Last week we identified a major top having occurred. After an initial drop from the highs, the markets once again found themselves in a narrow trading range. However, recent wave counts indicate that a more precipitous drop is imminent.
Having failed thus far to form a simple 5 wave correction pattern from Wednesday’s lows, the market has instead remained in a consolidation pattern. This pattern appears to be playing out as a series of nested waves, 5 wave sequences resulting in lower highs, and higher lows. This pattern generally results in a fairly substantial move in the direction of the main trend, which in this case is to the downside.
In this consolidation pattern we have a confirmed 5 wave sequence from the low of 1363.81 on the SPX, to a high of 1376.17. We have also confirmed 5 wave series for the ensuing downside move to 1366.42, and the final move up to 1372.10. We would call all of these termination points of 5 wave sequences, and label them as wave 1s of declining degrees. In order to complete the sequence started at last week’s market high, all wave sequences must be completed. Some of these sequences will be inverted waves, resulting in a substantial move to the downside.
How confident are you that this major top, even "the" top of this bear market rally, is finally here now? I have been burned many times trying to time this because of all the money printing, quantitative easing, liquidity, ignoring and rewriting rules and laws, failing to prosecute thousands and thousands of felonies, etc. For example, Elliott Wave International's wave counts have been ruined for years. Is the unreality finally ending so that we will get the big crash and deflation that was overdue years ago? If so, this could be a sight to behold.
ReplyDeleteBy the way, March 16 is a major "Bradley model" turn date, and a top near that date would be very fitting. Also, I have read about leaked documents saying that European banks are already being told to prepare for an outright default by Greece after they miss their March 20 deadline, probably due to lack of private sector agreements to accept haircuts voluntarily. That would trigger the CDS payouts and contagion. Apparently, a bank holiday will be declared on Friday, March 23, and Greece will officially drop the Euro currency.
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