Here is a 15-minute chart of the Dow Jones Industrial Average. There is a bit of an ominous structure at the end of the wave up from the election low.
|DJIA Cash - 15 Minute - Potential Ending Contracting Diagonal|
So, the Dow has indeed been going almost straight up since the election, and the wave may be making the statement of "too far, too fast" in the form of a diagonal. We will have to see. For this count to be correct, according to the text book methods of regular Elliott Wave, it means that the Dow must reverse course temporarily before it reaches 19,008.
At the present time, we have wave (v) shorter than wave (iii), wave (iii) shorter than wave (i), wave (iv) shorter than wave (ii), and all zigzag sequences. Wave (v) must remain shorter than wave (iii) in order for a valid diagonal to be claimed.
IF the ending diagonal proves itself, and this is all of a no-pull-back Minor A wave up, then the B wave down of Intermediate (3) must travel below the low of wave iv (circle iv) in order to honor the very meaning of an ending diagonal. When a true ending contracting diagonal minute wave v (circle v) forms, then price must retrace back below the low of the start of the diagonal at minute wave iv (circle iv).
During much of the time that the Dow has been tracing out the diagonal, the S&P 500 has been tracing out a triangle. This adds confidence to such a wave count because a triangle usually proceeds the very last wave in a sequence, and the S&P500 is very close to exceeding it's minute wave iii, also. Minute wave iv was a triangle in the S&P, and today would be much of minute wave v.
After the A wave concludes, price could retrace 38 - 78% or more in a B wave of Intermediate (3). So, watch this level closely : 19,008 in the Dow.
If that level is exceeded in the next two days, it means the Dow has not formed a valid diagonal, and a larger up wave - possibly that of an impulse count - is forming. This is simply what we mean by the fact that the patterns must form properly in every detail. If they don't, it is not a failure of Elliott Wave. No, it is more just a function that a larger wave is forming. Either way, the potential pattern, provides valuable information when the rules are applied - whether it completes properly or not.
Again, we can watch closely - without panicking - and try to follow the rules and guidelines as best we can.