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Monday, June 15, 2020

Elliott Wave Update ~ 15 June 2020

[Update: 9:30 PM EST]. Today reminded me of another furious rally that occurred over a 2 day period in a matter of only about 5-6 trading hours. That was Sep 18-19 in 2008, right before the big panic plunge.  The market had been making a long-winding series of ones and two's down since the 2007 peak. By September of 2008, it headed down again forming another wave (i) low. I knew it would rally hard because the (i) low was overlapping waves which was an ending diagonal triangle. I think the next morning they banned short selling of banks and it rallied even more.  An 11.5% rally in only a few hours trading time.

And then it rolled over anyway.

Today finished a lower low with overlapping waves from the preceding waves. It wasn't an ending diagonal triangle, but it rallied furiously all the same 4.15% intraday and add a bit more from premarket hours.

Perhaps the market senses it is in the same sort of perilous setup now as it was then in 2008. Maybe it tries like hell to rally furiously again.  It almost has to. As I mentioned below, it cannot really afford to start incurring any more technical damage or the downside targets may topple very quick.

There really was no a-b-c pattern back in that 2009 furious rally to speak of, just straight up more or less. Once it met a bit of resistance, it rolled over . Then once it started moving to the downside, selling kicked in it didn't take long for panic to set in.   You can see the "third of a third".
In lieu of that blast from the past, we'll raise the wave [ii] target area. The resistance is the underside of the island more or less.  That would be a straight up 9.1% rally from today's low if it occurred and more from the premarket low, say 10%.

Just something to consider.

ORIGINAL POST (UPDATED 15 MINUTE CHART)
The primary count is that today's hard bounce was Minute [ii] of Minor 1 of Intermediate (3) down.

Tracking the lower main channel line and looking for a Wilshire price low that overlaps with "A" peak and thus eliminates the count of 5 waves to new all-time high. There is already overlap in the SP e-minis and DOW all-session futures. There is A wave overlap on the Russell 2000 and NYSE and the NYSE Composite. So 1 by 1, weakness is permeating and the furious rally is meant to stave off the infection(s).

The rally(s) managed to relieve some short term oversold conditions on the usual suspect of standard indicators.  If it was an island reversal, it shouldn't be revisited in price. (Or else it wouldn't be an island, I guess that's obvious.)

The 61.8% Fib retrace would would touch in the open gaps which would be just fine.
Again if its wave (2) high, and Wave (3) down, the market bearish forces should exert fairly soon. It shouldn't be lollygagging too much up here in this price range. You can already make the argument that it has "consolidated" the last few days and is setting itself up for a very nasty 2500 DOW point plunge.

That's what the primary count implies but whether it happens or not is up to the market.
The wave 4 count is hanging in there for now. There will have to be continuous rallying and it really cannot afford to make a lower low in price, there is a small window, but another low could very well be a  rally killer. It would have to keep shaking out all the urge to dump stocks at this price and maintain prices both above the wave A (1) high and the channel line.
The effort to maintain high prices is noticeable.  At about 2:45 EST A.M. the SP e-minis futures were down to about 2924. They finished the day at 3062!

But when you realize how much ground was lost, it fits a normal wave two retrace in price and it has room to run further still if it wants.

A bit of bear porn for you. Yeah, it'll look pretty stupid if the opposite happens. But the market is in position for this count to occur and its in position to rapidly incur massive technical damage.

The main points to glean are: Minor 1 of (3) should finish lower in price than (1), and the decline might be (guessing) at least as rapid as what occurred in February- March. If these things happen, that helps confirm the overall count of (3) down.

Also note the smaller volume days of the last 2 days compared to the previous 3 red candle volumes. That supports the idea this is a small wave [ii] consolidation.

If you're in the mood to buy stocks and take more risks, have at it. Everyone I know is pissed off for some reason or another.  Everyone I see on TV is angry, and pretty much everyone on the internet. Wave (1) was driven by fear. Wave (3) will probably be driven by anger as the main negative emotion. Fear will come again, but at these prices, anger is likely the driver.

Technically this proposed  next squiggle wave [iii] of 1 down could accelerate very rapidly. We have a series of targets that if they start falling, should quickly lead to the next target. They could cascade very quickly. Robinhooders wouldn't know what hit them.

Specifically:

1.  200 DMA  which is flattening again.
2. A-B-C up channel (black channel)
3.  Purple wave [i] and [ii] starter channel.
4. 50 DMA
5. Price overlap with the peak of A.
6. Pink lower channel line 2010-2020 bull market.
7. Price break of B
8. Two huge open gap targets at the start of (2) up near the end of March.
9. Revisiting the March low.

I'll be honest, I hope this is dead wrong. I hope this is all a bad dream.  Maybe the parabolas are too steep.  Maybe we just walk and dance around and slowly sell things here and there....

This is exactly why the market senses danger and is desperate.  It has to hold all these things to continue the bull run. It wants that 50/200 bullish crossover to mean something.






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