Winding Down

As expressed last time, the best ending diagonal possibilities which began at 4 or [ii] in the chart above in 2013 have been weakening as the market continues higher.  These have been by far the best possibilities, but will be invalidated at 1975.65 which is fast approaching.  As current price draws closer to this critical level, the impulsive option in color above has been gaining strength rapidly.  The ending diagonal possibilities which began at 4 or [ii] are still in the running and are good options.  The chart above is simply demonstrating what the best impulsive option looks like in more detail.  Remember that there are no primary and alternate wave counts in my analysis; every possibility is weighed and a final view is expressed based on the entire picture.

As discussed last time, the sideways option following the [iii] high is not a great option because the undesired wave (4) correction must be used.  The count in color above also uses this flat wave (4) which is one reason why it has not been the most desirable option (an ending diagonal higher from 4 or [ii] utilized this area better).  The other main impulsive possibilities since 2011 use an impulse from 4 to [iii] in 2013 and/or an incomplete impulse wave that began at [iv].  These impulse subwaves are not good options because of the structure and/or complexity associated with them.  Because of this, the impulse wave higher from 2011 will be preferred should the ending diagonal possibilities be invalidated.

If there is no ending diagonal higher beginning at a late 2013 to early 2014 low, there must be an ending diagonal down from B to (4) to terminate a flat which began at (3).  This ending diagonal is strange not only because of its truncation, but also because of its sideways 4th wave.  Wave A of the flat is also odd because it must be a running flat with very high [b] wave and little overall retracement.  Shallow action like this is not typical because the preceding 5th wave, wave 5, is truncated.

As discussed last time, a double zigzag higher from wave (4) is better than an impulse due to the proportionality of the corrective waves that are within waves 2 and 4 and the subwave structure of [w] of 2.  Given that there is still not a fully developed impulse wave higher from 4 and price is only about 10 points shy of 1975.65, some less desired options might have to be used.

The prospect of a sideways wave since the wave 3 high is not great given that price is holding above the wave 3 high and the upward structure following 4 best resembles an impulse wave winding down, not a zigzag-family pattern.  There can be an impulse wave higher to [i], a wide sideways correction to (ii), then a 2nd impulse to (iii) to complete a zigzag, but the proportionality between the two impulse legs is very far from being typical.  It is still something to keep in mind however if prices turn definitively lower.

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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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