So, those are the reasons for judging that a Primary fourth wave is 'possible'. And, to that end, we have provided a very 'clear' and unambiguous 'invalidation point', based again on sound Elliott Wave logic, where that pattern would invalidate.That level is below 1930, in the cash SP500 Index.
Yet, we have been a very vocal advocate that Elliott Wave reasoning is an exercise in 'probabilistic thinking'. For many counts there is a very good 'alternate'. Furthermore, no one has yet asked, "what is one to do if the invalidation point is hit?" Well, here again, we have been vocal advocates that if trading is looked at as a business, one should always have a plan B. What else are we to do as traders? Take our ball home and exit the game in shame?
Having an equally well thought-out plan B should be looked at with no more stigma than when, say, in a football game, the quarterback decided at the last minute to keep the ball and run for the first down, versus the original plan of passing that ball, but the receivers were covered this time. That's it. That's all. The point of the trading game is to make and keep profits. Once one gets the longer term trend of the market correct, then that will likely happen.
We are currently in the price-discovery phase where the market will tell us which path it plans to take. With that in mind, without any apology, but actually with the best intention of preparing myself, this chart of Plan B is offered.
|Alternative Count for the SP500 Index, Five Minor Waves Lower to an Intermediate Wave|
The only significant objection to this count is that wave 4 is quite a bit 'larger' than wave 2, and 'usually' it is smaller. Right now, I don't know of a 'rule' that prevents such a thing - as long as wave 1 is not overlapped. But I will go back through some of the guidelines of wave formation and review this situation to see if it is a critical objection or not.
There is also one minor objection to this count : right now the waves form a suspiciously 'perfect' channel. So, the count may still be corrective. 'Usually' impulse waves have 'some' sloppiness in their channeling. Wave three's in particular tend to exceed channel boundaries. Again, this is not a 'deal breaker', but it is 'something' to keep one's eye on.
Right now, this is the very best alternate I see. And, an impulse wave lower, would most likely, turn the overall tide of the market lower.
Importantly, we do not want to be caught on the 'slope of hope', hoping for a Primary 5th wave yet to follow when the market does intend to head lower so it is very important to listen to the market's message, and below 1930, cash S&P, the game takes on a different character.
If a minor wave 5 were to occur lower - in opposition to the main count - then it would likely stop on the mid-point of the channel line. But, again, right now, there is no price evidence for that, so that is getting ahead of ourselves.