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Friday, September 11, 2020

Elliott Wave Update ~ 11 September 2020

I threw a bunch of primary count pathing possibilities on one 5 minute chart.  It all centers around the idea of a "base channel" forming.  Usually a one-two, one-two base channel will use the peak as the upper channel line.  

So we have 2 options for the base channel:

1. A low hanging base channel that is bouncing around stair-stepping down with lower lows and lower highs and eventually prices will break downward in a very sharp third wave acceleration channel. All the major indexes are in sync and seemingly aligned with this price action. 

2. The peak will be used to form the base channel, therefore wave [ii] has not yet completed.  Wave [ii] would count as a 3-3-5 expanded flat and take prices aggressively up toward a 55% - 61.8% retrace of the entire drop from peak and then exhaust itself. How exactly it paths to get there I have shown a few possible ways. But you get the idea.
And here the same chart without all the noise and the most bearish wave count and that implies Monday will be a crash.
Ok, added the Minute [ii] expanded flat (or downward flat) count on its own chart so its less confusing.  The key is prices should finish higher than (a) of [ii] to be an "expanded" flat.  If prices finished a bit lower than (a) of [ii] it would be called a "downward" flat. 

Note how a good wave counter doesn't change things drastically in the squiggles (unless its a bit ambiguous as the first wave down from peak usually is by design). What we alter is how we connect (label) the smaller structures together is how we get alternate counts.
CPCE. The option run to peak was just amazing.  it dwarfed the option run-up toward the February peak. However, the setup rhymes again at the moment.
Here is the option snapshot from Friday, 21 February. And the market created the huge open chart gap down on Monday the 24th. The market can be cruel. Would it dare repeat the same trick? Leave a scarring open chart gap down on a Monday?

The reason I have been focusing on these moving averages and their positioning is because one can imagine that they jostle around in a similar manner right before big market moves. The fact that currently we have the 30 day average at the lowest means that market participants have been positioning themselves for the past many days in a more bearish manner. This would be in the series of wave "ones and twos" down we have been perhaps experiencing since the peak. Then the acceleration wave lets loose in wave three and the meltdown in options begins.

In other words the options market seems to be turning and since the "NASDAQ WHALE" has supposedly left the market, there is a lot of money that can be made in the opposite direction (down). And the same "meltup" in options can occur in reverse with a meltdown in options. Gamma chasing in reverse as the Zero Hedgers like to point out.

Just wondering out loud. This is what makes the markets so interesting.
Of course that brings us to the alternate counts in that this market refuses to die before the election. It hit the perfect spot today if that is the case on the Wilshire.
But the 10 year yield count is being stubborn and may be morphing into a possible ending diagonal triangle (same with prices in reverse). 

What could scare that many people back into bonds to make them move sharply downward again to a new all-time low?  Well, one can consider a market crash might do that trick. But that would have to occur soon though or else prices may spike upwards over the blue wedgeline invalidating the count.

We'll see! Either way its exciting! This is ultimately a bearish pattern and has a violent aftermath (yields surge upwards after 5 of (5) finishes. And I don't suppose that surge will be interpreted as "bullish" anything.

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