PRO-ELLIOTT-WAVER

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After Monday morning's gap down open the market went sideways and then fell to a slight new low on Wednesday. The best way to count this price action is that it was all part of wave (iv) of [III]. We've labeled the formation as w-x-y with wave-y forming a "running triangle."  The push to a new low as wave (v) of [III] brought the S&P price right to the area where [III] is 1.618 x [i]. Yesterday and today the market could only muster a small bounce to the center channel line before turning down into the close to make a new low for the week. The chart above is labeled showing the small rally could be wave (a) of [iv]. The new low today would be an irregular wave (b) of [iv] and we would see a bigger rally next week as (c) to complete the wave [iv] correction. Much lower prices on Monday and we would have to conclude that wave [iv] is going to be very small and is complete at today's high. Wave [v] down would already be underway with targets ...

The last time we posted a short term chart the market had just finished the first wave down...."minute" wave [i]. Since then price had a three wave retracement for wave [ii] and then fell apart in wave [iii] down Wave [iii] set multiple historic records that would be expected but, we have to remember that this is just the first small degree waves from the all-time-highs that will eventually be part of the sub-waves of much larger degree waves down as the "Bear Market" evolves over time. The 60 minute Dow chart shows that yesterday's low has all of the sub-waves for a complete five waves for wave [iii]. Since this morning's action saw a new low in the Dow but not in the S&P we have labeled it as an (a) and (b) to start the wave [iv] corrective rally with wave (c) currently underway now. Wave [iv] could see price retrace back to the previous smaller degree wave (iv) of [iii] which is the most common target area. Also the Fibonacci scale on the ...

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Gold had a nice decline from the recent 1691.00 high but, as this chart shows it is clearly three waves labeled (a)-(b)-(c). This means that it's likely the three waves was wave [iv] of 5. The move up off the low has rallied back to test the high in what appears to be five waves on the 15 minute charts. Price should continue to a new high unless wave [v] has already completed which would mean a truncated fifth wave. Since truncated fifths are very rare we'll look for a new high before the end of the rally! Notice on the long term chart how well the five wave rally for wave (C) has stayed in the (blue) channel lines. Breaking below the lower channel line (on a closing basis) will signal the end of the rally that will lead to a quick move down to the previous wave 4 low of 1459.00 This will be the beginning of a larger five wave decline to unfold as wave [C] well below the wave [A] low made in December 2015. Follow the Trend and "Trade Safe"

Looking back 124 years to the beginning of the Dow Jones Industrials we can see that stock prices have traced out five waves and three waves at all degrees to where we are today. In 1929 the first wave completed from 1896 as "super cycle" wave (i) (blue). The 3 year decline from that high during the great depression formed "super cycle" wave (ii) (blue). From the 1932 low the market has been tracing out five "cycle" waves (pink) to form "super cycle" wave (iii) (blue) to where we are currently at the February 2020 highs. The "cycle" wave V (pink) started from the 1974 low after having completed an "expanding triangle" "cycle" wave IV (pink). The "cycle" wave is being sub-divided by five"primary" waves (black) as [1]-[2]-[3]-[4] and [5]. The "primary" wave [3] topped in 2000 and started an 8 year correction for "primary" wave [4] that was sub-divided at the "int...

On Friday we posted an update making a good case for a short term bearish scenario that would be followed by another rally to all-time-highs one more time. Today we are going to give traders the alternate scenario which is much more bearish than just short term. After 39 years of operating in the world of futures and options trading (with 35 years of that time spent studying the Elliott Wave) I learn one important lesson very early, which was, no matter how good the technicals and wave formations point to an indisputable conclusion for price movement going forward...there is always an alternate scenario that can happen instead. Once a trader identifies the correct wave count that the market is working in it then becomes rather easy to follow using all the rules and guidelines. These same Elliott rules will also alert you better than any other system known when you are wrong. Because of this we usually spend 90% of our time watching, looking for and calculating the alternate sce...

Early last year we were giving traders a lot of reasons to consider that the markets were still in a large correction that started from the January 2018 highs. In March last year our charts were labeled to show how a large "expanding triangle" pattern could be the wave formation that the market was working on. During the Thanksgiving and Christmas Holiday's we pointed out that markets rallied 85% of the time the week prior to each of those holiday's. With favorable economic conditions and the euphoria of the holiday's last year we saw big rallies in the stock market. The market was able to rally far enough for some of the technical indicators to shift and support a continuation of the rally. This would have meant that the December 2018 low was the end of the big correction and that the next impulse wave much higher was underway. However, for an impulse rally to be underway the market should have started a five wave pattern from the October 2019 low that c...

In the last update we were looking for gold futures to rally to a new high to complete five sub-waves of wave 5. This move would also complete (C) of the larger "primary" degree wave [B]. Today we got the push higher to prices that we have not seen in seven years. This chart of the April futures contract shows that wave 5 will equal wave 1 of the same degree at the 1630.00 area which is a good target. Today's high came close at 1626.00! We could see a smaller degree fourth and fifth up/down move to make the final high. The wave pattern down from the all time high in 2011, as five waves, to the low in 2015 is clear. The three wave corrective rally from that low over the past five years is now also clear. This means that the price of gold is ready to start the next large wave down which should be in the form of five waves. This move will take the price below 1000.00 with a perfect target being near 750.00. Once this move down completes, probably over the next...

Late Friday we saw a drop to a new low for the move down from the high that hit 3212.75. This was the first target as this was the 4th wave low of the lessor degree which is the common target after the termination of a five wave rally....indicated by the horizontal dashed blue line. The chart is labeled showing that Friday's low also completed a five wave pattern down from the high that came close to the 27.2% retracement of the previous wave [iii]...also a common wave four target. Since the decline formed five waves and since a correction can't be made up of a single five wave move we have labeled it as wave (a) of wave [iv]. We can now do a process of eliminations and assume that wave [iv] will eventually turn into a 5-3-5 "zig-zag" formation. Today's rally should be part of a retracement of the decline that is labeled as wave (b) that when complete will lead to another 5 wave decline as wave (c) of [iv]. This drop will most likely break below Frida...

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Fig 1 Gold got a spike higher on the coronavirus news as the stock market sold off, however, it was short lived and failed to make a new high. All we're waiting for here is to see if the "minor" wave 5 (blue) gives us five sub-waves to one last high above 1611.00 to complete the formation. Wave [iv] (green) can still be working but, the longer it takes the less likely it becomes. Fig 1 above shows the invalidation line which is the wave 4 low. Breaking below this low at anytime before making a new high will confirm a top is in place. The over 4 year long bear rally from the 2015 low will be complete as "intermediate" wave (C) (red) which will lead to much lower prices. Fig 2 Notice in Fig 2 that there is a large wave i (pink) in the top left corner and a large wave-ii (pink) in the lower right corner. These labels represent the "cycle" degree time frame (10 years or longer) with the high of wave-i marking the all-time high in the pr...

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 i...

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. Coming up will be the next most bullish week of the year (Christmas) also with an 85% track record although the size of the rallies are not as big on average as Thanksgiving. Our last update showed how price had completed a small "triangle" that would be followed by a quick rally. The next morning the market gapped higher and rallied to a new high in an impulse five waves. Price then fell back to the area of wave-e of that "triangle" also described in the update. We labeled that chart showing that the rally would end an "extended" fifth wave but instead only completed a smaller degree wave-[5] of wave-iii shown on today's chart. The updated chart shows th...

The market has traded in a tight range for the past two days which fits with the wave four correction suggested in the last update. Our chart shows how a "running triangle" may  have completed at today's low to end a small degree "sub-minuet" wave-iv. Triangles sub-divide as five wave formations with the sub-waves each tracing three waves. Each leg in most cases will have a price relationship with a previous leg. This triangle has multiple wave relationships... (C= A)...(D= 61.8 of B)...(E= 61.8 of C). This will be confirmed if we see a sharp rally to new highs as wave-v. This new high price will complete a thirteen wave formation with wave (v) being the extended wave within the impulse pattern. Follow the Trend and "Trade Safe"

The Dow supports the same wave formation that we showed in the S&P on Friday....the "zig-zag" pattern from the December low to complete wave-D of the larger triangle. This chart shows an interesting price target that was hit on Friday that helps to confirm the triangle scenario. There are several ways to calculate price targets for where the five wave rally (thrust) as wave-[c] out of a triangle could terminate. In this case we use the maximum high and low at the beginning of the triangle...indicated by the small red up and down arrows. The first target for wave-[c] should be a 61.8% relationship to this calculation. Friday's high in the Dow met this exact calculation shown on the chart. This doesn't have to be the exact high but, the fact that traders did sell the market at this price helps to confirm our primary count. The initial decline from the high on Friday can count as a small five wave impulse on the 15 min chart which could be the first clue...

Yesterday we posted charts of the SPX showing the short term impulse rally underway now, along with a look at what has taken place over the past year. We label the rally from the December low to show a "double three" (w-x-y) that is currently finishing wave (c) of [y]. This will also complete either wave D of the much larger "expanding triangle" (that we've been updating for most of this year) or wave B of a large "flat." If the market traces out a "flat" it will be in the form of a "running" or "expanding" which will be determined once it's underway. Today we are showing another way to count the rally from last December which is our primary count. It is hard to ignore, visually, that the sideways grind since May has the look of a "running triangle" formation.  Under the "triangle" interpretation the rally from December would count as a "zig-zag" with five waves of [a]......

Follow the Trend and "Trade Safe"

Follow the Trend and "Trade Safe"