Yesterday we said wave 3 from 1335 would project to 1298, or 1293. The initial drop this morning hit 1293.04. After a very slight move higher, the market continued lower, dropping to 1283. At that point the market tried a feeble attempt at a rally, reaching 1288, and then spent the rest of the day drifting lower, falling to 1277.25.
We believe wave 3 from 1335 bottomed at 1293.04, and then wave 5 from 1335 completed at 1277.25. After a brief wave 4, wave 5 then carried below what we viewed as the critical 1292 level. This signals that we must now complete another 5 wave sequence from 1422. The move from 1422.38 to 1291.98 was wave 1, 1291.98 to 1334.93 was wave 2, and wave 3 should carry us down to 1250. I will give a more thorough analysis over the weekend.
Started wave 3 of 5-wave sequence from 1422. The drop today marked wave 1 of wave 3 down.
ReplyDeleteA question for you. On 5/31 the SPX hit 1299 and bounced to 1320 later that day. Why don't you count 1299 as wave 1 of wave 3 down, 1320 as wave 2, and 1277 today completing wave 3 (to be followed by waves 4 and 5 to complete the sequence)?
Good question wavediver. Thanks. 1299 did complete a 5 wave sequence from 1335, in essence a "wave 1". The drop today to 1277 met our criteria for another 5 wave sequence from 1335, forming another complete wave. Our model is based primarily on one specific relationship that forms in every 5 wave sequence, and when that relationship exhibits itself, a 5 wave sequence has been completed. The sequence 1335-1299-1320-1293-1294-1277, satisfies that relationship. It is possible that 1277 marks the end of wave 3 from 1422, in which case we would expect a short rally, followed by a slightly lower low to complete wave 5. Based on several other relationships that we have uncovered, we expect wave 3 from 1422 to terminate at, or near 1250. That is why we currently believe this was only wave 1 of 3, and not the completion of wave 3. Our model does not distinguish between magnitude of the wave, but simply when a 5 wave sequence has completed. That is why we are developing some secondary relationships. We'll cover some of the other possibilities over the weekend. A lot will depend on how wave 4 develops. Hope this helps.
ReplyDeleteSteve
Look forward to your weekend update.
ReplyDeleteBill