Wednesday, March 22, 2017

Last Chance 4th Wave

In yesterday's post, I noted that trading below 2,335 in the S&P cash would start to signal a problem, and the count of a diagonal in the major indexes. Today, I'd like to show you where that calculation comes from.

The S&P500 4-hour chart below, now has the needed 120 - 160 candles to be indicative of The Eight Fold Path methodology. It actually has 185, but any lower time frame results in too many candles, and any higher time frame results in too few. The count below is one that was established as an alternate on the ES E-mini S&P 500 futures. This is just the extension of that count to the future.

At this exact point in time, it should be seen as an "equal alternate" to the counts shown yesterday.

SP500 4-hr Chart : Last Chance Fourth Wave?

The rationale for this potential count is that usually, most-often, fourth waves and second waves can travel a similar net amount. The black rectangle shows the total number of points traveled in wave 2, from low to high. And, the blue rectangle is just a copy of the black rectangle and shows a near exact measurement for a wave 4 at this level. This morning cash hit 2336.45, narrowly missing that 2335 level.

This count would provide the needed alternation for an impulse, as wave 2 would be the sideways holiday trading, counted as a double combination w-x-y, with the y wave as a triangle, and wave 4 would be a sharp - and simpler - (zigzag) correction.

At a level of -16, the Elliott Wave Oscillator is just  barely hanging on to a -40% of the peak of +40-2 on this chart.  A UBS strategist said it well this afternoon (paraphrase), "the market has decided to make this vote on health care the decider as to whether a further correction begins here or not".

In this count wave 3 is shorter than wave 1, so a wave 5 would have to remain shorter than wave 3. And, by way of invalidation, in no case, could a wave 4 overlap wave 1 (in this count).

As I said in my weekend video having clear alternates - and clear rationale for them - is an item that helps keep an Elliott analyst's ego in check. Breathe. Enjoy. Stay patient and flexible.

Have a good evening.


  1. good to see this alternate counts. My only concern/question is that you are not applying the same methodology to sub-waves of 1. For instance, EWO on most time frames would not return to 0 for ((iv)) of 1. I understand the methodology may not be universally applied to all fractals. Just want to understand how you make that decision.


    1. Because the sub-waves of 1 have less than 50 - 62% retraces, that is, no retraces that are characteristic of an impulse wave with an extended third wave, it essentially counts as "an impulse in a wedge shape" or what is formally known as an extended first wave. You'll notice it's minute ((iii)) wave is NOT the longest wave in the sequence. I wrote extensively about this wedge shape as it was forming.

      So, when the wedge shape begins to form, one looks for the type of exaggerated alternation I referred to in the prior blog post of the ES. Both (iv) and ((iv)) are short-lived in that regard. Hope this helps.