|SP500 2 hr Chart : Minor waves 1 - 5 of Intermediate (3) can be considered complete|
In the very last five minutes of the day today, a lower low was established, allowing a small degree "five" count on the downward wave. This wave - and it's associated gap - also broke the rising lower trend line yet again. Therefore, it is 'possible' to conclude that the Minor 5th wave of Intermediate (3) has ended, and we are now, very possibly, in Intermediate (4). If so, it would end on a divergence with the peak of wave 3 on the Elliott Wave Oscillator, after a dip below the zero line but not by more than +10% to -40% of the peak value.
Although I will not do this often, in the chart below I will show you the exact measurements of the diagonal so you will see that there are no hi-jinks being played. This will be on the SP500 30-min chart below. This chart is the one I referred to in my weekend comments and during live chat today.
|SP500 - 30 Minutes - Measurements of Diagonal|
Here you can see for yourself that wave minute v (circle v) is shorter than minute iii, that minute iii is shorter than minute i, than minute iv is shorter than minute ii, and that minute iv overlaps minute i. In this chart I have included the most extreme ends of the waves - without the truncations - and the measurements all work. But, beyond that I have tested that it works with the truncation, as well. That's why the first wave shows a second measurement. That is the length of the wave if the truncation is subtracted from wave i, to be sure wave minute iii is still shorter than minute i - which it is.
And, I also tested it using each of the potential bottoms in minute ii, and the result is still the same. Minute iii is always shorter than minute i, and minute v is always shorter than minute iii. The only qualm I had was how well the downward legs formed zigzags. But, they do "look" sharp and steep in the chart, so that will be acceptable.
With the diagonal trend line broken, the market is again losing more momentum, not gaining it. Since, there is likely a five-wave down sequence, one should expect at least one more such downward sequence (maybe more, depending on whether a larger impulse forms or not). As such, it is worth noting that today's advance-decline line was 1,082 to 1,942; making harder yet for the Dow to hit that 20k level right away.
Keep in mind the overall Intermediate (3) count would be that in which Minor 1 is the extended wave in the sequence. Minor 2 is a small retrace, that tends to indicate that the first wave is the extended one. But it is the first wave that breaks the EMA-34, lower. Minor 3 is then shorter than Minor 1, and ends very, very close to the predicted 0.618 extension on Minor 1. And none of Minor 3 breaks below the EMA-34. Minor 4, as we know, was a compound flat on the very light holiday volume, as was only a bit deeper than typical. But it did weave around the EMA-34, as a fourth wave should, breaking it lower, twice. Then, Minor 5 would be the diagonal that just eeks out the new high, but not before breaking the EMA-34 to the upside.
Well, I may have missed the wave-counting top by 12 points as regards the blog (...maybe not depending on what you think of the weekend comment). But, I did say the count was proceeding in a wedge. And, the 30-minute chart shows that is true. Any downward overlap of 2263 will solidify that the upward count is likely over - at least for a while.
With five waves down, there is now higher confidence that the diagonal formed. The only way for the bulls to rescue the situation is if the diagonal is somehow 'leading', but that would be a true rarity at the all-time high in the market and seems unrealistic at this point. In fact, the invalidation point for a contracting ending diagonal Minor 5th wave, now moves up to the all-time high, at 2282.10, or it is more likely that Intermediate (4) has now begun.
Since Intermediate (2) was a flat wave, Intermediate (4) may be a sharp (zigzag or double zz) or a triangle. Let's take it step-by-step.
Cheers and enjoy the charts!