A Show of Clarity

The short-term action has prompted some change to the wave count options since 2011.  A zigzag or impulse wave developing since the 2009 low is still most likely where an impulse wave higher is unfolding since the 2011 [2] or (2) lows, but within this wave an ending diagonal since the 2013-4 lows of 4, [ii] or [iv] are now weak possibilities.  This is because there is now a high likelihood of a new all-time high where the 1975.65 invalidation target will be reached.  The reasons for this are stated in a moment.

The incomplete impulse possibilities since 2013 [iv], from 4 to [iii], and since 2014 [iv] remain weak structures.  The wave count in color above does not use these components.  It does require wave (4) to be the flat which has problems, but there is not much choice anymore; even a sideways pattern underway since [iii] probably utilizes this flat.

From i to (2), a triangle works well due to the wave (1) and (2) structures that resemble 3 wave movements.  But besides the ending diagonal possibilities that were once strong, there are no good ways to describe an impulse higher since (2) that is incomplete; some weak structure mentioned in the previous paragraph must be used.

The structure of the decline since 3 had bearish potential until the (c) of [a/w] wave was heavily retraced.  The move on Friday to the origination of (c) in what is so far 3 waves gives an extremely bullish look to the decline.  [a/w] can be complete where an impulse wave higher is now unfolding, or [a/w] can be just the first leg of a larger correction (e.g. a double zigzag or flat).

Assuming there will be a new all-time high, the potential for a corrective wave higher, at least one where 1975.65 is not exceeded, is bleak.  The structure since (4) is now so far above the last high that a corrective 'b' or 'x' wave underway since (4) does not make a great deal of sense.  If there is a rise above 1975.65 the the structure higher since (4) does prove to be a correction, it may be best suited as a first wave of an ending diagonal.

The short-term action since [a/w] is not particularity clear.  It can be impulsive or corrective.  If corrective, this wave may or may not reach a new all-time high before a level under [a/w] is reached to conclude a corrective wave since 3.

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A Stall

Today I provide the wave possibilities in the charts above.  All 900 words of my analysis and more is available at http://ewaveanalytics.com.

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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