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Tuesday, July 14, 2020

Elliott Wave Update ~ 14 July 2020 [UPDATE 7:30 PM]

[Update 7:30PM EST]
We do have one more important scenario to discuss if the Wilshire5000 and SPX try a second breakout above the June peak and fail. 

The move up to peak yesterday kind of looked funny and the Wilshire wave down had an extra squiggle wave in it compared to the Composite. So, presenting...

FAILED BREAKOUT #2 SCENARIO:
Since this is a "Terminator" market that never seems to die, we have to suppose it's going to try and breakout once again above the June peak (its trying to break the big open gap down sore from February and break the VIX into making one of those stop runs goofy spikes down.)

In this failed scenario #2 the open gap sore remains forever and ever open or partially open on the Wilshire 5000. Not sure about that darn VIX.  They like to play games with that.

Couldn't but help notice there may be a bearish wedge developing and internally it has a bunch of "threes" which is ideal.  And another marginal peak that fails to hold would likely be exhaustion (in theory!)

In this scenario, the NASDAQ Composite fails to make a higher high and doesn't confirm.
SPX. Remember, the market likes to hide everything it can because so many people look at it every day!  This may just be a hidden rising bearish wedge!

I was correct about the first failed breakout scenario and hard reversal but the key pivot held firm today. So this may be pan out also. Its all a moot point depending on what futures do, but if they do hold up big and gap up big, they should meet some sellers. Maybe Warren gave the "go ahead" to dump Apple and Geico (he talked them both up in January this year!) just like he secretly dumped the airlines. LOL ol' Warren is a card ain't he?  Probably will get the last laugh on Mr. Portney after all!
In theory, if this happens, you could think of it as a "failed 5th wave". "X" would be "4" and the rising wedge is five waves of 5 in an ending diagonal triangle. Consider it a failed 5th.  That is way freaking bearish!
Ok, maybe it is trying to be a 5th wave after all and is failing! Super bearish!
E-minis never did confirm and take out their June 8th peak.  Perhaps they do overnight in this rising wedge pattern and by morning we open deep red because this pattern is resolved and all the "hope" (on a vaccine that may start a 2 year trial next month LOL) has been eradicated.

That would fit the squiggle count that today was a retrace wave [ii] or (ii). And tomorrow the lower trendline (channel) breaks and 4 pivot breaks and all hell breaks loose.

Too many people have seen the wedge now....

ORIGINAL POST
Primary count is the Wilshire/SPX and NASDAQ Composite formed Minute [i] low today from yesterday's peak and today was either the entire or partial retrace Minute wave [ii]. I could label it Minuette (i), but for now we'll stick with [i]

Hey Bears! We got the market right where we want them!

But seriously, here is the excited headline: DJIA "extends 3 day win streak. Up over 500 points." I'm sure the CPCE is now even more record-er-er low and bullish sentiment, if it dropped for a day, is back to where it was.

But underneath the message for the past day and a half is "NASDAQ loses 636 points from intraday peak to intraday low, 5.96%, retraced loss almost 50%".

Market tops don't announce themselves. I get the feeling the entire onlookers are expecting exactly that to happen. That when the market peaks, they'll surely know it!

I don't think it works that way. However, Elliott Waves can give us that edge.

Anyways, that's how I see things at the moment.

The market is trying trying to fool us into thinking this is a mini-replay of 2000.  In 2000, the NASDAQ peaked, retreated 13.6%  over 5 days while the Wilshire/SPX only lost about 5.6%.  Then the Wilshire/SPX then rallied and made new all-time highs again while the NASDAQ did not (and neither did the DJIA).  I guess you could say this was "rotation".  The market is not quite setup in the same way this time around.

The counts for the Wilshire/SPX and NASDAQ are now in alignment more or less.  They both made important potential peaks yesterday.  Wilshire in a possible (2) peak and the NASDAQ Composite at (5) of [5].

They both bottomed today in what looks like a decent 5 wave impulse move lower from peak we can call wave [i] or (i). And they both gained during the rebound today which we could call wave [ii].

So, at the moment this is not a likely repeat of 2000.  At the moment, the Wilshire/SPX are tied to the hip of the NASDAQ.  

They were tied together when the NASDAQ went to to wave "3" and the Wilshire went to wave W. They have been disjointed since June 8th but now they are aligned again.  Although that seems like a bullish thing, we should probably take the opposite stance and view it as bearish.  When big moves occur (in this case down) it is often the case that the indexes align in some way together first.

Both counts are nearly identical from yesterday's peak so here is a split screen. And yes they are free to retrace as high as they require.
If the market gaps up tomorrow, it would be an ideal place to unload NASDAQ longs (in my humble opinion)
Here is the "5 waves Wilshire/SPX to challenge new all-time highs count" which makes me ill having to post it, but I am obligated. The problem is, since the Wilshire/SPX are likley joined at the hip, I don't have a backup bullish count on the NASDAQ....

I will tell you this though. The market seemed to have identified an important trendline for us to watch. If this trendline breaks in price, look out things could get ugly selling.

If "4" low is taken out in price, this bullish count blows up entirely. The market seems to know exactly where ol' Dan put wave 4 because prices held above.  And it stealthily identified a line it may view as important.
And here is where I got the line from. This is log scale if you can't tell.  This would be our "5 wave channel line.". If the Wilshire loses this channel again, I don't think it will recover.
E-minis after hours. Look at that gap up on "hope news" (vaccine blah blah)! LOL, its funny-looking either way. I mean this is "hope" to the n'th degree.  Bull markets aren't based on "hope" that is a bear-market rally emotion.

What happens if this gap retraces overnight?
Oh my. CPCE. The Robinhooders are relentless!
The plumbing has got problems!
Here is an example of how alignment of the indexes can result in a bearish outcome. That process could be underway as the Industrials are now trying making their move to try and align.
10 Year yields. 


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