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Sunday, August 13, 2017

Sunday, 8/13/17 update

The Intermediate Term top anticipated in last weekend's update materialized on Tuesday with a spike high into ES 2488.50/SPX 2490.87 followed by an immediate and steep 30 point drop.  Current EW count has this high as the top of the 3rd wave (Intermediate W3 to be precise) of a bull impulse that started in Feb, 2016.  Inter W4 is thus underway.  Inter W2 was a simple flat, so by the EW rule of alternation this sell-off should take the form of a zig-zag, triangle or some sort of complex corrective sequence.  Preliminary target for the move is in the area of the prior Minor W4 lows around ES 2317 - 2322.

On the hourly chart of the ES, Elliott Wave purists will object to the labeling of the torturous 8 day sideways grind that ended last Tuesday as a triangle - but the cash market (SPX) shows the same pattern and is more proportionate.  Also, the culmination of the sequence with a short lived spike to new highs followed by an immediate collapse is right out of the Elliott textbook for this type of chart pattern.

So far since Tuesday's top we've had 3 waves down.  That could be it for the correction so far - i.e. the market may have concluded a zig-zag type "A" wave into Friday's low - or those waves are waves 1, 2 & 3 of a downwards impulse with the 4th wave in progress or completed.  If the move so far is an impulse then a possible target for a 5th wave low is at ES 2416.    

NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts
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