The Beat goes On

The rise to a new all-time high today has caused change to the desirability of some wave counts.

Beginning with the long-term picture as usual, there is likely an impulse wave higher winding down that began at the [C], or [E] low in 2011.  This can be part of a larger impulse wave or wave c of a zigzag.  It is not clear which is correct.

Taking an impulse higher from [C] begins with trouble.  The the 3-wave nature of [D] and [E] make it unnatural and difficult to work into an impulsive structure, but it is possible.  5 waves higher from [E] likely terminates at (1) or A of (3) where the structure of [3] is essentially set in stone.  Termination at (1) is the worst of the two choices because the structure of (1) works poorly as an impulse wave and it requires an impulse higher underway since (2) which is quite complex due to all the subdivision required.

An impulse from [E] to A of (3) is better, but it requires an impulse wave from [4] to A of (3) that is odd; its 4th wave in the (2) position is deep and retraces the entire core of the 3rd wave.  It also requires a sideways structure from A of (3) to (4) that really must be a flat with structural problems.  For instance, the 'c' wave of this flat must be an ending diagonal with sideways 4th wave (very rare) and 5th wave truncation.  Its wave 'a' also is a very upward-stretched running flat with very little retracement.  This is especially strange since an impulse from [4] to A of (3) requires truncation of its 5th wave which usually brings sharply lower prices.

Even with the problems of an impulse from from [E] to A of (3), it has been improved with elimination of "weak".  This is due to the large size of (5).  If price reaches 1975.65, the ending diagonal options from the [4] or B of (1) low will be invalidated.  This point is not far away and (5) is now larger in time than (3).  An ending diagonal higher from (2) can still remain valid if 1975.65 is reached, but it would be very weak as it is very unusual to see the 3rd wave longer than the 1st wave in an ending diagonal.

In an interesting development, a sideways pattern like a flat from the (1) high is now a weak option again.  This is due to the new requirement that it use the poor flat option from A to (4) where there is a single zigzag higher unfolding from the wave (4) low (a zigzag higher from (4) is now very unlikely).

With the possibility of an impulse wave higher from X to [a] looking very solid, the rise to a new all-time high today suggests an impulse or double zigzag higher underway from the wave (4) low.  The small size of [b] of Y in relation to [a] of W to X suggests a sideways correction beginning at [a] is incomplete should the impulse option be correct.  If there is a pullback for a sideways correction since [a], this would make the size of the sideways pattern larger than X and probably [b] of W which creates a proportionality problem and is not the tendency of waves.

As mentioned some time ago, the triangle pattern in the wave [b] of W location works perfectly with the waves and has no structural problems.  It now does require wave X to be a zigzag-family pattern which is perhaps not the most natural interpretation of those waves.

If waves do continue higher for an impulse from the wave [b] low, action since (4) will look much better as a double zigzag from that time.

Structurally, it does appear most likely that there is an impulse wave higher from the wave [b] low.  A this time, a complete zigzag-family pattern must be forced on the waves.  Higher prices might make the option look better, but the size of the wave higher today from 1940 is already large compared to any previous wave higher that began after the wave [b] low.

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Is this a Top?

The continued sell-off on Thursday has allowed us to eliminate some wave counts in the medium and short terms.  The longer term options remain unchanged however.

We are monitoring a wave higher that began at the 2009 low that should be either a single zigzag or impulse wave higher.  Months to years more of additional price action is needed to better determine which option is correct.

There are various impulsive possibilities since the wave [C] of b low.  If the market is drawing out an impulse wave higher from (4), the best way to fit this into the larger picture is by having an impulse higher from [E] to A of (3) where [2] to [3] is its 3rd wave and [4] to A of (3) is its 5th wave.  In the 5th wave, the structure of the individual subwaves is acceptable but its 4th wave crosses under the core of the 3rd wave with near wave crossing and its 5th wave is truncated with the ensuing correction essentially not existing for months.  These behaviors are not typical so this wave count is not preferred.

There can be an impulse wave higher from [4] to (1), but its 2nd wave (A) and 4th wave ((i) of [i], not drawn) are much different sizes.  So this possibility is also unlikely.  If there is an impulse wave higher from the (3) low underway, there still must be an impulse wave from [4] to (1).  Therefore this option is also unlikely.  It also has a complex impulse underway since (3) which certainly does not help its standing.

A sideways pattern underway from the wave (1) high is a reasonable option if the wave is used as a 4th wave and paired with [C] that is a 2nd wave.  This is in an impulse wave underway since [A].  The other sideways possibility from (3) is adding significant complication and not improving the situation for any wave count so it is a weak option.

An ending diagonal higher from [4] or B of (1) remain clearly the best options because they have no structural problems.  An ending diagonal higher beginning at (2) is not preferred because it requires a weak impulsive from [4] to (1).

The sell-off this week following the Monday wave C high is now clearly larger than any corrective waves from B.  The single zigzag option discussed last time from (4) to ii of (a) of [w] also has a small 'b' wave in relation to the current sell-off.  It is now likely that an impulse wave that began at B has terminated.

We are left with two possibilities.  The first is a double zigzag possibility from (4) where 'w' terminates at (b) of [y] of B and 'y' is underway since B where its 'b' wave is currently underway.  The second is an impulse wave higher from the (4) low where its 4th wave is unfolding.  Both of these call for the correction underway to extend for a greater period of time so better corrective wave proportionality is obtained.  Getting under wave [iv] support will generate some concern for these wave counts.

The double zigzag possibility from (4) is not the best option due to the added complexity and the fact that (c) of [y] looks most like a 5-wave pattern.  The impulsive option is better, but as discussed above following the first chart, this possibility is weak due to the requirements of the waves preceding it.

There is an interesting character to the sell-off since C.  The only two options that stand out here are a triple zigzag or an impulse wave lower still developing.  The triple zigzag is 'w' to b of (a) of [ii], 'x' to [ii], 'y' to [B] of w of (ii), 'xx' to (ii), and 'z' to i.  The reason for only these two possibilities is that (i) is shorter than [i] and i so there cannot be a complete impulse wave down.  Also the corrective waves [ii] and (ii) are so large in relation to the other corrective waves that this limits the possibilities significantly.

There can be an impulse down beginning at [ii] where (ii) is the 2nd wave and ii underway is the 4th wave but not without a major problem.  Wave ii has retraced nearly all of the core of i, going deep into wave i territory.  It is not typical of 4th waves to retrace so much.

The bounce following the wave i low has a somewhat corrective nature where the advance to the high just after [W] does not work well as 5 waves and (B) of [W] is small relative to [W] to (B) of [Y].  So a set of 1-2 waves higher does not make a great deal of sense, nor does a sideways correction from (A) of [W] to (B) of [Y] (wave (A) of [W] territory was barely reached).

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A Stall with Bearish Potential

Last time the long-term options were discussed in great detail.  Because nothing this week has caused a change to these possibilities, please refer to the last post for a full explanation of the long-term situation.  To summarize, an impulse higher unfolding since the wave (4) low is a weak option at best due to the structure required before (4).  A sideways pattern since wave (1) is not a poor option and is growing in probability.  If correct, it is most likely a 4th wave where [C] in 2011 is a 2nd wave.  A sideways structure underway since (3) is unlikely.  Finally an ending diagonal higher since the [4], B, or (2) lows remain the best possibilities but the one beginning at the wave (2) low is the weakest choice among these.

1975.65 is an important level and is near current action.  If it is taken out, wave (3) is then shorter than the wave higher from (4) which invalidates the only non-weak possibilities that currently exist, namely the ending diagonal possibilities as marked here.  The wave count possibilities since (4) and later seem to confirm that this level will not be reached for some time.

Two double zigzag possibilities remain; zigzag 'w' to ii of (a) of [w] or zigzag 'w' to (b) of [y].  Both suggest another zigzag is underway or complete that began at the wave B low.  If 'w' to (b) of [y] is accurate, the market is weeks away from completing 'y' because 'b' should be proportional to 'b' of 'w'.  If there is a zigzag 'w' to ii of (a) of [w], the wave higher since B can be complete or nearly complete.  This is a better option because proportionality between 'w' and 'y' is better and a single zigzag down from ii to [w] works well with the small sub-waves.  It comes at the cost of greater complexity like all double zigzags vs single zigzags however and there is then a very small 'c' of 'w' wave that is truncated, an unusual development.

Because of the problems with these double zigzag options, they are labelled "weak".  A single zigzag from (4) counts far more naturally and is simple.

Notice also the impulsive possibilities beginning at the wave B low.  The sell-off from the C high is only well-proportioned to the wave [ii] and wave [iv] corrections.  If there is an impulse higher from [ii], [iii] is the 1st wave and [v] is the 3rd wave.  The 3rd wave is much shorter than the 1st and the core of the 3rd is nearly totally retraced.  These are unusual qualities.  The core of [v] can be moved lower, but there are then proportionality problems with the corrective waves nearest the end of the move.

[ii] to [v] can be an impulse wave where its 3rd wave terminated at the high just after [iii] and its 4th wave terminated at the low just before [iv] which brings moderate proportionality relative to the 2nd wave ((ii) of [iii]).  But there is again the same structural problem as mentioned above when moving the core of [v] lower.

It is more visible above what the problem is when trying to label an impulse higher from b of (x).  Within it, an impulse higher from (ii) seems to be the best attempt in doing so but the size of its corrections are distant from one another.

There is a choppy set of waves down following the all-time high.  If this is happening following a significant bottom at [iv], the pattern would be more bullish. Given what we know about the action higher following B, an impulsive structure down is workable here.  Structurally it labels as well as a double zigzag although the sideways upward 2nd wave corrections it uses are unusual.  Sharp 2nd waves are more typical in impulse waves.

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