Friday, March 24, 2017

Three Waves Down from the ATH

As best I can tell, there are - at this point in time - only three waves down from the all-time high at 2401. They are 2354.54, 2390.01, and today's low of 2335.74, as shown on this chart below.

SP500 - Hourly - Three Waves Down So Far

Wave ((C)) is slightly longer than Wave ((A)). Within wave ((A)), wave (5) is an expanding ending diagonal - which has a much better look and feel than the prior w-x-y count, and it does count properly.

Note that this count puts wave (3) of a third wave, which is only a ((C)) wave as shown above, on the low point of the Elliott Wave Oscillator. (So far, this wave in it's entirety does not follow The Eight Fold Path Methodology - but there was no expectation that it would have to). Since the wave does not yet follow the method, a bearish 1, 2, 3 from the high must only be an alternate at this time.

So far, the 2335 level is holding, but there is no firm evidence to conclude downward movement is over. Trading above wave (4) of ((C)) would go a long way to providing that evidence, as it would also again overlap the ((A)) wave down.

We showed in our last blog update how this could form a fourth wave, 4, and that option still remains open for a bull count. For a bear count, more waves would be needed with either a longer decline below 2330, and then an upward wave that does not overlap the ((A)) wave, OR, a few more waves that will make a diagonal in one of two fashions. But there is not good evidence for a bear count of this type, yet.

From the standpoint of the daily chart, below, price is for the first time touching the EMA-34, and so there is some rationale for that fourth wave here.

SP500 - Daily - Contact with EMA-34

But at this rare height in stock prices, the market will have to demonstrate whether there is or is not support at this level.

My opinion is neutral and remains flexible and patient.

Have a good weekend!


  1. TJ, seems this again forms as ED the wave 5 of C in which case one lower low is missing most likely around 2325, could show early next week

  2. Did wave 5 of C just complete an expanding ED?