Elliott Wave Update ~ 30 April 2020

Primary count is that Intermediate wave (2) has peaked.   However we are closely looking for 5 wave impulse structures down and so far today, we do not have evidence yet using the Wilshire 5000. The DJIA though can be said to be 5 waves down from yesterday. However I use the Wilshire for a reason. I think it makes better wave structures, better channels, and better trendlines.

I've never seen a wedge run so far to the end. Either its not a true bearish wedge and is fooling us for now, or it will have the most bearish price drop from a wedge you will ever see.  I can't wait to see either way. The lower trendline has at least 11 hits. This line is apparently important to the market.

A closer look at the trendline and the count. Note that the drop from peak yesterday does not count as 5 waves down...(which is what we are looking for to confirm a trend change)

So this blog is closely monitoring the top alternate count as presented below. If we see a [b] wave of Z forming (it may be), then we'll switch gears again and presume the market has more work to do.

There would be a good reason to ponder that wave Z is not yet over. It would give is a better look on the bigger charts (such as the daily) to have 7 overall waves (appearance-wise) versus what some are calling 5 waves. 7 waves is a corrective structure (as is 3). 5 waves is considered an impulse.

Log scale would give you a better perspective since these waves have been so huge in such a short amount of time. A test of the blue hashed support line would create a 7 wave look. In other words, there needs to be more of a price pullback to make it pronounced on a chart this size prior to surging up again.

Something like this:

So that's it in a nutshell and what I am looking for in the next few days:

1.) Will the lower trendline break in dramatic fashion and wave (3) down begins in earnest forming 5 wave impulse structures down?

2.) Does the market still have more work to do and will create an overall "7 wave look" (which we would still count as a triple zigzag) as I have outlined above?  In this case it will likely hold upper support as outlined in the chart above.

Elliott Wave Update ~ 29 April 2020

We have enough waves in place to consider the triple zigzag count of Intermediate wave (2) complete.  The structure looks nice.  The Wilshire 5000 has retraced the entire drop from peak back to just beyond Fibonacci 61.8%.  The entire rise from the low is looking like one of the biggest bearish wedges I've ever seen.

When the lower blue trendline breaks, that may be the signal that wave (3) down has begun.

The market internals for each successive zigzag has been less robust. You can see that on the chart below. 

Possible squiggle count of wave Z of (2):

Daily:

Perhaps stocks have further to run in wave (2), although I wouldn't count on it. We may have labeled wave Z prematurely, and if so, we'll adjust.

The top alternate count if wave (2) needs still more time and price:

Some people have suggested we have made a 5 wave move overall from bottom which makes the rise over the last month an impulse move up rather than corrective waves to the drop. I would say one thing to that is that wave Y (a supposed wave 3) internal structure is not an impulse.  You simply cannot break down Y as a valid 5 wave move. This also probably goes for wave W.  Wave W also doesn't count as an impulse structure.

Elliott Wave Update ~ 28 April 2020

The upper blue virgin space was filled.  The primary count is today's peak was the top of [a] of Z of (2).  Therefore we are looking to trace out wave [b], and then wave [c] will take us to peak of Z of (2). There are enough waves in place to consider the count over, but again we'll keep giving the market the benefit of the doubt for continued rally.

Despite the negative day for the S&P 500, market internals of the NYSE was quite robust ending the day with 2.9:1 up volume vs down volume and 2.5:1 advancers vs decliners.

Note the horizontal line that was resistance and might now be temporary support. This is the point where major market player shorts are likely covering and forced to go long if they haven't already done so.

Possible squiggles on the 1 minute. Looking for wave (c) of [b] to be confirmed. The black line was resistance now it might be tested for support if there is a gap down open tomorrow to form the low of (c) of [b].

CPCE. We are looking for divergences to occur in the various moving averages. So far, nothing out of the ordinary.

GOLD hanging in there for the count.  Or perhaps wave [iv] forms a small sideways triangle. Be on the lookout for that too.

Elliott Wave Update ~ 27 April 2020 [Updated]

Primary count is that Wave Z, the final 5-3-5 zigzag of a triple zigzag Intermediate wave (2), has kicked off today.  This kickoff leg is much weaker than was W and Y as to be expected. Weaker and weaker internals on each successive kickoff.

Note the upper blue virgin space is within range.

A more detailed count of wave (2). Looking to form the top of [a] of Z of (2).

[Update] And a super squiggly count. Wave [a] has likely peaked. Note how the "third of a third of a third of a third" is today's gap up open.  That would be wave 3 of (3) of iii of (iii) of [a]!

A variation on the count would suppose wave (2) is nearly over. But this count doesn't jive well with the idea that today was the "kickoff" of Z which means the market has more work to do. The reason today was likely the "kickoff" day and not the gap up from our second "X" is because in the count below, wave [a] of Z finished below the peak of the sideways "X" consolidation period. That is not ideal because each zigzag [a] wave should peak above the previous consolidation period. On the chart below it does not which is why its not the primary count. Make sense?

10 minute chart in log scale:

Gold still on track for a spike peak (we hope)

Elliott Wave Update ~ 24 April 2020

Well, we didn't get the dramatic selloff as was suggested yesterday, however things were trading heavy early and eventually the market grinded and thrust higher. Perhaps we had our [e] wave of X afterall.  We'll throw the X on there again and see if it sticks....

Note how the long-winded triangle could still be in play if we get a small pop Monday to form the peak of [d] and hard sell for [e] and then reverse thrust bullish again.  However this sideways move is already long in the tooth. But to add to the discussion yesterday, its an example of wanting to label a triangle too early and then it fools you and then in the end its a triangle anyway.

A messy squiggle count but it all counts best as a zigzag probably regardless.

Another possible count. 

(And again please note the ALT (2) is still holding in place. Perhaps the market is lullabying us to death here before another great plunge down....)

Despite the back and forth on the squiggles for the last nine days, the overall theme has been that the market will break higher and trace a third zigzag to complete wave (2).

Gold. Still on track I suppose. The main theme is looking for an overthrow of the upper trendline(s) and max bullishness for sentiment.

CPCE still headed lower

The fear gauge VIX finally relaxed a bit and made a new recovery low. You could see this during the day the VIX was much lower than the market indicated. This was a clue it was probably going to pop higher despite the rough market internals.

These 2 data points (CPCE and VIX) kind of support the idea of a higher wave (2) peak along with an incomplete GOLD count.

Weekly:

Elliott Wave Update ~ 23 April 2020

Ever since the market peaked where I have marked wave Y, it has been trading sideways in a game of opening gaps (both up and down) for the past 9 days or so.  So we can still consider this entire period a possible consolidation of prices. We all know there is stiff resistance because we are hovering around the 50% retrace point of the market drop from all time peak. If the market can shake all the sellers and maintain prices, we have a situation where it can break higher.

This is a good time to discuss triangle dynamics so here it goes:

We may be setting up for that triangle situation. Perhaps we are still within the second "X" wave of our triple zigzag count. Wave X could be setting up as a very long-winded triangle that is nearly complete.

Here is the thing to watch: Market might open lower and cover the recent gap up from a few days ago in an [e] wave of X and then prices climb relentlessly in a true breakout from this range higher.

An [e] wave is where everyone is convinced that the trend is opposite of what the [e] wave actually portends. In other words, if the market sells hard in [e], people will be convinced that finally the direction the market is heading is bearish. But [e] waves have a way of smacking most of the people the wrong way.  A hard selloff [e] that reverses hard bullish is a surprising thing to behold and is the entire point of triangles.  This is called the "thrust" out of the triangle.

Triangles jiggle you around for days or weeks depending on the size and degree.  And even if you can see a possible triangle form it is hard to feel a triangle in its late stages. Though we can sometimes see it, we have a hard time believing it.

In this case it is easy to know when the [e] wave fails. If prices go below where we have [c] of X marked then we know the triangle is not to be.  that would be roughly 27.3K Wilshire. That is a triangle Elliott Wave rule.

Closer look at the possible X triangle.  Remember the discussion on that 1 of the triangle waves is usually complex and a mess? That would be the [b] wave in this case.

An even closer look of a possible [e] wave.  It may even have its own intraday triangle within it! (and a leading diagonal triangle for wave (a) - buts that's a discussion for another time)

The other top 2 counts are shown on the chart below: 

1) X is finished and is labeled a 3-3-5 flat and market is tracing wave [a] of Z. Expect a possible breakout higher tomorrow to finish [a].

2) Market is going to bust lower in a dramatic selloff as wave (2) peaked and we haven't realized it yet. That's why the triangle discussion above is relevant either way.  Because if prices go below wave [c] then we can say its not a triangle and that it failed.

Elliott Wave Update ~ 22 April 2020

The triple zigzag count is alive and well so we'll keep going with it until the market proves otherwise.

A closer look. Maybe down to (ii) in the morning? Its been such a game of gaps lately....

The count if wave (2) has peaked. Its not the preferable count because "Z" is small to be its own Minor wave zigzag compared to W and Y.

This count implies a big selloff is coming in pink wave (iii) down. So again, tomorrow will provide more clues.

The best count I got for GOLD. I'm thinking it goes vertical here for a blow off top?

Makes sense for a commodity to do that.

Looking for a strike to the upper green trendline with possible overthrow.

Elliott Wave Update ~ 21 April 2020

It was mentioned yesterday that if the market tried to close the recent gap up, it was likely to have problems and selloff.  That's pretty much what happened.

However, we still haven't given up on the idea of a second "X" wave in a triple zigzag count. We have a valid 3-3-5 flat as a possibility for X. The landing window is likely narrow. Either today was its low, or shortly tomorrow with it going no lower than our pink target box for this count to be valid.

Technically, (a) of [a] of X is still a lower price as of today. Its been a game of gaps for our second X wave count.  The market tried to breakout upwards last week from a triangle, but it didn't last long and got sucked back down.  So maybe we still have "X" finishing up.

The flipside of the count above is that wave (2) is over and we began wave (3) down. The count is unsatisfying in that the 3rd zigzag was a fairly quick affair. Yet, I'm not going to quibble.

The weekly shows prices closing back beneath the long term bull channel.  The supports wave (2) is complete.

And a closer look:

And they made a big mistake in allowing the May oil contracts to trade negative. Its just not right.  That's like buying a stock and have it go negative and you OWE money as if you had used margin.  This makes all ETFs suspect in my opinion, in fact every market (GOLD comes to mind). If I buy a non-leveraged market-based SHORT or LONG ETF, will I be responsible for anything if it was to go below zero due to some structural problems in a market panic situation?

Conclusion: Tomorrow is a key day for our count(s). Again, we'll give the benefit of the doubt to the triple zigzag possibility. 

Elliott Wave Update ~ 20 April 2020

Its curious that the Wilshire covered its gap down today and then sold off. We'll give it the benefit of the doubt that it has one more wave in it up, but there are enough squiggles in place to count the pattern is complete.

CPCE 5 and 10 day moving average is still moving down.  When these 2 averages start to curl up again, then we'll be looking for a market wave (2) peak.  

The market has yet to close the up gap from last week, but its working on it I suppose.  Either [b] of Z finished today or will tomorrow. The problem for the market is that it probably can't afford to close the gap safely without a massive selloff.  

If prices drop beneath the second blue "X" we can probably say that wave (2) high is in.

Prices are starting to struggle compared to the early waves of (2). Resistance is heavy at this point.

We await confirmation that the markets roll over into wave (3) down.