level that is a perfect C wave level, as the next wave up (wave D of the triangle, which should be .618 X the length of the A wave) projects to a symmetrical level—right where it would hit the top triangle trendline.
I’ve put together a video that explains the big picture and the reasons for going with a triangle and a new final market high, something that was not possible with the flat (3-3-5) pattern. Only a triangle of some sort will allow for a new high, which is projected to be both very weak with a 5th wave that should be very short in time.
If we turn up on Sunday or Monday from here, the triangle will be confirmed. If we continue down, something else is happening. At this point, I don’t know what else that something could be.
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Make sure you zoom the video to full size with frame expander (arrows) in the bottom right hand corner and also set the quality to as high as your web connection allows. This is an HD quality video so the best viewing is at that level. |
Here’s the four hour chart of the SP500 with the triangle’s projected path drawn in. You can see that what we have here is perfectly symmetrical, which a typical fourth wave triangle should be. You can also see that I’ve used the fibonacci retracement tool to measure the elements of the C wave. The extension from the first three wave combination of that wave ends right at the current bottom of the wave, suggesting an end to the wave. The other indices have similar fibonacci wave relationships.
We are also deeply over-sold (you can see the Wilder RSI reading below the chart) and the level of bullish sentiment is in the single digits, suggesting a turn is due.
Note the the next major cycle turn is at Jan 27-29, which in my time projection, seems like a match for the playing out of the balance of the wave.
Triangles in the fourth wave position forecast the end of a major wave. There is only one wave that follows a fourth wave triangle.
At .618 X the length of the B wave up of the triangle, the target for a D wave should be 2068-70.
Good trading while we wait to see. In any event, this market is on life support.
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New post with a video of the bigger picture: https://worldcyclesinstitute.com/on-life-support/
From André (from the end of the previous post.
“A cit in the weekend will cause a low early morning Monday CET. Then up into Tuesday evening, some 2 hours before the close on Wallstreet. Then down into a lower low (sun000merc) one hour before the opening of Wallstreet. And then up again into Fridaynight as the turn comes Saturday. Overall we are down into 1/28-29; I think.”
Thanks as always.
Great report.
Hi Peter
Excellent update ,
Have you taken a look at the russell 2000 ?
its futures symbol is TF , im looking at it tonight as well as the ym futures
The ym futures broke below my 16155 target which concerns me short term .
the TF ( russell 2000 futures ) has a target of 1025.38-1016.50
at the moment its at 1037 and change . not far to go .
this leaves somewhat lower prices . yet i do agree that we are near a bottom .
ive lowered my cash dow target to 16025.04 ( 16025-15950 ) which is 321.46 points lower than Fridays close ( roughly 2 % from Fridays close )
i cannot make any bullish case that is valid below those levels .
the jan 20th date im going to stick with until proven wrong yet
many indicators are giving warnings of a low yet not everything is lined up .
im staying flat for the next few days unless i see something to give me a bias
to get long .
my gut tells me the sept 29 low at 15942.40 may get taken out before a turn higher
yet that is also based on a typical triangle pattern and the overlaps not anything mathematical . 8 trading days to go .
Joe
George Lindsay was the most consistent market forecaster in our time.
My concern with this market is based on these parameter.
Lindsay characterized the “three peaks” process as one of rapid advances in brief spurts between which the market goes through long stretches of consolidation. The tops are typically somewhat “rounded or flat,” and the tops usually occur within a similar price range perhaps with a slight upward bias. According to Lindsay, the entire “three peaks” process typically lasted eight months.
After the third peak (at point 7), a rather severe downtrend begins. It is called the “Separating Decline” because it separates the “Three Peaks” from the formation that follows. This decline usually encompasses at least two selling waves, labeled from point 7 to point 8, and point 9 to point 10. The decline eventually achieved at point 10 is always at a lower level than either point 4 or point 6, and usually lower than both. Unless at least one of these lows is broken, one cannot label this formation as a “Separating Decline.”
A new advance and overall formation begins after point 10. It is the beginning of Lindsay’s “Domed House.” After a sharp reverse from the point 10 low, first there is a small requisite double test of that low. This transpires during the period labeled points 12 and 14 (which in traditional Elliott wave analysis terms would typically be labeled Wave ii of 5). After point 14, the market shoots higher into point 15. Lindsay labeled this advance the “Wall of the First Story.” Elliott would undoubtedly have called it a wave iii of 5. The “Roof of the First Story” follows, and typically takes the form of a flat or expanding zigzag with at least 5 reversals (down into point 16, up to 17, down to 18, up to 19, and down to 20). After the fifth reversal is achieved at point 20, the main uptrend is resumed into what Lindsay referred to as the “Wall of the Second Story.” In Elliott terms, the diagonal triangle would of course be labeled a iv of 5 wave, and the “Wall of the Second Story” would be the beginning of the final v of 5 advance.
The advance that begins at point 20 has one major hesitation at point 21, a potentially sharp decline into point 22, and then a final rush up to point 23 before quickly falling back to point 24, retracing practically the whole move from point 22 to 23. Prices hold up and typically rally a little until point 25, leaving an imaginary line that could be drawn through points 21 and 23 that marks the edge of the “Roof to the Second Story.” Falling back from point 25 and penetrating this line leaves an overall formation that suggests a cupola or small dome on top of a building, and thus the reference to a “Domed House.” In traditional technical analysis, one might often hear this referred to instead as a Head and Shoulders top.
A significant and lasting decline then commences immediately thereafter.
Joe
The problem with short term elliott wave is that it can be viewed either up or down. I have called this a one,two for weeks and been heavily short. But, am covering this morning because of option week. Plus there should be a rally back to about 17100-200. Please read RAMBUS on kitco commentaries. He does a different charting method and his current opinion is opposite from yours. But, he is also calling for a current rally. The only question is how far. Also, please find and listen to Peter Eliades and his latest on market history and the 33 year cycle. Tim Wood, the dow theory analyst, has huge long term down objectives. SCARY!!!
I completely disagree, of course.
To all my loyal readers and supporters. Thanks for being here and for the camaraderie. I’ve decided to cut back my time on the free blog.
My original intent was to help visitors understand Elliott waves (and how to use the principle for themselves), as well as forecast the market. However, there are far too many skeptics with previous bad experiences, I think, and it distracts from the original intent.
It also takes hours to prepare the material and if I was doing this full time, that perhaps wouldn’t be an issue. However, I think the greater good is served if I concentrate on my books, videos, and speaking to business audiences (primarily) and others to help them understand the dire situation we’re all in and how to stay safe (financially and otherwise) over the coming years.
My assessment of the traffic is that there aren’t enough people to make a dedicated service viable. However, I’ll continue to post a blog on the weekend but my regular blog posts will start to be directed to the bigger challenge of helping people understand how the world really works and how we need to be smarter about how we approach life.
The DOW will get under $3K without my involvement and you’ll all do well but the average person won’t and that’s my primary concern (and to have a voice in changing a recurring human pattern—naive me …)
Thanks again for all your support and if you’re in the neighbourhood, I hope you’ll drop me a line from time to time.
Peter,
thank you for your thoughtful posts. Keep blogging and please try to pay less attention to other ANONYMOUS bloggers.
Drazen
🙂
Hey Roger
I to watch the 33 year cycle ( 32 1/2 years ) . i have questioned its starting point though and think it began in 1984 . Tim wood is pretty good how ever i have not read
anything from him in years .
Based on the 3 peaks domed house i can say this .
I have not followed this pattern since mid 2014 because i had thought it had failed so today i re opened the chart which is a spx weekly . One thing Lindsay noted
was never to call point 15 to early , in hindsight i had most definitely called
point 15 way to early , so i moved it up and then moved it up again and labeled both spots. the final count would have point 15 in july 2014 and that is only if this
is still bullish . points 15 through 20 are basically a triangle formation .
Weekly spx , Point 15 july 21 2014 ( week of ) point 16 the oct 2014 lows
at 1820.66 , point 17 week of may 18 2015 at 2134.72 point 18 the august 2015 lows at 1867.01 point 19 would be the week of nov 2 high at 2116.48 which places us now at point 20 . for this to be true how ever and there is many problems with this count as i see it . but to be bullish then 1867.01 simply cannot be broken by even 1 tick .
The bearish side of this is we reached point 23 in week of may 18 2015 at 2134.72
point 24 was the drop to the august lows at 1867.01 point 25 was the bounce into the week of nov 2 2015 at 2116.48 and we are now heading lower towards a point 26 low in the area of 1646.47 ( the week of oct 7 2013 low ) before a bounce
and eventually we will re visit the lows of the week of oct 3 2011 at 1074.77.
the rule of thumb is once this pattern peaks at point 23 , the target becomes the point 10 low . so regardless of where we are in the pattern today .
( whether this is point 20 and new highs to follow ) the downside target
from even higher highs in the future will target that 1074.77 level .
My bias though presently is with peters triangle formation and that we
see new highs . My cycle model is bottoming and pointing upwards
following january 20th .
That said we are now at a crucial point in both time and price .
The russel 2000 has a downside target not far from present levels
and ill note that the cash spx really has its important support
at the week of oct 13 2014 low at 1820.66 . ( after thought while typing this out )
Summary from all of this :
week of dates :
Point 15 the july 21 2014 high at 1991.39
point 16 the oct 13 2014 low at 1820.66
point 17 the may 18 2015 high at 2134.72
point 18 ??????????/ below the august 2015 low near –>1848.78
Why ? Because the rally up to 2116 failed to overlap the B wave in the drop
to the august lows .
the drop from the week of may 18 2015 high at 2134.72 to the low
week of aug 24 2015 low at 1867.01 lasted 14 weeks and traveled 267.71
points down . an equal drop down in terms of both time and price
would therefor be 2116.48-267.71 or a target of 1848.77 in the week of
feb 8 2016 . ( final answer for this to be bullish in my eyes )
Bottom line : A fake out break down below the august 2015 lows in the spx cannot be ruled out at this juncture and if so the 1848.77 level should be it most likely
to the tick .
Joe
Hi Peter
Im going to send you a chart of that final thought .
basically if wave C should be a 5 then this wave cannot be complete
a bounce from near 1901 on the cash spx would go up to near 1970
in a minor wave 4 and then decline below the august low .
Joe
Joe,
Wave C of the triangle will be a wave in 3, not 5. You will be able to count five waves within it, but the overall count will be a 3, if that makes any sense. Waves in triangle are always in 3’s.
Kudos to you for pegging the 1901 turn! Don’t agree on the minor wave 4 idea, as there’s no viable wave 1, unless we’ve had some sort of truncation, and I’m off that idea in favour of the triangle. So, we’ll see what happens.
Peter, I hate to here your cutting back. You have helped me a great deal on learning EW. I will miss your daily insights to the market. I do understand there is only so much time in the day. Please keep us aware of your thoughts concerning the arriving
crash and any information on your ideas on how best to prepare myself and family for the upcoming events. You are much appreciated.
Robert
Robert,
I think you’ve hit the nail on the head. I’m stretched and I want to finish my book on Deflation, which will have info in it on how to deal with the upcoming challenges.
After much thought, want to direct my attention to where I think I can have the most impact :-).
Thanks for your kind thoughts. Glad I’ve been of some help. I will continue with market posts, just not so much.
Peter
I wish you the best of luck in every thing you will do , and thank you for all the help you gave us .
Regards
AZ
Thanks, AZ.
I’ll still post on weekends … likely video, because now that I’ve figured that out, I can do it in a lot less time and I think provide more insight into what’s going on. We just had the turn (finally) and it’s relatively strong, as the SPX was in an ending diagonal. We have a long way up to go, but the triangle is a bit wider now, with an SPX target of something like 2052 (if we’re going to do .618 X wave B).
Longer term, we know where this thing is going. It’s such an unpredictable market at the moment (because we’re topping) that it takes a lot of time to get a handle on the count. Thanks AZ for the kind thoughts. Let’s keep in touch.
Peter,
we’ll miss much your opinion on the market.
I would appreciate very much if you continue to give us your wave count from time to time, especially when the market is so difficult.
May be you could limit your intervention to once per day after market close, please.
Sincerely
Dimitri
I can certainly do a short post (or update) on a daily basis, if that would help and then a video on the weekend. That would be manageable. It’s more a matter of reducing time. I’m not planning on going anywhere.
btw … haha … that looks like 5 waves up to a previous 4th in the futures right now, and so after a 62% retrace, we should be off and running again. Good luck.
If ES doesn’t turn here, we’ll go to a double bottom, but it looks like 5 waves up to me. Of course, I’m on a 1 minute chart, so that’s problematic.
Dmitri,
And if you took that trade, it should last at least a week and on one unit, that’s almost $7.5K.
My problem with ES is that Interactive Brokers doesn’t allow stops after hours in futures … don’t like that(!) This was too close to the end of the day for me.
Dmitri,
We may get a 2nd wave of the 3rd here in ES, so another 62% drop to about 1907.
Thanks Peter
I posted an updated chart of the SP500 at the top of the post.
Peter,
Many thanks for all the excellent,very diligent work that you’ve put into helping us !
Thanks, Charlie.
You’re very welcome. Indeed, I hope I’ve been of some help.
Peet,
You know what I know so, GO WRITE THAT BOOK AND SHOW THE WORLD! And for the people reading Peet’s stuff: if you do not buy his book, you must be 1. poor 2. dumb or 3. under 18 or 4. some kind of combination of the terms in 1, 2 and 3…
This guy from Canada sees the overall picture that so many people MISS! Same with EW! He sees shit coming…
Peet, I will drink a beer or 5 to you this weekend, cheers! 😉
W
Hi Peter – I must applaud you on your generosity and willingness to help us all learn. Yes, I am sure that it takes a large amount of your time to prepare your posts, even as the setting/market keeps changing and evolving. I perceive that you are personally enjoying the challenge presented by the complexity of this current market and I expect that as you think out your posts and prepare your charts, that the process actually helps clarify your own mind set and evolving direction.
I LOVE your posts and would sorely miss them! I concur that perhaps an end of day chart and targets would simplify your burden somewhat and still keep your ‘community’ abreast of your mind set. (After all, a picture is worth a thousand words.)
You may not realize that you have created a COMMUNITY of very sharp minds. (Myself not included). They may not all agree with you, and certainly may not be to your level of expertise, but the sharing of interpretations is invaluable. Your web site has become a forum where others may express their own studies, which expands the understanding of all of us. The contributions of Joe, AZ, Dimitri and Dave, among others, add an additional dimension to your web site. I would encourage you to consider maintaining your web site, although demands upon your time are great, if only to sustain the forum of this community. Your critiques of other posters’ work further educates us and clarifies our understanding. I realize that posters desire to sustain a degree of anonymity, but I wonder if they also desire to dialogue among themselves, without ‘busying’ your forum. Does your web site bulletin board allow for some level of ‘private messaging’ between posters, or perhaps a secondary level of forum for intra-poster dialogue, segregated from your primary dialogue, to keep the primary focus on your posts, but also allow poster interaction……just wondering.
Please, please sustain your web site and posts. I must tell you that i refresh your page more than any other in my browser; even more than my email page.
Thank you for all you have given to us!
amb
amb,
Thanks for you very thoughtful (and long … haha) comment. So, I’ll take a bit of time to try to answer it appropriately.
To your suggestion of a forum. Yes, I have one just about set up, but due to some technical issues with this site, and another one I’ve just built, it got shelved for a little bit. However, I should be able to complete it this week, I think. That perhaps will help as it will allow for expanded capabilities, all of the ones you mentioned.
I do enjoy the challenge of this market—perhaps the most perplexing ever, with all the twists and turns. I always need something challenging on my plate and yes, the exercise sharpens my view of the overall market, as I look at quite a few charts in the process. You see, I have this innate ability to recognize patterns (they call it “mentally manipulating three dimensional objects in space”—I’m sure the “skill” that got me into Mensa, which I don’t mention much, ’cause they’re for the most part, the whackiest people on Earth … sorry, Mensans!) and so I find the market a challenge—the ultimate game, if you will.
But, I’ve decided I do NOT want to do this full time. I need to be out in public (my personality is the issue) talking about the bigger issues that affect us all, as the coming depression envelops the world yet again (as it has so many times in history and in much the same way—sigh). At the same time, I feel a certain amount of responsibility to the small community here. After all, we’re talking about your money (and mine, I might add), and so I have to be as right as I can be in the reports I create. I would be concerned to put something up that I can’t 100% commit to due to time constraints.
The other issue, which I’ve expressed before has been the desire to find like individuals with similar interests (and knowledge of where we’re all going). It’s been very frustrating having all this information with no outlet locally (that seems to be changing) and so finding this small community provides a potential tight-knit group of people to communicate with as the going gets tougher. No one person can have all the answers.
So, the challenge is mine in figuring out the time demands and how much I can dedicate to this without putting anyone overtly at risk. I think your suggestion of the forum is a good one and would allow more member dialogue and a place to more easily store and share images, links, and resources that others (beyond traders) can use on an ongoing basis. It would allow conversations on trading amongst other things and can allow various access levels (not sure about the privacy issue, but yes, I think you can private message with it). It would require users to be logged in, which I don’t think is a major issue.
After these recent comments, what I’m considering is a major update video on the weekend and then a short text only (or text with a key chart) during the week. I’m not going to be around as much during the day to reply to comments (may be around some days, but it’s perhaps the biggest distraction to my other work).
The ability to post visuals is a “must have” for members and I know it’s a frustration. I have found a comments solution for that, as well, I think, but the better idea is the forum as it’s a more permanent and easily organizable “database.”
They say “Do what makes you crazy.” Well, the thing that makes me crazy about Elliott Wave is the postings I see that break rules or make very obvious mistakes. More so, it’s the tendency for posters of EW charts not to explain the “whys.” I’d rather teach you to fish, than feed you occasional one. Elliott Wave Theory has been very good to me but if you’re not totally objective in using the rules and deciphering patterns, it comes back to haunt you. So, I also tend to shy away from others’ prognostications due to the tendency to influence my objectivity. However, I certainly don’t mind the discussions between others. Go for it!
I think I’ve gone on perhaps a bit much. But those are some of my motivators and the pressure I’m feeling due to time. You see, I thought this market would keel over a little sooner than it has. But it seems to have a mind of its own!! Fancy that.
So we’ll continue on, less of me during the day and the major posts will be relegated to weekends, if that’s OK. As I mentioned to Dmitri, I’m OK with a short update on a daily basis. I’ll try to get the forum up this week.
Thanks again, amb, and everyone else who’s responded. Very helpful and very much appreciated.
Peter-
Just wanted to add on that I have found the blog helpful specifically around understanding the difference between a motive wave and corrective wave and the importance of understanding overlapping waves. It pushed me compared previous historic topics and what the wave structure looked like coming down from those tops (which the move down from May does not look like).
Will certainly be interested in what other information you put out in the future.
Ted,
If this 4th wave triangle is correct, then that wave down from May will actually not be motive, although it had me fooled.
Peter,
if your 4th triangle is valid does it mean that the 5th may stretch to 2400 or higher?
I’m going to guess you’re referring to ES, although it really doesn’t matter. I can’t say. My expectation is that we will reach a new market high and that’s about all. I think it will poke its head up and be done. We should know a bit more when we see the strength of the 5th wave, but I think that’s going to be a bit of a wild card.
ES has really large retraces, which I’m afraid are likely to persist. NQ looks correct, as does SPX, so I have to assume there’s nothing funny going on with ES. I place this wave down as a small 4th, but in ES, it’s very deep. Anyway … off to some writing. Will check back later.
Dmitri,
What has me concerned is that the first set of waves up in ES is in 3. I had originally counted the first five and then we had a third wave, which I thought was the first of the third, with a big retrace. Looking at the chart now, it looks like 3 up. But then this is a triangle, so that may not necessarily be an issue-just something to keep in mind. Triangle waves are themselves in 3’s and there really aren’t any rules.
It will likely be a scary trip up. The next leg down should be a breeze (no consolation now, of course).
Thanks Peter
this should be a 4th wave in ES etc. When we get to about 1964 in ES, I would expect a larger second wave correction. That’s also the 38% retrace level. Usually previous 4ths are at that level. At some point, we should be a B wave. It shouldn’t happen before then, but that might be it.
This market is not instilling a lot of confidence in the D wave scenario. However, the move recent wave down was in 3, so that suggests we continue up, at least for the short term …
Hi Peter
I want to say thanks for the time you have put into this blog .
Its also nice to see that you can change your mind despite it all .
This is a difficult market to position trade and while we may disagree
at times i think somehow we manage to have a similar theme in mind .
The weekly charts to me tend to be telling a different story though in terms
of this wave count so i m cautious into feb and early march .
bear markets chop sideways in short term up cycles and then head lower on the short term down cycle . in bull markets its the opposite.
so far 1901 on the cash spx has held and while the ym did break below the 16155
level i noted it has become support . so i see the upside bias which will most likely
last into next week , this week is option expiry . the 1970 spx is about all i see
whether is be wave A of an abc move upwards or wave 4 this market has been
doing the same thing over and over lately . new moon lows , 2 weeks up then down
until that changes i m sticking to the weekly charts .
Good Luck with your books and as for trading , there is always another train about to leave the station .
Joe
Thanks. A very difficult market to call. I take me where the market tells me to go. If it says we’re going up, so be it. EW sometimes doesn’t have the answer until to you get there. It’s mostly about patterns …
We have waves in 3 at the moment, virtually everywhere and that says “triangle” until something changes. Yes, up is the direction at the moment.
These are corrective waves down in the us indices, so I suspect this is the long awaited second wave, which would result in a strong third wave (of the a wave) up.
We’ve obviously come down to a new low. Today’s wave down is still in 3 waves, but measures out correctly that a fourth wave up and then a fifth wave down could make it a motive wave. However, We have the entire wave down from Dec 31 which is an abc wave, so unless we’ve had that truncation I talked about, I’m at a loss right now to explain where we are in the wave count.
The triangle is still operative (although another drop may knock that idea out), so there are certainly options…
Waiting for the next move.
Looks like some panic selling.
If this is a motive 5th (looks motive) ES would retrace in 3 waves to about 1904 before a final smaller 5th to a new low. That might mean a first wave down has occurred and would need a big retrace, but as I said, the entire wave down looks corrective as a whole. Very confusing. Then again the triangle is still viable but if we go to a new low, it might not be. A lot of “ifs” as the moment.
At the end of the day, the wave down in cash indices is in three waves. so it may just have been a drop to finish off the C wave of the triangle. Nothing has changed technically from that perspective. Futures have the same count. One way or the other, this wave down needs a major retrace, so that should happen before much longer.
We’ll have to wait to see what happens with futures tonight.
Thank you, Peter, for your patience.
I think everybody has lost the count in all this messe.
I think it’s not the bottom yet. I don’t know how.
There is no flux of selling.
The fund managers are still waiting. Imagine when they realize what’s happening.
Yeah, the patience is starting to wear thin, haha. Thanks for yours, too!
I’d like the market to give us a definitive clue.
I actually think it may well be the bottom. I’ve been short eur/usd, which is still running inversely and it’s at a double top right now. There are double bottoms on most of the indices, and we have a full set of five waves down in this wave from Dec 31, so we should turn here. But it’s still overall a wave in 3, so I’m still looking at the triangle.
Euro is starting to come down … so we’ll see what happens tonight. One way or the other, we need a retrace, and the shape of that (and length) should give a good idea of where we are.
Dmitri,
You were right! And it changes the count, obviously. I’m leaning towards the truncation. That makes the most sense to me now.That would see the SPX head back up to about 1967 before a turn down into a fifth wave.
Hi Peet,
I thought we would crash into 15 january, but I am not completely right. We just do a big dive into 15 january, not the 3.3 wave yet which I thought. So as an EW rookie I see this: end of today/tomorrow/Friday is the last drop for now. Friday the bottom, 1850±? Wave 1 done then. 😉
Cheers,
W
This obviously is the end of the triangle. We’ve come back to the previous low, which is where I’d expect the first wave down to end. However, ,this is not a motive wave—it’s a corrective abc wave, unless we have a truncation.
I would think we will get a retrace from here. The question will be, “How far?” Let’s see the turn and then I’ll post the possibilities. If we have a truncation, there are two options. There is a third very bullish scenario, but I don’t personally think that’s a high level option. However, it must be considered, nonetheless.
The truncation would suggest that we’ve had the first and third wave (of the first of the third) and that we’ll have a 38% retrace to head into the fifth wave. That would complete the first wave of the third. The “big stuff” would be still to come.
Well, closed all CFD shorts of CAC and ES.
Just keep the longterm shorts in cash in case if the market breaks down
Dmitri,
If we have a truncation (that would mean we’re at the bottom of wave 3), then we would expect a 3-waver up to about 1950 ES at least. That’s the 38% retrace of the larger wave down (however, it really should be from the very top (so about 1960). If we have a C wave here and it’s 1.618 approx. X the a wave, it would take us to that level. Watch for that. If there’s a turnover there, we would likely fall into a long 5th wave down (that would make Wouter a star!).
I see that we didn’t quite take out the previous low, so in fact, the triangle is still viable. And we did a strange 3 waver on the last wave down, so there may be more to this than meets the eye. I’ll have to study the charts in detail later today.
One more down day to go. 😉
Cheers,
W
Yeah, I just mentioned you. You may be right, but not because of the count, which is all wonky. However, if we have a truncation, it would be natural for us to turn over at the 38% level and have a large 5th wave down. I will show this on a chart tonight.
Hi Peter
For what its worth
All my metrics are into deep oversold conditions even if i use the dow
closing up 200 points today .
10 day adv dec line oversold , 5 day oversold
20 day oscillator deep oversold , 5 period average of the 20 day oscillator oversold
10 day trin un officially giving a buy signal ( closed yesterday at 1.50 and is now below 1.40 yet market is not yet closed )
Bottom line : we have the conditions in place for a bottom .
If by chance we see new lows in the coming days that will only give a bullish divergence set up . ( i tend to doubt it )
Time to start looking for upside trades 🙂
Joe
Joe,
I totally agree with all of this. However, if we go up 38% and turnover, then I’m listening to the market. The challenge is that the waves down support exactly what you wrote. On the other side of the coin is the option of a truncation, which so far seems to be winning the day. So it’s watch closely time. The next wave will determine the ultimate direction. I’m not very high right now on the triangle as the Nasdaq has come down too far to support it. It also don’t think there’s any way this market is going to a new high (but that’s bias and I need to put that on the shelf). My top line count is the truncation until something else tells me differently.
I’ve been having some very strange things going on with the site today, so I’ve had to roll back a few hours and lost all of this afternoon’s comments (my error on that). I have also lost the chart update today, which I will re-generate shortly.
How about let’s use the NYA until the others clear up?
Kent,
Makes no difference. It is one reason the triangle is out though, because it went to a new low, like the Nasdaq. It supports truncation, but the wave structure is the same as everything else.
I’ve updated the post tonight with a chart of the NYSE.
Peter-
One other scenario i potentially see. Wave 4 already occurred and topped at the open on 1/13 and yesterday’s wave up was wave 2 of 5.
Ted,
Wave 4 needs to be much larger to pull off that scenario. And the wave should bottom at the previous low (previous fourth). It’s all making sense from an EW perspective, but it’s been a big drop and the bounce will take at least a day to take hold, I think. I agree that it should be wave 4.
With the new low today, i think a very choppy wave to the 1967 area and around your suggested turn dates makes sense. As a cross reference for understanding extremes, the daily MACD that i am using is near the August 2011 and August 2015 lows, so we certainly have some oversold conditions that need to be worked off before we make another solid move down.
Ted,
Yeah, I think that’s the most likely path. I’m fairly solidly in the truncation camp and expecting a fifth wave down after a bounce. And now we have cash indices looking like they’re also falling into an ending diagonal. There is still a large bullish fourth wave possibility for the main cash indices, but the NYSE appears finished, so I don’t have much hope for a bullish outcome.
The upside targets are going to change somewhat with this new low, of course.
Seers of old killed animals and studied their entrails to determine the future. SO, thank you peter for having the guts to make forecasts. Kent and I disagree with you but we applaud you for trying. But, please look at the 15 min chrt of the SNP for the last few days. —A bear flat of A up, B to a new low, and the C up yesterday. Now a potential fifth wave to new lows. In many ways the last 30 years have had many bull flats, now bear flats. Direction is down. Kent and I were brokers in the early 1970’s bear mkt—this mkt is trading the most similar to that era that i can remember. Only when the FANG stocks crater 70-80 percent will it be over.
I’m sorry, I’m missing your point. Are you saying we’re going to a new high and have another count that suggests that? But then in the SNP, you say the direction is down. I’m confused.
We need to see one more big selling monday/tuesday we will rally again..
We look to have done a wave down in 5 waves this morning, so that may produce the bounce we’ve been waiting for. We also solidly tagged the previous low.
The bounce targets haven’t changed by much, and the count hasn’t changed.
We now have ending diagonals shaping up in the futures.
Hi Peter
Looks like some sort of bottom is in place
yet this may be just another very minor wave 4 bounce .
The advance decline ratio today showed bullish divergence at the low
and by the time i finally got it together we started bouncing and i missed the low
The spx i still favor 1848 being hit yet everything else has hit the targets .
the sox diverged , the dow is diverging , the nasdaq 100 diverged
the nasdaq Comp has the overlaps in place for a potential triangle
the banking sector $bkx has 2 almost perfectly equal moves down from the may highs . the only thing left is timing this massacre .
market is closed monday ( short day ? ) that leaves tuesday the 19th-jan 20 ?
The next time frame to me will be the puetz window which begins 20-25 trading days before the solar eclipes ( solar eclipse march 9th ) that leaves feb 3rd-10th
for the starting point . so will the next full moon be a low ? if so id give bias to
a lunar eclipse low on march 23rd which implies and upward crash phase
its not as strong as the fall cycle but will be worth paying attention to when we get
there. if the new moon on feb 8 forms some type of Low and the new moon on march 9 forms some type of High ( new moon to new moon ) then the full moon
on march 23rd should be the low ( higher or lower doesn’t matter )
the cycle ends april 16th-25th.on the other hand if the feb 8 new moon becomes a high of sorts then we see a choppy down trend into the march 9th solar eclipse
then a bounce into march 23rd lunar eclipse would set up the crash cycle
and the cycle still ends yet with a low april 16th-25th .
Given the oversold status of the market and taking last yrs cycle into account
my bias is we see a low of sorts in the feb 3rd-10th time frame with a high
towards the end of april . Way to early to call this yet the parameters do not change .
Joe
A verry good story Joe thanks,
The next topday I have on Feb 6.. after that the big decline…
Good Luck…
Last comment
if the typical of this past week holds to the norm
the highs are in for today .
Joe
Another constructive day despite the big down move this morning .
1952- 1970 is the next spot im keeping an eye on .
could be next week but thats all the upside i can give this market .
the set up to me still looks like this week was the bottom of wave 3 .
wave 4 next week then down into feb in wave 5 of 3 .
More waiting for me
Joe
Yes, that’s the count.
Targets now 1957 for SPX and 1946 for SPX – fourth wave at 38%. There’s a big cycle turn date Jan 27-29, as I’ve stated before.
Peter-
As i do some some research over the weekend for projects, are you looking around ~1700 to finish the third wave off? I am getting 1699 as the 1.618 extension from the bottom of today. assuming a 1957 wave 4 that would also make wave 5 2.618 of wave 1.
And that would make the entire wave 3 1.618 of the wave 1 that ended August 24th.
I think the full third wave will be 2.618 X wave 1 down. That’s typical in a crashing bear market like this. We may have completed all of smaller wave one of three perhaps. If that’s the case (which is becoming my preference based on where we ended), then we need a 62% retrace before wave 3, followed by a large 4th and then a large 5th, so we have a long way down to go. I still put the bottom under 10K on the DOW. Around 1300 or so SP500.
I think you’re referring to the SP500. If so, no, I think “wave 3” (if that’s what it is) has bottomed. An ending diagonal on all the major indices and futures tells me that. I can’t get any fib lengths to work on this wave down but I can count five waves, just not five good textbook waves.
But as I read your comment again, I’m not sure what wave you’re referring to. This may the bottom of the third of the first of the third. I agree on your wave 4. Wave five can have two different objectives based on the wave structure so far (which is questionable) so I’ll provide both on the weekend.
This also could be a full first wave down (a typical first wave has a long fifth and ends at the previous fourth, which this wave seems to have completed). Hard to explain here without a diagram. I’ll provide the options in a video this weekend and maybe post a couple of charts so the options are clear.
Peter-
Yes on the SP500 and i was referring to a likely Wave 3 of a larger 3 being finished today, so i am on the same page of a smaller wave 3 likely being complete. I had not thought about this being a wave 3 of 1 of 3 but in the first wave diagram here https://worldcyclesinstitute.com/first-wave-down/ am I correct to look for the 1.618 extension of waves 1 and 3?
I think i will get the answer when you do the video, so I am looking forward to watching.
Good. Thanks for finding that chart! That’s what I was referring to as per us perhaps having completed wave one down. That makes the most sense to me, although it looks nothing like the wave in the chart (because of the truncation, I think). If that’s the case, that’s all of wave 1 and I have to re-label the chart to make it clear. So wave 3 on the chart actually becomes 5 of 1.
That being the case, it calls for a 62% wave 2 retrace. Then wave 3 of 3 down, which is likely to be 2.618 X 1 then 4 of 3(backs up 38%), then 5 of 3, which will be at least 1.618 X 1 and could crash further. All of that would be wave A down.
Then we would have a very large 4th wave of higher degree (which will likely rival Aug – Jan in terms of time). That’s actually wave B and then the final C wave that would take us to the bottom … I peg that at 1K DOW (the bottom). That’ll likely take a couple of years.
Hope this helps. This weird wave down has really made all this difficult to sort out. I have the path in another chart I’ve posted previously (somewhere). That’s why a forum would be so much better than this comments section …
We’re leaving the end of the day after an ending diagonal and a set of waves up that’s in 3 so far. I’m uncertain as to whether futures have to tag the low again. I was hoping for a new high in futures before the end of the day but they stalled out.
Monday is a holiday in US equities, so we may not see a whole lot happen until after that.
Futures now at a new high so the change in direction has a bit more confirmation.
Peet!
Got some time tomorrow?
Bottom wave 1 made today at my turn date around 1850 as said before if I recall correctly.
Cheers,
W
Sorry, Wouter. No time today. I’ll be out all day and then hope to get into doing a video on the market.
NP Peet looking forward to the video. 😉
Cheers,
W
New post with video live: https://worldcyclesinstitute.com/strap-on-your-crash-helmets/
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