Tuesday, October 25, 2016

Repeat After Me ...

I did not tell the market to make yet another diagonal lower. But it sure looks like it did, validated with correct wave lengths and all! Here is precisely the diagonal that was counted out in the live chat room today.

SP500 5-Minute Validated Expanding Diagonal Lower

I called for the diagonal once the last blue a wave lower was made, today. The sharp blue b wave rally then followed, as did the new lower low which crossed the 2146 level - which I stated was the minimum length for the (v)th wave of the diagonal. Following these waves, which look like an A wave down, there were lower lows which presently look like a B wave flat, the c wave of which may rise tomorrow (yet to be seen).

The diagonal has all of the proper price relationships, in that wave (v) is longer than wave (iii), wave (iii) is longer than wave (i), wave (iv) is longer than wave (ii) but does not travel above it, wave (iv) overlaps wave (i), and there are all zigzag sequences.

This diagonal caused me to slightly re-evaluate my downward count to Intermediate (2). I found a way that may make it the more likely count, and that is shown below on the two-day S&P chart. A portion of this chart - the triangle - was also presented today in the live chat room.

SP500 2-Day Chart of Intermediate (2) Lower

If you remember that the Dow did make the new low at the location of the arrow, but the S&P truncated, then it is possible the five-wave sequence up in the first three says of September is the truncated end of the C wave of Intermediate (1).

Then, if we have the minor A wave down, the triangle can be a "barrier triangle" which hasn't broken lower yet for minor wave B. And, if that is the case, we may get a very small d wave down, which likely started today, followed by an even smaller e wave up - before the triangle dumps price lower.

That is the count that fits the current scenario the best, but, as always, triangles and diagonals (like the one in the first chart) are structures that must prove themselves.

So, it is still best in my opinion to remain flexible, calm and patient as the short-term whipsaws continue.



  1. Going to be interesting as the futes continue to plummet. Not sure of the diagonal count. It can overthrow, but would need to see fast recovery

    1. Chart is of a partial day. One way to count a completed B wave up was already provided in the cash market in the real time chat room. I was only looking to see if it was going to become a 'compound flat' with another C wave up - does not have to. A diagonal definitely occurred. May show the whole thing tomorrow.