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Saturday, June 8, 2013

Saturday, 6/8/13 update

Nice rally in the ES/SPX off Thursday's lows which pretty much confirms the idea in Thursday's update:  a zig-zag correction into the lows with the "c" leg of that zig-zag forming an ending diagonal.

If Minor W4 is not yet complete, then the current rally off Thursday's low is either an "x" wave which will lead into another zig-zag selling sequence or it's the "b" wave of a developing triangle (not shown in chart) with the May 22 to Jun 6 zig-zag being the "a" wave.  If a triangle, then there is a wave c, d & e yet to come before Minor W4 concludes.  

There is another possibility, and that is that the May 22 top is not the conclusion of Minor W3 but is actually the top of Minute W3 of Minor W3, in which case the Thursday low would mark the termination of Minute W4 with Minute W5 thus currently in progress.  That would mean new all time highs in the short term to mark the top of Minor W3 before more selling in the form of Minor W4 ensues.

This view has some credibility for several reasons.  First, the rally from mid-April into the May 22 high has the steepest slope of any rally series since last November's lows, which evidences the type of acceleration that typifies 3rd waves in equity market sequences.  Second, the low of last Thursday occurred right at the lower trendline of the channel that delineates the bull market from last November.  Finally, the character of the bounce since that low is very clean and impulsive looking, more typical of a move with the trend then against it - i.e. it looks more like what would be expected of a 5th wave up rather than an "x" or "b" wave in a correction sequence.

A possible target in this eventuality would be ES 1695.00 where Minute W5 = Minute W1.


  1. Thank you for sharing. Your last count is interesting. What would your targets be for Minor W4 and Minor W5. It does imply two successive all-time highs, Minute 5 of Minor 3, then Minor 5. This could take the market much higher on some extension (1.618, 2.618,...) calculations. One major attraction of this count is that it would allow major breadth divergences to appear. One question, is whether the market has sufficient energy left to lift it twice to new all-time highs. Interested in your thoughts. Kind regards

  2. Any targeting at this point for a Minor W4 & W5 on the alternate count is highly speculative - obviously these things come in to better focus as the pattern develops. One thing to note is the upper trendline of a channel that delineates the action since the Mar '09 major long term lows - that upper trendline is currently north of ES 1700 and should provide solid resistance to any rallies. Concerning a Minor W4, general rule in EW is that 4th waves tend to bottom in the same area as prior 4th waves of lower degree, the 1550 area +/- looks to be a likely candidate

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