S&P500 ~ all that's needed for a complete elliott correction is in place....will the bears gain control???


Fig 1
Todays news of thousands of businesses that won't ever reopen along with Fed Chairman Powell saying the economic outlook is highly uncertain was more than the market could take and was the catylist to start the move down we've been waiting for.

Friday our charts showed how the potential for the "double zig-zag" wave 2 was complete at the high and that the small five wave impulse decline should be wave (i) down to kick off the next leg of the bear market.

The last two days we watched a rally fully retrace the drop which formed a 5-3-5 zig-zag at yesterday mornings high for wave (ii). 

Price reversed after hitting the morning high (turn around Tuesday) and as of today the market is down 100 SP pts and over 1000 Dow pts.

The move down counts as five waves at today's low as shown on the 30 min chart which we have labeled as "sub-minuette" wave-i of (iii) of [i].
The global futures chart clearly shows a clean five waves down from yesterday that also sub-divides with all the sub-waves.

The problem for now is that we would have preferred that wave-i today broke below wave (i)...while not necessary it always adds a little confirmation.

Also, price held the lower channel line which can be indicative of a wave-c. So, it will be imperative for the market to drop below these targets after a small wave-ii rally...sooner rather than later to validate the wave structure shown.
The SP futures formed a real double top while the Dow lagged behind only retracing close to the 76.4% Fib target.

The next few days will be important to see a total breakdown if wave 3 down is ready to start.

The alternate count we are watching would be only with a new high which would be that wave 2 is still unfolding as the "triple zig-zag."

Volume has been extremely weak compared to volume during the decline to the low in March. Along with put/call ratios, momentum and market sentiment which all point to a bear market correction.


Follow the Trend
and
"Trade Safe"

Comments

Post a Comment

Popular posts from this blog

S&P500 and Dow ~ the rally based on "hope" continues the bull trap...

Image
This week we watched the stock market as it continued to grind higher with only small pullbacks. The rally is being referred to as the hated rally by traders but, Wall Street has given it a new name "The Rally of Hope." While we don't have anyway of knowing when the virus will go away or when the economy will recover...we can use the charts and the Elliott Wave to show us what is likely to happen next. With each three waves up or down or five waves up or down the formation fits together like a puzzle that will eventually form one of Elliott's corrective wave patterns. This week it has become clear that the markets are tracing out "double or triple" zigzag corrective waves. This means we have eliminated nine out of the eleven possibilities. The decline that happened two days ago looks like a small wave (c). The rally from that little low was five waves shown on the chart. This means that the uptrend is still unfolding. Now, what happens next ...
Read more

S&P500 ~ the minute degree third wave rally is near complete with wave four down ready to start next week!

Image
Wave-(iv) of wave-[iii] took all of 5 hours to form and as is the norm lately was very shallow without coming close to any normal Fib targets. Although, you can see that wave-(iv) is about the same size as wave-(ii) or 94% to be exact. The patterns also alternate with wave-(ii) being a "flat" and wave-(iv) forming a "zig-zag." Price didn't waste any time moving back up to form wave-(v) to further complete "minute" wave-[iii]. Today price moved up on the open and then spent most of the day forming a small contracting "triangle." Once complete the market spiked to new highs which is referred to as "the thrust" which is always seen at the end of the "triangle" formation. The wave labels show the sub-waves-i-ii-iii-iv-and v which could be all of wave-(v). If so, wave-(v) is pretty short and hasn't reached the minimum relationship to wave-(i). However, this could be expected since wave-(iii) was the extended wave reaching a...
Read more

S&P500 ~ today's all-time-high coincided with a Fibonacci price target that turned the market down to start a short term small price correction!

Image
Last week we published charts showing our opinion of the current market structure and how the Elliott wave formation is developing. We were looking for some small degree ups and downs (4's and 5's) to complete the "minuette" wave-(iii) or "minute" wave [iii] top where we should see a small corrective move down. Since then the market has moved up in a diagonal looking pattern, although void of any over-laps, at today's high reaching the common price target where wave-(iii) is a Fib 1.618% of wave-(i). We can also see that wave-(iii) has five sub-waves i-ii-iii-iv-v. The cash market came around 10 points short of hitting the same Fib target as the futures market. This divergence could also help the correction start. Price has turned down on the day in the largest correction since wave-v of (iii) began which should indicate that the wave-(iv) correction has begun. How deep it goes is anyone's guess because of the way the market has been acting for the p...
Read more