Thursday, October 27, 2016

Before the Bell: Three Waves in Each Direction So Far

In the last post on the SP500 5-minute chart, we showed you a perfectly constructed expanding diagonal wave, now known to have been a Leading Expanding Diagonal, lower. The chart below is a slightly longer time frame - the SP500 15-minute chart, and is prior to the open of the cash market.

SP500 15-Minute Chart with Expanding Leading Diagonal

There are three purposes to showing this chart today. The first is  to show how the Expanding Leading Diagonal fits into the slightly larger picture. The second is to show that Leading Diagonals are very often in an A wave position, as this one is. The diagonal is followed by a flat b wave, and then a c wave down. And third, to state that, so far, from the 10/21 low, we have three-waves up, and now only three waves down to yesterday's low.

We now don't know whether we will get another three waves up or five waves up. That remains to be seen. The blue arrow suggests where the cash market may open from the overnight futures.

There are many patterns that can occur from a count like this, so we will remain open-minded, flexible and patient until some clarification of the count occurs.