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Wednesday, July 15, 2020

Elliott Wave Update ~ 15 July 2020

Wow SPX sitting exactly at a perfect Fib ratio at the high today! The Wilshire did not confirm a higher move today. [UPDATED END OF DAY CHART]
Ok, SPX higher high but its close cousin the Wilshire 5000 did not.  That may be yet another non-confirmation piled onto non-confirmations.

There are 4 squiggle counts at the moment. Here are the 4 from most bearish to most bullish (temp bullish mind you). You, dear reader, can pick one and choose.  As usual, the market will decide.

1. Most Bearish: The "It's Over Count".  Supporting evidence: Non-confirmation of the SPX by the Wilshire 5000. The bastards may even "mega -gap down" in the morning and create yet another huge breakaway gap fooling an entire generation of "gap traders", This would set a new trend to just leave bloody big breakaway gaps all over the place in the coming Depression.
2.  The "Gap up and Dump" tomorrow count. This calls for yet another effort to get above June 8th and gap resistance and fails in a wedge-type situation. Selloff ensues. NASDAQ no new high.
3. The 5 waves count with Ending Diagonal Triangle. This is really just another variation of the above two counts, except the market may start a bit down in the morning (or small gap down) to form wave (b) and then max effort to form (c) and then its exhausted. Count the entire structure from the March lows as 5 waves with 5th wave failure and an ending diagonal triangle to top it off. Super Bearish actually. NASDAQ no new high.
4. The most bullish count. 5 waves to challenge new all-time Wilshire 5000 highs. Market count is primed in a series of "ones" and "twos" up. Likely a mega-gap tomorrow in "upside super surprise". It would just run right through the Feb gap down. Supporting evidence: Market internals ended pretty strong today. May still be a 5th wave failure but it gets a lot closer to the February peak. NASDAQ may or may not make new highs.
I have no real preference at the moment. But do remember this: These are ALL Ultimately Bearish endings!

Split screen Composite and Wilshire as shown yesterday. Prices contained in the boxes so far.  Overlapping waves on the Composite and 3 wave structure to today's high. 
A/H's prior to trading. It made a marginal higher high.  If its a wedge in A/H's, then one could suspect it should behave like one. We'll see.
Everything got a nice bounce over the last many sessions. Certainly nothing is oversold. 
Weekly Wilshire 5000 non-log. Just a smidgen of RSI divergence, But that still shows a loss of momentum.
The VIX is super stubborn. The market makers are trying to break this long-standing uptrend and run every stop. Relentless. But the higher market goes, the greater the crash.
Wilshire 5 wave count showing the ending diagonal triangle pattern.  This week has made it to within under 5% from its all-time peak.  Note the strong internals using the NYSE data.

Ask yourself this: Why the "hope" emotion? That's clearly a bear market rally emotional trait. We heard it for months in late 2008.   Very strange to hear considering we are within 5%. They normally would use the term "Wall of Worry" for a true bull market.

Ask yourself this too: Why when the market first started reaching these heights in 2019, the VIX was super low teens and everything was calm? Now its stubbornly high and reflects a great nervousness at the same price levels. 

Its almost as if every participant is becoming self-aware, yet they cannot stop themselves from bidding higher. (CPCE reflects that!)

Its like the poll I read today where people were asked who they were voting for and it went like 50 - 43 Biden in the lead. But when they were asked "Who do you think will win?", the same people went Trump like 56 - 43 or something to that effect.

Its like they want to say "I'll probably vote Trump" but they can't bring themselves to tell the pollsters. And actually, they may have convinced themselves they will be voting Biden but the second question shows what they may actually do. 

That's kind of how the market is. Here would be the poll question: Is the market going to go up? Yes 85 - 15. Will the market crash back to March? Yes 85 - 15. Its schizophrenic and the VIX reflects that. 

I just made those numbers up but you get what I am getting at.
CPCE. Presented without comment.
Same chart just backed out and dimmed the Daily, 3, and 5 day moving averages for effect. 10 and 30 day day has never been lower as far back as it can go.
They are within spitting distance of just mega-gapping right into the open gap. Should be wild!
This wedge pattern is now probably obvious one way or another and the market doesn't always reward the pattern, but sometimes it can.  Like fake triangles, there can be fake wedges. It's also obvious now in the afterhours as it exists there too.

Under that possible assumption, we can either deduce that (don't you love Elliott Wave logic?):

a) The high may have been today (perfect Fib ratio on the SPX 3238.2!), there will be no further touches or overthrow and if it is an ED pattern, expect price collapse because that is the outcome if this is a true ending diagonal triangle.

b) This is not an ending diagonal pattern and the market will break higher and/or will trace some kind of price move that invalidates this as an ending diagonal bearish wedge.  

However coupled with the extreme sentiment readings (for instance the CPCE), it is perhaps a deadly combination of a super bearish wedge pattern + perhaps a failed 5th wave to new market highs. 

The logic here is that if it is a bearish wedge, there should be a very scary price collapse considering the market bets have been so persistently one-sided for so long. Added to that, the potential NASDAQ count may have finished as noted in yesterday's post. 

I just don't know who has the balls here! Oh yeah, SuperRobinhooders!

The sister Wilshire 5000 did not confirm this higher high today by the SPX either so some more bear porn thrown in for you.

Futures seem to be holding just fine, I'm going to bed.

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