Wednesday, May 28, 2014

Holding Above 1900: Is 2000 Next?

The long-term waves since the 2009 low suggest a zigzag or impulse higher is developing.  There are various ways to describe the 2010-2011 congestion area following wave a, but a triangle works very well with the structure of waves [D] and [E].  Obviously this would imply that there is a zigzag since 2009.  A flat following wave a or a 1st and 2nd wave since [A] of b are still good options worth considering however and the structure of last 100 years works well with an impulsive rally.  It will not be better know which is correct until a sell-off begins and its size can be compared to the previous ones in the post-2009 rally.  For example a dip to the lower 1500s is a signal that there has been a zigzag higher beginning at the 2009 low.  A brief explanation of how this multi-year rally fits into the larger picture is available here just under the multi-decade chart.
In the shorter term, a sideways pattern since wave (1) in 2014 looks fairly weak now due to the massive size of the rally since (2) in relation to wave (1).  Due to this and the very low probability of an impulsive pattern developing since (2), a sideways pattern from (3) looks weak as well.  These sideways options are only adding more complexity to the picture.

If the market is impulsing higher following (4), on a weekly basis the market needs to maintain momentum higher and preferably get to a level where the wave following B is larger than A.  Because this is such a weak chance of an impulse higher since (2) developing, the possibility of an impulse higher developing since (4) should also not be taken seriously.  So far, the rally higher since (4) strongly resembles a 3-wave pattern anyways.
Wave [w] of B has clear structural problems; waves ii and iv are of much different size.  Good proportionality can be restored to [w] if ii is taken as the top of a single zigzag that began at (4) so there is wave 'a' to A and wave 'c' to ii.  This in turn brings a great lack of proportionality to the impulse legs of a zigzag terminating at ii, but ii did massively retrace i which gives the possibility merit.
The point of discussing the subtleties of wave [w] is due to the structure higher following B.  This wave, if it completes when an impulse higher following last week's low terminates, works as a zigzag that pairs well with a zigzag to the wave ii high.  In other words, there can be a complete or nearly complete double zigzag higher which began at wave (4).
A single zigzag 'w' to the wave (b) of [y] high followed by part of all of an 'x' wave is still a possibility, but a weak one due to the complexity.

The best option since [ii] is the one depicted in color up to the wave (iii) high.  There can still be a 5-wave advance unfolding since (iv) or an ending diagonal can simply be complete since that time.
The core of an impulse higher since [ii] appears to have been on the 27th and usually this comes at the middle of an impulse wave.  It is far from the middle of the impulse in the wave count above, but it is difficult to view the structure continuing much higher.  The central reason why is the fact that wave iv is large in relation to the corrective waves within iii.

Read more at including our consensus.

blog comments powered by Disqus