Tuesday, March 7, 2017

Critical Conditions Met

Again, using the SP500 2-Hour chart (the same as yesterday), the critical conditions for a fourth wave have been met. The chart is now out to 122 candles, within the suggested range of 120 - 160 candles, and the Elliott Wave Oscillator (EWO) has retraced back to the zero line, and slightly under.

SP500 2-Hour Chart - Fourth Wave Critical Conditions Met

It can also be clearly seen that the lower trend channel line is being attacked to the down side, and we do not know that downward movement is over. (It's "possible" we are still getting an ending diagonal c wave lower or a more complex correction lower).  At present, minuet (iv) has traveled back to the area of sub-minuet wave iv, but has not closed the upward gap there, and the wave currently has a 23.6% downward retrace on wave (iii).

At this point, the only unsatisfactory aspects of a fourth wave are the amount of time taken and the "look" of wave (iv) compared to wave (ii). They look very much the same. Therefore, while we do not like to use alternates often, we must suggest that the down wave could still only be the a:3 wave of a larger fourth wave flat or triangle, so we have posted a flag regarding that on the chart.

Alternate or not, we are glad we began looking for a correction just as others began their "how high the S&P can go" postings.

Because fourth waves may not overlap wave (i), that will have to be the invalidation point for this fourth wave. Sometimes - high up in the wave sequence - fourth waves can get fairly deep.

Speaking of invalidation, if the market decides to pull a "fast one" and get out of hand to the down side, within the live chat room I did post a clear alternate count for a possible top. But, there are some things I don't like about it, yet: primarily the proportionality. And so I will leave it in the chat room for now and only show it should this fourth wave not work out as expected.

Why did I develop an alternate already? Because I am always looking for the count that would tell me where the current count is not correct. Keeps one on their toes.

Have a great evening!


  1. Thanks Joe. If the market starts accelerating to the downside immediately, then I'm counting it as a wave 1 down to 2375.39, and then a running wave 2, which ended late in the day today at 2372.10 (a-b-c-x-a-b-c-d-e). I realize that you have previously explained that the end of a running correction has to overlap the end of the previous wave, and this count obviously doesn't do that, so the other way to count it is 1-2-i-ii, with wave 2 still as a running correction, but ending at 2378.79.

  2. Looks like a DZZ which provides some alternation to wave ii. I would expect a shallow wave iv since wave ii was a deep correction. It does need to find support soon however.