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Friday, July 24, 2020

Elliott Wave Update ~ 24 July 2020

A gap down this morning did not recover and close. Trading was sluggish all day.

The wedge that has been shown on the Wilshire for past many weeks was gapped under at the open.
A rally backtest intraday was not successful in closing the gap. In addition, prices closed under the June/July peaks. It held at "island support". The Wilshire is technically on an island. It has yet to close its gap up from the 14th(?) of July.  

If the Wilshire loses island support (for the SPX it is 3200), then the next support is likely far below.  Thats the nature of choppy wedge price action. There is probably nothing firm other than where prices landed today.  
Each zigzag should connect in a channel in some decent way which they do.
Since this is the Terminator Market, we can assume it'll try to gap things up Monday in a wave (ii).  This would in effect be a wedgeline backtest and attempt to re-capture June/July peaks.

Composite/Wilshire combined count. The counts are again in alignment. Note the alternate count that the backtest today was actually all of wave (ii). Which implies Monday may be a bloodbath if its wave (iii) down. But we'll see how futures do.
Top alternate count is that Monday is a bloodbath once the Wilshire loses island support (SPX loses 3200).
Top bullish count would be that prices hold here fast and catch yet another bid with the goal of closing the February gap down. This doesn't "look right" by the way, but its the best alternate bullish count at the moment until and unless something else develops.

Note the crisp price action to [a] of Y. Then in [c] of Y price action is more saggy you can actually see it. If we do somehow get another wave look for saggy prices again. This is evidence of wave strain. (Ok, I just made that up).
Weekly, again the smidgen of divergence and the doji-type candle poking into the gap.  Its been stated numerous times that if this is wave (2), the gap should not be closed completely. ok raise your hands who thought we'd be here July 24th?
Our SPX chart from last Thursday's SPX post.  It has retraced a tad bit over 90% (3273.5 = 90%) of wave (1) down. This is the territory where one could say "failed wave 5 of (5)" could occur. This is a very bearish situation if true which is why the count is still shown.  To top it off, its a possible ending diagonal triangle count that may have just triggered.
CPCE. At peak +3 in February, all the moving averages has crossed the 30 day.  
Dollar. Could be a spike under the support line. Daily sentiment as reported by Elliott Wave International was only 13% on Wednesday. Likely to be lower after today.  Anything less than 10% is an extreme sentiment. You'll see the usual dollop of bearish articles on why the dollar sucks and all that.  But the euro sucks even worse as does everything else.
 10 year.
And our ratio chart again. As per discussion last night 2 of the 3 ratios declined again as the NASDAQ was down on the day particularly the big name stocks that help drive warp these 2 ratios higher.

However the high ratio versus the NYSE still persists and was almost a record. The Composite is still the center of attention for retail and its being amplified by the market makers, hedge funds, front runners, and anyone else deciding on this "dip" to get in on the action.

There is probably only one solution to this; massive selloff of the Composite and everything else along with it. 
That wedgeline is actually the line from the March low in arithmetic scale. Didn't realize it, usually use log. Prices fell out of it today for the first time.

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