The Optimistic Weekly Count

The larger parallel channel upward cracked a bit today. Price can still move lower; prices can then also back-test the lower channel boundary. The overall weekly count is currently as shown on the chart below. While the US Federal Reserve is raising interest rates and doing QT (Quantitative Tightening) a simple bear market (five-wave-decline) would not be out of the question from a fundamental viewpoint.

ES Futures - Weekly - Flat Count

Again, in trying to keep the degrees of the wave count correct, if we had three Intermediate waves as a flat to the Covid-19 low (lower left) as Primary [A], and a triple zigzag each of Intermediate degree to the Primary [B] wave high, then if we have five Intermediate degree waves down to the about the level of Primary [A], then those would make up a Primary [C] wave down to be a Cycle a wave down of a larger flat.

Why is this termed an "optimistic" count? Because if Cycle a is a three-wave sequence, it implies a Cycle b wave that can again approach the high within 90% of the prior all time high or perhaps even go over the high. Each of these cycle waves, Cycle a, Cycle b, and an eventual Cycle c would make up a wave known as SuperCycle {IV}. Again, as I have written before, I think SuperCycle {III} ended in October 2018 for reasons I have explained.

At this point, other counts assume the FED will relent on its policy, or some other factor will come along to save equity prices. Right now those items are not in evidence. So, the count remains as it is until something not expected presents itself.

If you happen to think that a wave count like this is not possible, flat waves happen every day on smaller time scales. We have shown many of them on this blog. A flat is a very common type of sideways correction. There are others. But if you think this count is too drastic, you should see what the counts that end with a five-wave-sequence up to the high predict - much, much worse than this.

Regardless of optimistic or drastic, the count being presented is the one that can most be defended using the definitions inherent in degree labeling. At this point, there is only one other count I give almost equal weight too, but the weekly chart has to make a 62 - 78% retrace to activate it, and we are not there yet.

And, for the bulls, yes - in this count - there will be plenty of wave 2's and 4's along the way that will provide significant retraces. But, we may have seen the largest wave (2) already.

Have an excellent start to your evening.

TraderJoe