Waiting

Last time the possibilities from late 2013 to the present were discussed in depth and these have not changed.  As stated last time, "the best options are ending diagonal wave counts beginning in 2013 at [4] or B where their 5th waves are underway, or an ending diagonal underway since (2) where its 3rd wave is underway.  An impulse wave higher since [4] and/or (2) are very weak options."  The sideways possibilities remain weak.  For a full explanation of where these views come from, please visit the last post here.

From wave (4), there can be a zigzag higher to ii of (a) or just an impulse to A then zigzag-family wave correcting to [w] when the area is taken in isolation.  Neither option is compelling for the reasons discussed last time.  But the possibility of this double zigzag higher has weakened due to the large size of the congestion area this week in relation to the early subwaves higher in [ii] of C; it is difficult to view wave [iii] incomplete.  The best view of the structure higher since B is an impulse underway where its 4th wave is underway or complete.  More on the details on this below.

The other double zigzag possibility where 'w' terminates at (b) of [y] (triangle divides two impulse waves in the 'w' zigzag) remains a weak option because of the complexity involved with the pattern.  The market tends towards simple moves.  Without over-thinking the situation, so far there are three waves higher since the wave (4) low.

Following [ii], the impulsive structure breaks down into two possibilities depending on how the action from ii of (iii) to v of (iii) is looked at.  If ii to v is one impulse, then the impulse higher from (ii) terminated at [iii] or the high reached Monday 6/2.  Because wave (ii) is so small relative to the action following the 6/2 high, and still assuming ii to v is one impulse, the impulse higher since (ii) very likely terminated at [iii] and the impulse higher since [ii] terminated at the 6/2 high.  If ii to iii is one impulse, the structure above in color makes the most sense.

No matter how ii to v is viewed, breaking (ii) to ii down into 2 or 3 sets of 1st and 2nd waves is a possibility.  But of the numerous new options this provides, there is only an added complexity and no added benefit; the impulse higher beginning at [ii] terminated at [iii] or the 6/2 high unless there is a major proportionality problem within the wave (again, the action following the 6/2 high is much larger than any corrective wave preceding it except for [ii]).  Also the size of the corrections within i are a bit small relative to ii of (v), iv of (v), etc.

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The Trend Continues

The market continued higher the last few days, but this does not change the wave count options expressed last time.  The best options are ending diagonal wave counts beginning in 2013 at [4] or B where their 5th waves are underway, or an ending diagonal underway since (2) where its 3rd wave is underway.  An impulse wave higher since [4] and/or (2) are very weak options.

Somewhat better is one of the sideways options starting at (1) or (3), but these are both adding a large new degree of complexity and size that does not work well in the the larger context.  For example a sideways wave underway since (3) is just expanding the size of a double zigzag higher since (2) which will lead to problems.  When the 'c' wave of the sideways correction comes, wedging has a good chance of being lost when considering that at least B will be reached.  This will invalidate all existing ending diagonal possibilities.  A large sideways wave since (1) or ending diagonal beginning at (2) with its 1st wave underway would become the best options, but the complexity of these patterns is certainly unusual.

A simpler sideways pattern since (1) is better with its 'b' nearly complete, but the size of 'b' is quite large in relation to 'a' and the whole pattern's pairing with either [D]-[E], B of (1), etc. also makes it questionable.  The 2nd and 4th waves of an impulse are typically of similar size and the corrections of the subwaves of impulses are usually of smaller size than the parent wave's corrective waves.  Also remember that an ending diagonal's 2nd and 4th waves are almost never sideways patterns so a sideways wave since (1) is probably a corrective wave within an impulse.

There are two good options following the wave (4) low; a single zigzag where an impulse wave higher needs to complete beginning at X or a double zigzag illustrated above with the colored labelings.  As discussed last time, the problem with the single zigzag is the structure of [a] of W to [w]; in order to find a corrective wave from [a] to X (clearly the most natural way of looking at the waves because of the large advance above (b) of [y]), a single zigzag must be forced from [a] to [w].  Remember a double zigzag higher from [w] to (b) for a 'b' wave of a flat is possible and this allows a triple zigzag from [a] to [w], a good way of describing that region, but this double zigzag is a poor option because of its subwave structure.

The double zigzag option higher in color resolves the subwave problem except [c] of W looks quite small in relation to [a].  But [b] of Y from a few weeks ago has good proportionality with [b] of W which makes this wave count a good one.  Relative to the other possibilities, in its entirety it is no worse.

A sideways correction still underway since (b) of [y] is possible, but the rise well above (b) gives it a low probability of occurring.

In the short-term, the core of the impulse wave higher since [b] is very likely on the 27th.  As it stands now, there is a nice shape to the wave with the core acting as a symmetrical point as it usually does.  Wave v of (iii) is a bit small in relation to i of (iii), but wave iv is much larger than any corrective within iii.  This attribute gives the strongest wave count as shown above in color but because of the better symmetry that it brings, it is the next best option.  In addition, the large subdivision we are seeing since (iv) (corrective waves as large as anything since [b]) is most typical of the terminating 5th waves of impulses, not 5th of 3rd waves of impulses.  If there is an impulse wave from ii to (iii), then there also must be an impulse wave from (ii) to iii of (v) or what will be v of (v) (wave i of (iii) really cannot be broken down into separate 1st and 2nd waves because of the small size of the waves within it).  An impulse to iii requires a very wide corrective wave from (iii) to ii which is large in relation to ii of (iii).  So that option makes little sense.  Better is an impulse to what will be v of (v), but as mentioned a 5th of 3rd wave with subdivision like this not typical.

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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.

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