Regarding prospects of a longer-term bearish scenario, an impulse down is yet to form, perhaps along the lines of the blue [4]-up and [5]-down in Chart 2 (blue).
Regarding prospects of longer-term bullish scenarios, the following two tracking counts (Chart 3 and Chart 4) offer some possibilities.
Chart 1
ReplyDeleteFrom the spike peak around 13 March at 2700pts where the upper blue line starts from there I see a a compressed 5 wave seq possibly there in MTU's ds pennant.
The prev low at 2478 on 12 March there I would say is wave 3 from the 4 March peak, which itself is either a wave B, or 4 or 2.
Note that DAX, UKX and stks like BA have either turned up now flattened. Oil prob making double bottom.
MAIN WAVES
ReplyDeleteDJIA has come back down close to the 2015 wave 3 from 2009 top level. That should under normal circumstances provide support.
NASDAQ has retraced around 50% of the move from the 2016 low showing the greatest strength of the indexes I have reviewed.
SPX has corrected about 61% of the run from 2016 low to the 0.38 level of the rally. EW theory would classify this is main trend reversal signal for the moment.
NYA & MID have returned to the 2016 low level - a support point usually. As has Boeing.
Given all this the prob of further declines for the moment is low. Mkt is likely to either rally, hold or slow sink (depending on specific patterns whatever you are looking at).
There is still the spectre of a this correction being akin to 1987 (a great buying point) if a supercycle is running from the 2009 low, which would make 2020 peak as wave 1 from 2009, this decline (wherever it ends) as wave 2, and a wave 3 up to follow the 4 & 5. Would like to hear MTU's thts on that prob. This point is not invalid because under some obv and EW circumstances the 9 yr correction from 2000 to 2009 would require more time to complete the next impulse wave than the 11 yrs to 2020. However as said before the % price gain of wave 1 of the supercycle (1942 to 1966) is similar to wave 5 (2009 to 2020) of around 5x. So make your own assessment. But each's stks own position will vary*. Note tho the timing aspect of the EW count varies and you can get shorter or longer waves in time than you would expect.
*In the late 60s & early 70s stks like Kodak and Polaroid where big players but are now gone. Eg will Google or FB be replaced by something else later ?
ERR
ReplyDeletesorry about my typos - should read above "then 4 & 5".
When I type this in the window only displays a few lines and difficult to see the remainder.
Thanks, please see additional charts and discussions in the post.
DeleteMTU's CHART 3:
ReplyDeleteI don't know how wave red A can be classified as such when there is not 5 waves in that seq between Sep - Dec 2018 unless you count the Sep top as its wave 2.
Red A's time length is too short rel to your wave red B.
CHART 4:
Accordingly your CHART 4 makes more sense but one count I have I would put blue 3 at the May 2015 peak, and blue 2 at the Jun 2012 point with wave blue 4 at Feb 2016. My alt count is your blue 3? as end of a very long extnd wave 3 with again blue 2 at June 2012 which gives the Sep - Dec 2018 decline as wave 4 (with 3 waves down in it) and wave blue 5 to 2020.
SPXs, like the DJIAs, waves are being distorted by stk components that are out of usion with the old industrials who made it up in the older times. Its quite possible that these indexes are no longer readable a lot of the time in terms of EW theory. The true wave 5 may be the Jan 2018 top or alt the 2020 top - it is doubtful that the Sep 2018 peak is it on that basis - so flip a coin on the issue.
I ask MTU just how many of the stks that made up the SPX 25 yrs ago are still there ? And are they of the same sectors.
Note also the waves since Jan 2018 may be forming a reverse expanding triangle which usually result in a solid move upwards.
As I do not trade US indexes I have not delinearized the wave seqs so I must sit down one day and do so to get the future possible moves. Anyone who wants to pay me for my time to do it can have the results. The one of did for stks I follow predicted this slide and pattern seq beforehand reasonably well.
MTUs CHART 2:
ReplyDeleteWhile optically there isnt 5 waves down you must consider that the rally from Jan to Feb 2020 was in fact wave 2 as it was so on comparable indexes like UKX.
Supporting that is that the Jan 2020 decline consisted of 5 small waves not an abc, then a rally to a higher top of 3 waves on DJIA. NYA saw a lower wave 2 top like UKX, but SPX gave confusing pattern of 5 down 5 up in Jan-Feb. This shows you need to look at patterns on other indexes when considering what the true count is on SPX.
So on the above basis your Chart 2 your blue [A]-[B] is prob a [3]-[4], but your blue [1]-[2] is also still somewhat possible given the distortions in these indexes we have seen in recent years. The former view ([3]-[4]) is at this time more plausible because of the resistance of the index prices to fall much in net way the past week.
The question remains is the wave from 4 March over ?
If an extnd wave C or 3 (or 5) in a general sense was running its wave iii under normal circumstance would have to have been very large and it would have prob have to have been between 11 - 13 March, but price action then wasnt, so one might conclude an extended wave wasnt in progress. If the pattern's distorted extn is still possible. The wave from 4 March in fact looks as tho its a equilateral seq with all waves same length (so far).
The other consideration is if the seq is an expanding neg impulse seq where wave 1 3 & 5 has elapsed since mid Jan and they are of increasing magnitude with wave 5 as the longest. If thats so then there wont be a large extded wave 3 but it will be an extnd 5 (which is what may have unfolded since 4 March).
While the position at this time looks like a low is around or close, always cover the position is the traders rule in case it drops out of the current levels.