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Monday, April 12, 2021

Elliott Wave Update ~ 12 April 2021

UPDATE

A chart to ponder. Is the market in a disguised ending diagonal triangle but not in a classic shape to to distortions from extreme leverage? 


Also CPCE which has enabled the extreme leverage.


ORIGINAL POST

BLOG ANNOUNCEMENT

My Stockcharts account had become a complete disorganized mess. Part of the reason is because I like to record all my thoughts in a chart and refer back or just post them to give the reader their own ideas. These are the charts I post and I know it can be confusing when I throw wave structures all over the place and variations upon variations.  Showing these variations has been fun and I'm not likely to stop completely but I do need to consolidate a bit and be a bit more consistent, if only for myself. In my mind though, things are fairly clear.

So I did a radical thing today and deleted outright most of my Wilshire charts (in which there was upwards of 20)In doing so I realized there was a subliminal purpose. First, showing the false (B) wave count - with Feb 2020 being the "orthodox" wave high for Grand Supercycle [III] - no longer serves its purpose as it was largely based on a Fibonacci relationship to Wilshire 42,440 or so. The market has blown through that. Additionally the VIX has finally collapse sub-20 to a more historical low. So far it bottomed at 16.20 since the panic last year. That is another reason the "false" top no longer probably makes sense. This is indeed a wave 5 mania and we are likely near the end. Yes, social mood is "rolling over" (for decades depending on what wave degree "arc" one is tracking) but its more satisfying keeping the big expanding triangle ending in March 2020 and having the rise since then as a final wave 5.

As Prechter likes to say, its "beautiful pictures". And I want to get back to that which I'll keep the sunset theme which is pleasing to my eye.

But what degree wave five?  I have decided to finally go with Robert Prechter's amazing DJIA/PPI count from 1789 or so and that count clearly shows a Cycle wave IV ending in 2009 (instead of the lower Primary degree). So that's another radical change I have decided to undertake in which I have hinted plenty in the past I would do but too lazy to change my charts. So it made sense to do it now.  The important thing to remember is that is changes NOTHING as far as wave count(s) and how we have been putting the structures together and it doesn't change the overall time frame. I simply wanted to stop confusing things by counting that the rise since 2009 low makes more sense as a cycle wave rather than just Primary.  And it fits much better with the overall Grand Supercycle wave count for the past 233 years. 

So starting tonight I am down to four Wilshire charts.   I have Monthly, Weekly, Daily and Hourly. And they all show the same count. I will make more "squiggle" charts and variations but that'll take some time and I am striving for a more consistent format. 

Finally there is a reason to start laser-focusing on the counts because we are likely nearing the GSIII top sooner rather than later. With "later" being only a matter of a few weeks/months at most.  As reported by Elliott Wave International, the Daily Sentiment Indicator (as reported by Sentiment Trader.com) 5 day moving average is now at 87.6% with the DSI reaching 90% on Friday and probably higher today. These are rare readings. Of course they could go higher still.

COUNTS

WILSHIRE MONTHLY

The degree of wave labeling is likely correct.  It makes sense that a "cycle" wave since 2009 has occurred and not merely a Primary.  And thus, it makes sense that a Supercycle degree has occurred since 1945 and not merely Cycle.

But the point of the chart is:

1.) The channel since the 2009 low has been reached at a wave [5] on insane volume that dwarfs anything in the past.  

2.)  Peak volume bars occur near the major tops. In 2000 and 2007 we had the same situation. From this outsized perspective they look downright puny but at the time in comparison to what had come before, they were not. Is the same occurring now? I think so, and on steroids!

3.)  Looking at the monthly can you discern a possible count since the 2020 low within proposed wave [5] of V?  Based on that (and the weekly) I've consolidate the count since the March 2020 low and you'll see it on the Weekly, Daily and Hourly.


WILSHIRE WEEKLY

WILSHIRE DAILY
WILSHIRE HOURLY

CONCLUSION:
It was time to clean out my charts and it was time to finally switch and remake them to the higher wave degree labeling that in my heart I always intended to do. It was also time to discard the false (B) wave count because the Fibonacci relationship that it was largely based on did not work out and the VIX finally collapsed well under 20.

Additionally the RSI patterns of the monthly, weekly, daily and hourly seem to all be aligning better with the count above.  One thing that is hard to hide is that the the peak RSI patterns usually occur in third waves as the Monthly and Weekly clearly show so far. The Daily does not work that well in that regard but because the proposed wave (1) was the "push" over the previous 2020 peak, it is understandable. We do have a nice peak at 3 of (1) of [5] so that works well. 

Also, I liken the proposed wave "three of three" virgin space where I show it on the Hourly. The virgin space is clear enough on the Monthly and Weekly. So I can't just ignore that its not the virgin space if it clearly looks like it. So at this point there is enough structure in place to put it there.

And finally I like to be able to discern the subwaves in the larger monthly and weekly charts for where subwaves (1) thru (4) are. Therefore it made sense to put waves (1), (2), (3), (4) where I have them because you can "see" them and you can "see" the virgin space.

So we'll go with the above. Which implies we are likely looking to confirm the price top of wave 3 of (5) of [5]. That's what makes the best sense right now.


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