Saturday, 1/30/16 update

The lows achieved in the ES/SPX a week ago Wednesday (Jan 20) appear to be the final lows for the corrective process that started last May, although there is the possibility for one more final stab down to even lower levels before that final low is established.  The point of contention is the EW count for the sequence that started at the end of December:

Alternate #1 - low in place

Alternate #2 - one more leg yet to occur

Up until Friday I was favoring the idea that since Jan 20 a 4th wave has been in progress as in Alternate #2 - the action since the Jan 20 low was clearly not impulsive.  But Friday's action clearly was impulsive and generated pretty strong market internals.  This combined with the extremes seen on those internals at the Jan 20 low point mitigates in favor of Alternate #1.

Daily chart shows a triple zig-zag Primary W IV laid out from the Primary W III high of last May:

Primary Wave V will follow Primary IV and should be similar to Primary I in terms of time and price.  Primary I lasted about two years and gained roughly 700 points:

One final note:  the count for Primary I showed in the above chart has always seemed a little off - it's possible that Primary I ended at the point labeled Major W3.  More on that at some point in the future, but if that's the case then there will be another 4th-5th wave sequence yet to occur before the ultimate top of the long term bull that commenced at the Mar, 2009 lows.

Saturday, 1/16/16 update

In general all markets can be characterized as either "cycling" or "trending".  In a cycling market prices are either in a trading range or slowly trending up or down, and there is a lot of backing and filling.  Trending markets move strongly in a bull or bear fashion with only minor interruptions to the trend that are usually of very short duration.  When market analysts refer to a market as "overbought" or "oversold" there are generally referring to market indicators that oscillate based on market momentum.  These tools are excellent in cycling markets - after all a cycling market by definition is oscillating.  However, in trending markets they tend to become useless - again, by definition a trending market is moving in one direction in a sustained manner and thus is not oscillating.  This is where Elliott Wave analysis can be valuable - it provides a way to judge a market move and make reasonable conjectures about its endpoint.  

We are in the midst of a strongly trending move in equities.  By most measures this market is "oversold".  But that doesn't mean a bottom is close at hand.  Indeed, from an EW standpoint there is a pretty fair likelihood that there's more selling to come, although it is reasonable to anticipate a small bear market rally in the coming week.  There are a couple of possible counts for the pattern from Dec 29 top, the 1st of which has that move currently done or close to done:

The 2nd possibility has the move extending:

In either case the sell off this January is labeled as the 3rd wave of an impulse, which means it will be followed by a 4th wave bear market rally and a final 5th wave down to the ultimate low.

The longer view has the whole pattern since the highs last May labeled as a multiple zig-zag Primary W IV with the 3rd and final zig-zag of that wave currently in progress:

 A possible target low for Primary W IV is the .382 retrace of Primary W III which is at 1726.75.

Saturday, 1/2/16 update

So, is the glass half full or half empty?

Bull Alternate

Daily Chart

Hourly Chart

Bear Alternate

Daily Chart

Hourly Chart

Bear Alternate #2

Daily Chart