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 http://ewaveanalytics.com including our consensus.

A New Round of Buying

The wave higher that we have been tracking since the 2009 low can be an impulse or zigzag wave.  Beginning at one of the late 2011 lows, an impulse wave higher began and is currently winding down.  An ending diagonal higher that began in 2013 or 2014 at [4], B, or (2) remain good possibilities.  A sideways wave since (1) in 2014 is also still worth considering.

Action higher this year is very choppy and full of zigzags, so it is unlikely that the market is drawing out an impulse wave higher since (2) or [4].  A sideways wave from (3) is possible, but it is then an 'x' wave of a double zigzag since (2).  This is a then a very complex move that has either a proportionality problem with the larger structure (if there is a sideways wave since (1)) or will cause loss of wedging higher and loss of ending diagonal possibilities (The lower red line is very close to current action and it almost certainly will be breached if there is a sideways wave since (3).  In addition, sideways 2nd and 4th waves of ending diagonal are extremely rare).

The low-probability burst higher to a near all-time high causes a significant change to the possibilities by moving options that were previously not strong to the forefront.  While an incomplete sideways wave since A remains weak, a complete zigzag+flat corrective wave in the B position is now a good option.  One reason for this is due to the fact that a zigzag from (4) to (b) of [y] now requires a more complex double zigzag higher beginning at (4).  Still, the superior alignment of the structure of the waves with this wave count for a zigzag higher from (4) to (b) keeps it in good standing.  A double zigzag from (4) works much better with a sideways wave since the last all-time high at (b) for 'x' (so 'x' is of better size relative to triangle 'b' of 'w'), so a retracement back to the 1860s, maybe a bit more, is worth considering.

(c) of [y] can be seen as a double zigzag, albeit not a great one.  There are no problems with a complete zigzag higher from B.  Actually it counts slightly better this way because of the deep retracement last week before the surge back to 1900.  Subdivision is a feature that only adds complexity to an impulse wave and one retracing more than about 61.8% is not that common in second waves.

The structure of the advance since B looks best as described above.  If the market begins correcting Tuesday when the market opens (there is the Memorial Day holiday on Monday), getting under 1892, a 4th wave of [iii] very near the core of [iii] and a support area, would be uncharacteristic of a 4th wave.  Since [ii] is so large, in order for [iv] to gain good proportionality with [ii] while obeying typical guidelines, the market will probably trade in a sideways range for a few days.

Conclusion:

In the short-term, a breakdown into the 1880s under [4] is a signal that ...

Find the remainder of the update at http://www.ewaveanalytics.com.

The Market Holds Ground, but for How Long?

The following analysis was given in the last update: "over the last two years, an impulse higher developing since [4], (2), or (4) is a weak option.  A sideways correction beginning at (1) or an ending diagonal higher since (4), B, or (2) are far better options."  These long-term options remain the same today.  A more detailed explanation of why is available in the first few paragraphs here.

There is also no change to the options since the 2009 low.  A zigzag or impulse higher are the best possibilities since that time.

A sideways wave since (3) is possible and obviously suggests a test of the wave (4) April low.  It can work with a sideways correction underway since (1) or an impulse wave since [4] or later.  The complexity this option adds makes it not the most desirable of options however.

The sideways options after A have actually weakened because of the additional wave action over the last three days that needs to be worked into the possibilities.  For instance if there is a flat from [b] to 1, that wave must be part of some other larger corrective wave to explain the waves around it.  Wave [b] can be zigzag wave 'w', but the action higher since 1 then does not make sense as part of wave 'y'.  Maybe A to 1 is a zigzag+flat double, but [a] only works as a single zigzag when forcing the matter.  While there are no shortage of arrangements, all possibilities that I have looked at have fairly major problems.

Another example is a flat from A to 1.  Obviously wave 1 is the 'c' wave, but it seems that [a] to (5) needs to be labeled as a zigzag family pattern to make the count work.  Again, [b] can be a single zigzag, but wave [d] best resembles a double zigzag structurally.  Even if it is an impulse, wave [e] is very large compared to the possible 'b' wave within single zigzag wave [b].

If there is no sideways wave underway since A, it means (5) is a single zigzag as marked in color.  In order for there to be a double zigzag higher beginning at (4), a corrective 'x' wave following the (5) high needs to complete.  Wave 1 looks very much like an impulse wave and a zigzag-family pattern in that position is very unlikely so a complete corrective wave down is a very weak option.

Even though it is choppy, an impulse higher in the [a] position looks strong while zigzag-family patterns look weak.  Something non-impulsive higher is apparent since [b].  It labels well as an ending diagonal or an impulse to (i) then a sideways correction unfolding and possibly complete at (iv) as a flat.

Like any three-wave move, the action higher since 1 can be a part of a larger sideways wave.  There can also be an impulse higher forming where these three waves are only the beginning.

Find my 350 word conclusion of this market at http://www.ewaveanalytics.com as well as the consensus of two other analysts and myself.