It can be argued that we have a completed five waves up from the 2009 low to the nominal all-time high (Chart 1).
Chart 2 provides a more detailed count on wave [iv]-down of 5-up, as a (w)-(x)-triangle structure often seen in recent years amid market exuberance.
Also note that the plunge in the Dow has already overlapped its wave 3-up (Chart 3), which increases the likelihood that this is a larger degree retrace.
This could be the end of a larger degree wave (5)-up or just 1-up of (5)-up (Chart 4). In either case, a correction of the 11-year run from 2009 to 2020 could be running and is unlikely to have lasted only 6 weeks.
For the near term, we have an impressive bullish weekly candle (Chart 2 above) but SPX is still pressured by the downward trend line until it is broken. For short term tracking, we are monitoring the possibility of a fresh upswing (Chart 5 purple and green) or a fourth wave flat (Chart 5 blue)
LONG TERM CHART & WAVE COUNT
ReplyDeleteMTU has now agreed what I was saying mths ago that prob 5 wave from 1932 or 1942 has worked out.
I am however cautious about this because I recall in 1987 and prior to it (Prechter's 1982 Book prediction) were saying that wave was the end of the 5 from 1932, but it wasnt.
If Neely's view of large advances still to happen is right, then wave 5 from 1932/42 is still in progress and the run from 2009 to 2020 is its wave i, this move currently in is wave ii, with a iii - v to follow.
The big question is just how possible is that ?
Remember that the 1930s depression & stk bear mkt only occurred as a result of monetary contraction which is not what we are seeing now - nor will Govt allows Central Banks to do that.
If wave 5 from 32 has ended then a zig zag down for 3 yrs approx is the usual thing. If not, mkt should prob hold at the low of this drive and bubble back up to the end of the year. The key signal will more be what it does next year in 2021 - if its down then wave 5 may have happened, if its up in 2021 then wave 5 not completed.
The implications for 5 completing are scary because enormous qty of stks, and other securities may lose a lot oft heir value over the next 3 - 10 yrs. also a 87 year advance from 1932 would require at least 20 years of bear trend to correct as an A-B-C.
OTHER INDEXES -
ReplyDeleteDAX has declined to a strong technical support point of both the 50% level from 2009 - 2020, plus to the level of the tops in 2000 & 2007. While nothing is guaranteed past obv on this type of pattern would indicate further declines for the moment are low, and approx around the low a week or so ago it should bounce from.
UKX has had a weaker run since 2009 than that DAX and the US Indexes and has declined a rel proportionate amt to DAX but because of the lower top in Jan the recent low is lower at its 2011 levels.
It too like DAX should have some type of bounce off this level for a mth or so.
US DJT (Transport) Index also show pattern similar to DAX.
Whether the final lows are in on minor waves, as MTU notes, is the question.
On MTU's main comment the thing to remember is the DJIA from 1932 has only met MINIMUM REQUIREMENTS for 5 waves, not best requirements.
SPX DJIA etc -
ReplyDeleteNote also on US indexes there is a possible distorted reverse expanding triangle from the Jan 2018 top, forming a possible a-b-c or 1-2-3 wave to recent levels. (The true end of wave 3 is in Nov-Dec 2017 I suspect).
The rel timing structure of that also fits nicely at 0.382 correction so far from then to now, of the wave 2 (2012) low.
If that triangle is correct the implications for upside are more prob.
IF 5 WAVES HAVE EXPENDED FROM 1932 -
ReplyDeleteIf 5 waves have run from 1932 to the Jan 2020 top then under EW rules the A wave would have to go to the 0.382 retracement area of the move up from 2009 which is around the 2011 lows (1080 area on SPX).
That has not been reached, and the current position under this scenario would be neg wave 1 of the neg 5 of that A wave.
That A wave also could take anywhere between 2 to 5 yrs to unfold.
The answer to all this depends on exactly where the upside count end for wave 5 (or 3) from 2009 - is it Jan 2018 or Jan 2020 or even Sep 2018 because that answer will change the count.