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Thursday, July 2, 2020

Elliott Wave Update ~ 2 July 2020 [Update Thurs 9:15PM]

[Update Thurs 9:15PM EST]   The May jobs report was the 5th of June but (2) peaked on Monday the 8th. In that light, If we have one more squiggle coming likely it would fulfill on Monday also. This would be where (c) = (a) of [ii] and would close the island gap on the SPX but probably not the DJIA nor the NYSE. In fact they probably wouldn't make new pivot highs.

The low points on the flat was an upward configuration so we have to assume perhaps one more squiggle to make the top of the flat in an upward situation.

I like this count maybe better. It stretches out wave iii and places the virgin space at the 50% mark. We are ready for Monday either way.
Actually the squiggles would have to count like this due to wave three violations. I don't ever recommend shorting usually, but if this last squiggle occurs on suspect internals, it would be a good place to put a short once (c) = (a) - see chart above.
The primary count is that Intermediate wave (2) peaked on June 8th on Monday after the Friday monthly jobs report. The unemployment dropped unexpectantly to 13.3% that day. The market then sold off viciously a few days later with a 90%++ down day. We marked that eventual low Minute [i] of Minor 1 of Intermediate (3) down. That daily candle has been basically the entire trading range of the market ever since....and that's a quite normal thing!

After peaking in wave (a) and then downdrafting in (b), the market has rallied furiously over the last 4 days heading into the July 4th weekend.  The structure counts as complete and Minute [ii] counts as peaked today on yet another "good news" jobs report. This time unemployment unexpectantly dropped again to 11.1%.

Therefore shouldn't the market be higher than the June 5th high? Is not that a significant divergence? Why yes Dan, it is! Ok, so maybe I'm stretching things here, but is it not a negative divergence?

The proposed Minute [ii] wave counts as a 3-3-5 flat. Three waves to (a) - (counted as a 5-3-5 zigzag), three waves to (b) - (counted as another 5-3-5 zigzag), and a nested 5 wave move to (c). Hence the 3-3-5 flat pattern. (This is the same pattern that traced Minute [ii] after Intermediate (2) peak in May 2008 as shown a few posts ago.)
The market jumped over the channel line this morning it couldn't wait to get higher.  And then at the end of day, it fell back under the channel and pretty much finished near its low of day.

And its on an island at the moment.
The complete count of (1) and (2) so far.
Proposed waves [i] and [ii]
As far as the NASDAQ, I'll take another stab at the count. You can see after wave 4, it broke to a new high. This would have been the perfect spot for "5". (yeah it was marked a 5 at the time). But its a greedy freaking market and it decided to extend further after dropping back lower.  And then it did make another high, but it was only wave [iii]. So after dropping yet again in horrible overlap, it fulfilled its [v] wave duties.  

So it finds itself in yet another potential bearish ending diagonal triangle wedge pattern.  And there was no overthrow today just a perfect kiss of the upper trendline.  Maybe its too exhausted to overthrow. Or maybe its not done, who knows. But the wedge is now staring us again in the face and it cannot be ignored. Price collapse follows afterwards if its a wedge.

And yes, its been since February since pretty much anything else made an all-time high.  Its over 4 months of non-confirmation going on 5.
NYSE count, which is basically a proxy for the DJIA count more or less. I rather use the NYSE. And yes, non-confirmation with SPX, Wilshire, NASDAQ, etc.
Its been a holiday week more or less. The vaunted 50/200 crossover event should be coming up soon, even if the market tanks.
VIX squiggle count.
The VIX uptrend line. Its an important line, the market knows this. I will say, if this trendline breaks decisively, then the big VIX gap underneath probably will be closed or partially closed.  That implies the June 5th (2) peak would likely be seriously price challenged on the Wilshire 5000.
BPSPX 2008 vs today in Minute [ii] flat patterns post (2) peak(s). Technically very similar setups.
Apple non-confirmation.
The big, big picture
Oh and you can throw out the contracting Minor 4 triangle as a count.

And a little bit of mini-Dow theory signaling turns. You don't want a major signal at this point because they have already diverged at the all-time peaks of each.  You want them in agreement with each other. The March lows confirmed that they both agree a bear market has started. However, the minor divergences can be helpful for the smaller turns.

We triggered a minor divergence again today which suggests markets down unless the divergence gets corrected.
Fractured market. The banks have caught no bid since they peaked.  Everyone has forgotten that the world is loaded with quadrillions in derivatives. The interest rate derivatives alone would blow up the entire system if something goes haywire. Negative interest rates would signal massive asset deflation.

At any rate, this is not a healthy picture. yes I keep telling myself that, and you dear reader, but surely it must mean something.  The banks are leading everything down, followed by the NYSE and Global Dow.

The indexes on this chart are important both for the US and globally. Everything else is mostly just noise.

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