Finally a decent 5 wave impulse lower!

 

After what seems like forever going up, the market has created a very clear impulse lower followed by a three wave rally. Assuming the recent top sticks this creates a (very lopsided) head and shoulders pattern with March 7th as the left shoulder. At a minimum we are heading to the sub 1800's, but I believe that is an extremely conservative estimate.

 

The NASDAQ 100 chart shows the Head and Shoulders pattern far more textbook than does the S&P. The dates are somewhat different but they appear to be aligning at the right shoulder for the time being.

While this chart is a couple of weeks old, it display how on a logarithmic basis the recent all time highs were bumping into the lower end of this channel. These lines have been defining many of the significant market tops and bottoms over the last 30+ years. The bottom line is I believe we are currently at the very beginning of a new bear market.

 

 

*On a personal note, the reason I have let this page fall into a state of disuse is due to my current job as a Platoon Leader in the US Army. I cannot trade with the same focus as I could when I was in college; my primary duty is to my Soldiers and country. The demands of trading weigh on my mind too heavily to be dual focused on trading and training Soldiers. They deserve my all. I will continue to update when I feel there is something significant in the works, but still infrequently until I complete my service.

 

US Equity Market Rolling Over?

It appears as though the S&P 500 may have finally completed the first of many (yet to come) impulses lower. The trend line shown is the last bastion of support which is why I believe that we will get a modest rally from here which should not take out the September 13th highs. Although this impulse lower appears as a leading diagonal, which it probably is, when viewed from the DJIA it appears as a normal impulse wave.

This chart offers a very simplistic view of why I believe the top is in. As far as I know, I am the only one who has been tracking this long term channel forming in the DJIA. The price action in the S&P 500 has not reached the upper boundary of the channel; however, aside from traders I believe the Dow Jones is more widely followed and therefore has more relevance.

Potential S&P 500 Peak

There exists some possibility that the market topped earlier today as a ending diagonal within an ending diagonal. I had expected this move to continue to roughly 1450 under this count but with the large daily reversal candle potentially signal immediate weakness I decided to share this chart.

Decade long S&P 500 channel resistance looming at 1382

It appears that the S&P 500 may see a major top very soon upon reaching the secondary resistance of this decade long channel. This secondary  resistance previously acted as the tops of both shoulders from the 2007 Head and Shoulder's topping pattern.

Possible 5 waves lower in S&P 500

I usually don't post my short term wave counts. However if this labeling is correct, we may have already seen the very first leg down of a much larger decline in Wave 3 or Wave C. The point is to remain very cautious until the market provides more clarity.

S&P 500 corrective rally appears complete

With today's latest jobs report, the S&P 500 has completed it's minimum pattern for a Wave 5 Black to complete Wave 2 Green. This does not mean that this is the top, but it may be. Prices need to hold below the May 6th high for this count to remain valid. The main point is to remain very cautious as the downside risks are far larger than the upside left.

S&P 500 Mid-Term Elliott Wave Count

The S&P 500 looks like it has one small rally left in to clear several overhead technically significant resistance lines. This should take prices past the end of Wave A Green and will likely result on most everyone turning bullish allowing the market to finally head lower in a third wave. Get ready for some fireworks!

S&P 500 B Wave Correction potentially complete

The S&P 500 appears to have complete a 3 Wave correction and should continue to make new highs tomorrow and possibly thursday also before a large impulse lower unfolds.

S&P 500 Triangle Consolidation Appears Complete

The S&P 500 appears to have complete a B Wave triangle and should now thrust higher to test the May high. A thrust from this triangle should propel the S&P 500 to roughly 1315. As triangles are always terminal patterns, I expect very sharp movement lower after this target is hit.

S&P 500 SHTF line

The S&P 500 has survived a test of 1225 which was already major support, but is now where the recent trendline resides. If and when this level of support is taken out, prepare for an extremely sharp long-term move lower. This should coincide with a sustained USD breakout.

S&P 500 ready to rally?

The S&P 500 appears set for a large rally which could potentially take us to new highs above 1220. Looking back at the price action since the August 9th low, it looks extremely corrective. Therefore I do not believe we are in the midst of a 3rd of 3rd Wave just yet. The selling does not appear forceful enough. Currently, Wave C Green (the end of Wave B Red) is not confirming the new RSI lows below Wave A Green on a 2 hour time frame. However, if we break the August 9th lows, fresh selling pressure would be injected giving the 3rd of a 3rd look. There is a way to count price action in this manner; however, wave 1 and 4 overlap requiring it to be labeled as a leading diagonal. I only label in this manner as a last resort, but it is a possibility. I believe we will have final week or so of a strong rally to knock out the weak shorts, followed by a severe decline around October 10th.

S&P 500 to begin Wave 4 up?

The S&P 500 looks set to open much lower than yesterday's close and rally in a correction perhaps the rest of the day. This may be a optimal time to close some dollar long positions in order to resell at a higher price.

 

Here is my current standing in CNBC's Million Dollar Portfolio challenge. All of my trades in this portfolio are based on the research I have posted to this blog.

S&P 500 Hunt Volatility Funnel & Elliott Wave Count

The past month and a half has seen a massive compression of volatility in a series of higher lows and lower highs. Once H3 (1221) or L3 (1187) is broken, a significant movement in the direction of the break should be unleashed as large numbers of stops are triggered.

Here is the my interpretation of the Elliott Wave Count of the same time span. It implies that we are almost in Wave 3 Blue of 5 Green. Given how the equity indexes have been driving the currency markets lately, this implies further appreciation of the dollar. When the next move occurs, make sure you are on the right side of the trend.

 

 

S&P 500 Mid Term Chart Update

After being rejected again by the 55 day moving average the S&P 500 appears to be set for an extended fifth to complete Wave 1 Green down. I will try to stay ahead of the market and give an update before a sharp short covering rally takes place in Wave 2 Green up.

S&P 500 Short Term Chart

The recent bounce in the S&P 500 may be ending as it appears to be respecting its descending trendline which connects the lows of April 18th and June 16th. If my wave count is incorrect and price action breaks above the descending trendline, we can expect a sudden move to 1250.

S&P 500 Mid Term Chart

The green line is a 55 period EMA which has shown a tendency to act a significant support and resistance; therefore, the path of least resistance should be lower.