Brutal Counting

Today we counted down a likely third wave with two, not one, expanding diagonals at different degrees of trend. The wave counting is brutal. The intraday trading subsequently difficult. There can be no question that our diagonal target was met. And it raises the point that this monthly count may still be on the table for the S&P and the NDX. The ES futures are shown here to be representative.

We have shown the skeletons of this count many times. It is the diagonal count to a Primary ⑤th wave that would end Cycle V. Now, finally, on the downside, there is something to work with. Wave (3) is just barely longer than wave (1) in price, and it is clearly longer in time.

We made a notation on the chart regarding possible potential alternation in wave (4). Interested readers should view it. Please keep in mind that I have sketched out an idealized wave (4). Like all fourth waves they can get much crazier than this. Sometimes in a diagonal, wave A comes very down near the trend line before the bounce. Sometimes there is a triangle in the middle of the fourth wave to slow things down and cause traders to lose money fast. Sometimes the Minor B wave bounce is 90% or very nearly there to confuse people with a flat.

But first things first. Overlap on 4,808.25 would first be expected. Then, after overlap, wave (4) must hold above wave (2) to avoid invalidation. Often the fourth wave takes more time than the second wave. So, that's the way we've shown it. And it often retraces 62 - 82% of wave (3) in price. So, the Fibonacci ruler is shown as a guide.

Careful readers might note that the Minor A wave of Intermediate (3) is shown as an expanding diagonal itself. This is what is known as a fractal of the larger pattern if it should play out as shown. It is the only way I can count the wave to observe degree labeling requirements.

Keep in mind this is a monthly bar chart. So, this pattern can take a very long time to come to fruition. To novice technicians it might look like it is forming a large head & shoulders pattern which then fails to play out. 

And if it does invalidate? Place a Primary ⑤ and Cycle V at the high of 2022, a Primary Ⓐ at the bottom of October 2022, and a Primary Ⓑ at the high in 2025, and Primary Ⓒ and cycle a at the low near 2,000 (price) to match the low of Primary ④. We just think the market should have the option of ending a very long wave with a diagonal, and the above count is it, for now.

Have an excellent start to the weekend.

TraderJoe