Barry McGuire sang “The Eve of Destruction” from hand written notes (in a single “take”) in a recording studio rehearsal in 1965. It was not supposed to be the final soundtrack for that song. It was written by P.F. Sloan, who wrote hit songs for Johnny Rivers (“Secret Agent Man”) and Herman’s Hermits (“A Must to Avoid”) among others. This was one of my favourites in the ’60s.
Well, the record got leaked (something that’s a little more common today) and Barry got a 7am call the next Monday morning from a radio station urging him to listen in. That same week, that single went to number 1 on the Billboard Top 100 chart. It knocked the Beatles’ “Help” from its long-held spot at the top of the charts.
Yeah, my blood’s so mad, feels like coagulatin’,
I’m sittin’ here, just contemplatin’,
I can’t twist the truth, it knows no regulation,
Handful of Senators don’t pass legislation,
And marches alone can’t bring integration,
When human respect is disintegratin’,
This whole crazy world is just too frustratin’,
And you tell me over and over and over again my friend,
Ah, you don’t believe we’re on the eve of destruction.
1965 was nearing the top of the third wave in the US indices. The top of that wave also coincided with a solar maximum, which helped to bring about the original Woodstock, which I was at (I still have my tickets, as there was nobody there to take them — the gates were wide open and it ended up being a free, three-day concert. Originally, the tickets cost $6.00 per day).
Alexander Chizhevsky wrote about the tops of solar maximums causing the “excitability factor” in humans. Solar maximums always elevates the human psyche. We saw the destruction of the World Trade Center on spoke in a subsequent solar maximum — right at the top, in 2001.
Last year, we saw the top of another third wave (of the final fifth wave). Fifth waves in bull markets mark a much less optimistic society, and since the NYSE and related indices are in a corrective B wave, in this instance, optimism is waning even more than usual; the “herd” is becoming relatively more pessimistic than ever before.
In fact, the feeling amongst the general public should be on the verge of turning decidedly negative. When we reach the top of the fifth wave, more than 50% of the population will be negative, resulting in a dramatic international stock market drop in historic fashion — one that will be talked about for centuries to come.
So, it’s no wonder the song lyrics tend to ring true today. However, we’re turning to a time where the anger will turn inward. In other words, the third wave is an expansionary wave and we saw lots of expansionary wars instigated by the empire of day, the United States. The turning of the fifth wave will result in civil wars around the world.
I would forget the WWIII scenario; history says it won’t happen within the next hundred years at least, as the financial system collapses, and the climate turns colder and dryer. Thoughts will turn to self-preservation.
You can see the times reflected in our music. The top of the third wave was a golden age, with some of the greatest music produced since the 1800s. The music in the 80s and 90s turned downright angry and music today just seems “lost.” Very little of it is memorable.
The huge drop in a C wave that I’m expecting will reflect a very dark time ahead. I always think of stock market as a mathematical representation of the mood of the herd, or population.
We’re about to see a lot of negative events over the next few months as we complete this final C wave of the Fourth Wave from Hell. But then, as the fifth final fifth wave heads back up, we’ll get a glimmer of hope, but it won’t last.
“May you live in interesting times” is a Chinese proverb that in 1966 Robert F, Kennedy used in a speech in 1966, which of course, was near the top of that third wave. He was making the point that it was a time of danger and uncertainty, but one of the most creative times in history. It may not be as much the latter, as the former.
Know the Past. See the Future.
The SP500 – The Bigger Picture
Above is the seven day chart of the SP500. As we’ve reached the top of this extraordinary B wave in the US indices, it’s time to step back and look at the bigger picture and where this wave down is likely to go.
If you know anything about Elliott Wave, you know that final waves ending a trend requires five waves (motive, or as a diagonal) . Now, you might counter with, “but what about truncations.” I’d reply, “Well, just find me one example of a truncation anywhere in the history of any index in any market.” My experience tells me that would be a problem, as I’ve written about here many times before. They don’t exist, unless someone can come up with a valid example (as the ones in “The Elliott Wave Principle” book, are invalid).
You would also know then, that a bull market fourth wave of a fifth wave reverts back to the area of the previous fourth wave (of one lesser degree of trend) and is required to retrace at least 38% of the entire fifth wave up. We haven’t even gotten close to fulfilling that requirement.
In the chart above of the entire corrective wave up from 2009 (a B wave, something that has never been seen before at the top of a market), the 38% retrace level is at ~2093. We need to at least reach that level, imho. The previous fourth wave of one lesser degree sits at 1800 points.
I’ve moved the January 29, 2019 third wave top to the all-time high because it gives both the third wave up and the fourth wave down “the right look,” which is an extremely important aspect of the Elliott Wave Principle. However, this is probably not correct, because the “mother index,” the NYSE very definitely has its third wave top at that January 29 date. On the other hand, there are often non-confirmations of this type at major tops.
In any event, the large fourth wave down now in progress has traced out an ‘a’ wave down, and sprung back to create a three-wave ‘b’ wave to the 62% retrace level from the all time high. You do not get a B wave of this nature without a much stronger C wave in the opposite direction.
Using fibonacci measurements, there are two most probably targets for the C wave down: 1970 (the 1.618 extension of the a wave down) and 1796 (where the C wave is equal to 1.618 X A). This latter target is my preferred resting place.
My timeline target for the bottom of this C wave down is mid to late May. That will most likely move the final top of this 500 year rally into 2020, as we need a final fifth wave up to a minimal new high.
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.
Registration for Commenting
Want to comment? You need to be logged in to comment. You can register here.
If you register, it protects your information. It also allows you to comment without filling in your information each time. Once you’re registered, simply go to the home page and click on the login link top right in order to log yourself in. Usually, you’ll be logged in for several days before needing to be logged in again.
Problem receiving blog comment emails? Try whitelisting the address. More info.
Have not had a losing week RW 2
The best of them JL 2
A true expert in Elliott Wave FL 2
Couldn’t be happier … KK 2
Tops in your field DZ 2
Get an upper hand … JC 2
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).
The height of this B wave has confirmed that the way I count it has to change; it's now a B wave, having risen to exceed the 62% retraced level from the all time high. That means we have a large C wave to the downside just waiting to get started.
NQ (Nasdaq futures) have not quite hit the 62% retrace level; however, they're extremely close, only 20 points at the close on Friday. It doesn't need much impetus to bridge that gap.
In effect, this slightly changed count confirms the patterns in place so far: We have a large running diagonal scrawling across the top, followed by a double zigzag, to complete the A wave of the fourth wave. The B wave up is virtually in place, so expect a very large C wave down to a new low.
I've provided some insight into the bigger picture above so I'm not going to become redundant here.
On short time scale, ES the week before last completed a running triangle in a fourth wave position, which signals one more wave up to complete the countertrend move. We've been in that wave since the beginning of the past week. At the top, we'll look for a turn to the downside.
I expect this wave down to last at least a couple of months and most likely longer. The pattern is yet to be determined.
Summary: My preference is for a dramatic drop in a C wave to a new low that could start as early as Monday. 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.
Once we've completed the fourth wave down, we'll have a long climb to a final new high in a fifth wave.
Trader's Gold Subscribers get a comprehensive view of the market, including hourly (and even smaller timeframes, when appropriate) on a daily basis. They also receive updates through the comments area. I provide only the daily timeframe for the free blog, as a "snapshot" of where the market currently trades and the next move on a weekly basis.
Sign up for: The Chart Show
Next Date: Wednesday, February 13 at 5:00 pm EST (US market time)
The Chart Show is a one hour webinar in which Peter Temple provides the Elliott Wave analysis in real time for the US market, gold, silver, oil, major USD currency pairs, and more. You won't find a more accurate or comprehensive market prediction anywhere for this price.
Get caught up on the market from an Elliott Wave perspective. There’ll be a Q&A session during and at the end of the webinar and the possibility (depending on time) of taking requests.
|"I think you are the only Elliot Wave technician on the planet who knows what he's doing.”|
|m.d. (professional trader)|
All registrants will receive the video playback of the webinar, so even if you miss it, you’ll be sent the full video replay within about an hour of its conclusion.