SP500 ~ a small wave four decline today as the larger degree wave three of three continues to sub-divide...

Prior to the holidays we posted an update that said..."the most bullish week of the year (Thanksgiving) didn't disappoint bulls this year. Veteran traders know that 85% of the time the markets rally during that week but, not all traders are aware that the wave count also has to be in a position to support the rally or it doesn't happen".

Fig 1.


Through all of last year the market traded in a wide, sideways range making it difficult to determine if the market was still correcting from the 2018 highs or if the January 2019 low marked the end of the correction.

Days before and into Thanksgiving the market moved high enough to finally confirm that the "intermediate" degree wave (5) was underway and that the Jan 2019 low was in fact the end of " intermediate" wave (4).

Fig 2.


Our alternate count from last year moved to the primary count as price moved above the white dashed line. Notice in fig 2 price moved above the trend-line and immediately dropped down to test it as support...this is classic price action before a break out move.

Since then price has rallied in an impulse wave to confirm a third of a third wave at the "minute" degree as labeled on the charts.

Fig 1 above shows a breakdown and labels of all the squiggles that form the sub-waves for "minute" wave-[III] (green) of "minor" wave-3 (blue).

Today's high met the price target where wave-[III] is 1.618 time the wave-[i]...shown on the chart. This is also classic price action which helps to confirm our primary wave count. Price also bumped against the upper channel line which did cause the market to head lower.

Fig 3.


If today's high marks the end of wave [III], shown above in fig 3, then the pull back from there should be the start of wave [iv] which may only be a shallow correction to the 3300.00 area.

Once we see a corrective move down in the form of three waves we can anticipate another round of new highs as wave [v] to further complete the "minor" wave 3. If wave 3 reaches the 1.618 times wave 1 we could see the 3700.00 area before wave 3 completes.

After this we would start a larger correction for wave 4 and then still new highs again for the final wave 5 of (5) . This high will complete the entire rally from the 2009 low which will be a major top at the "cycle" degree.


Gold hasn't done much since the spike higher a few weeks ago. The high counts the best as finishing a third wave with the 50.00 drop as a fourth. This would allow for another push as wave five to complete the rally. This would also end the rally and begin a bear move down below 1000.00.

Any move below the wave 4 low now would confirm that the rally is complete and the bear market has started!

Follow the Trend
and
"Trade Safe"


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