In our post of December 3, 2015 while some other Elliott wave sites were looking for a "three of three upward" to begin, we took the contrary view that the best 'hope' for a Primary fifth wave at the time was to complete a triangle or double-zigzag downward (sic.. not upward as they were calling for) to the lower parallel Elliott trend channel boundary. These sites and false pundits have done nothing but revise and revise their counts - even changing their degree of labeling! They have been so dogmatically incorrect that they have made statements like, "this wave needs to start acting like a three of three soon or we will be forced to change our count." Indeed they have!
The daily chart of the S&P 500 now confirms that prices have not only contacted the lower trend line boundary - but have exceeded it to the down side. Here is a chart of the daily cash S&P 500, with no wave labels since the August low to show how the lower trend line boundary was met & exceeded.
|Daily Cash S&P 500 Showing Channel Breach and Overlap|
Rather, when the stock market does things like this, "we listen to it!" We do not ignore such Elliott Wave evidence, because it is the best chance at making another good prediction of what is to come. And that prediction is below on the two weekly chart of the S&P500 cash.
Before we explain, we need to tell you about another correct prediction. We said that because Primary wave 2 (circle 2) was a FLAT wave, with a higher (B) wave than Primary 1, we would not expect the (B) wave of Primary 4 (circle 4) to exceed the high. So far, it has not! Another correct prediction.
Now with the start of downward movement and overlap, we must conclude in a similar line of reasoning, that price will attempt to regain the lower two-weekly parallel Elliott trend channel line, and a 38.2% retracement of it prior wave three - Primary 3 (circle 3). Since we counted A-B-C down to the August low, we now see it as one zigzag of either a double zigzag - or equivalently - a flat-x-zigzag since wave (X) did attain within 90% of the high. Again, these would be identically equivalent structures in this case.
The key point is this : this is what the self-styled pundits and wave counters are missing - a sense of proportion and timing. Look at how long Primary 3 took in terms of time. It took almost four years! You don't correct a four year rise with a decline of only three-to-four months!
Wave fours tend to be very, very long structures in time compared to their wave two's. A wave four at (W) is just "too short" in terms of time, and a double zigzag for Primary 4 will still provide terrific alternation to the flat for Primary 2.
So - even though we can clearly see this count ahead - are we "locked in on it"? Unequivocally - No! Nothing has taken away the ability of Primary 4 to become a much larger sideways triangle, but the structure isn't right for a triangle yet. If it becomes correct, we will let you know! The bottom line is that Primary 4 'should' touch the lower trend channel line at some point, and it should try to effect a retrace of 38.2% of Primary 3. So, we remain completely flexible and non-dogmatic. We understand the issue of the Fourth Wave Conundrum - as we have called it in our YouTube Video, "A Critique of Elliott Wave for Trading" more clearly than most amateur wave counters, and it has helped us to be more patient, and responsive to the market as a result!
Listen to the market - not me!