A potential impulse may be developing in SPX from the low (Chart 1), potentially to launch wave five up (Chart 2) highlighted in recent weeks. Note that wave four down, if complete, retraced a fib-0.382 of wave three up.
Can it be a bull trap, at least for the short term? Yes and time will tell. By measurement, a potential expanding (solid red line) or contracting (dashed red line) diagonal triangle is a possibility (Chart 3).
Your Chart 2 count does not make valid sense MTU.
ReplyDeletePast charts obv show it is extremely dangerous to be long when there are 3, let alone now in this case 4, sections up from the last main low (=2009).
And unfortunately most people don't understand how an expanding seq or wave 3 works. Its hard enough for even me to figure it out.
If chart 2 shows an impulse wave I would as (an alt count) label it 2011 wave 1, 2012 wave 2, Sept 2018 wave 3 (=your wave 1), and Nov 2021 wave 5.
But I think wave 5 is Jan 2018. and the waves since A and B.
Because of the 500 stks in SPX and different sub component sectors on their own trends, the index isnt a good guide to the real picture of the wave count.
The end count will depend on how skewed the real count is from the waves we see.
Also Chart 2 -
ReplyDeleteYour wave 3 is too small in size to be a 3 given the size of your wave 1.
Your wave 1 saw a 4x rise from the base low price in 2009 (approx 750 to 3000 pts) .
But the rise from your wave 2 to your 3 is only under 2x (2250 to 4750 pts).
Wave 3 is usually a lot larger a multiple than wave 1.
Same obv apples to a C wave in a countertrend B wave.
This is why I disagree with you but ....... anything is possible in a skewed mkt.