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Thursday, July 16, 2020

Charting to Possible Top of the S&P 500 [Friday Trading Day Updates]

[Updates through trading day of 17 July]
Wilshire channel line. Note how prices are oscillating trying to maintain above it or near it. This is the true price channel of the 5 wave Elliott Wave count and prices are bearishly struggling to maintain.  Very important line. When you see things through this lens, intraday prices make more sense. They are struggling for that final effort higher...

This just goes to show you how harsh the move down to 4 did technical damage to the entire market.

LOG Scale:
And same chart just in arithmetic scale.
VIX is bleeding down.
Goal for bulls today is to finish the week with a close higher than the early June high closing. That sets everything up for a gap up Monday.
The Wilshire formed a nice (b) wave triangle.
After a small a-b-c bounce from their lows, banks down again. Most of the big banks have reported earnings.
Wilshire 5000 wedge. Goal is to close it over 33,000 as the June 8th peak close was 32,991.

Then they gap up Monday.
Wilshire at resistance again. Keeps making lower highs, but we'll see.
Special Post!  Possible Gap Challenge Day.

(NOTE: SPX may have already performed the final wedge move at yesterday's high. This post is if it has one more push and what to look for.)

The possible ending diagonal triangle in the SPX. This special post focuses on the SPX since its easily seen on any financial site.  The Wilshire 5000 would apply also.

Rules/Guidelines of ending diagonal triangles are as such:

An ending diagonal triangle (otherwise known as a bearish wedge) occurs in wave five spots at peaks.  It consists of five overlapping waves that have an internal "three" wave structures we count (a)-(b)-(c), typically all 5-3-5 zigzags (they are).  Why the 3 wave internal structures and overlapping waves? Because it indicates a tired market that is no longer able to produce clean 5 wave impulses.  In this case the market has moved up so fast and so much that momentum is slowing and it can result in a compressing ending diagonal triangle. 

The ED pattern can be typically "overthrown" in a fit of excitement/exhaustion.  This is the final move and then prices should rapidly decline. Once prices exit the bottom of the wedge, that confirms the reversal. A price collapse will typically take prices back under from where the wedge started. In this case that's probably a 10% down move to under "4" for starters.  

Each internal wave ideally gets "weaker" in some way. Our Daily chart confirms that it can fit the pattern of an EDT:

(NOTE: SPX may have already performed the final wedge move (with underthrow) at yesterday's high and unconfirmed by the Wilshire 5000!)
Our max upper target is about 3273.3. (This is a little into the big open gap down.) 3273.3 is where wave [v] = .618 x wave [iii] and total SPX market retrace from March low would be 89.99% in an overthrow move.  The notes are on the chart no need to repeat them here in words. 90% total market retrace is a problem in Elliott Wave world and we really don't want to go there!

We have about 1.8% to reach 3273.3.  Remember this is the maximum projected price. Prices can end anywhere lesser as long as its above (a) of [v] which is 3238.2. The NASDAQ should not be making a higher peak. It has room to spare not to do so. 
No need to expound more on the subject other than to say if this is a wedge that requires one more move it needs to likely happen tomorrow because this is ideally where the wedge gets resolved, not at the tip.

Ok we'll see if futures agree or disagree come market time. Good luck!

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