In our replace from final week for the (SPX), see , we “anticipate[d] a crimson W-ii quickly, ideally all the way down to $3875+/-25, earlier than the crimson W-iii to ideally $4275+/-50 kicks in.“
Again then, the index was at $3997. It topped at $4015 earlier this week and dropped to $3885 yesterday. Thus far, so good. Now the index is staging a rally. Thus, the principle query is whether or not the correction is full or not.
Earlier than we reply that query, for these not conversant in my work, I primarily use the Elliott Wave Precept (EWP) together with technical analyses to evaluate the market’s subsequent most definitely strikes and the place it ought to high and backside with an inexpensive margin of error. As such, our major expectation has been for a lot of weeks:
“As soon as the $3800+/-70 zone is reached, …, we should entertain the notion all of black W-b has already bottomed out. From there, we anticipated the extra vital c-wave rally to $4300+.” See Determine 1 beneath. Be aware C waves comprise 5 waves. On this case, the crimson W-i, ii, iii, iv, and v in Determine 1. Furthermore, crimson W-i, iii, and v are made up of 5 smaller (inexperienced) waves, 1-2-3-4-5, whereas crimson W-ii and iv comprise three waves, a-b-c, displaying the fractal nature of the monetary markets.”
The SPX bottomed at $3764 on December 22, 2022, for black W-b and rallied in 5 smaller (inexperienced) waves to $4015 earlier this week for crimson W-i. Due to these 5 smaller waves, we knew {that a} pullback was imminent. In addition to, usually a 2nd wave retraces between 50-76% of the earlier 1st wave; therefore, why I known as for a pullback quickly to $3875+/-25 final week.
With yesterday’s low at $3884, which is the 50% retrace of crimson W-i, the index has technically performed sufficient to contemplate the correction full. Nevertheless, the inexperienced “a?, b?, c?” labels present we can’t but dismiss crimson W-ii turns into extra pronounced and subdivided. It may now be in inexperienced W-b to round $3950+/-25 earlier than inexperienced W-c all the way down to $3820-50 takes maintain. However, if the index closes above this week’s excessive, then crimson W-iii is basically confirmed, barring an irregular flat W-ii. A drop beneath yesterday’s low from the $3950+/-25 zone indicators inexperienced W-c? is in progress.
Thus, our conclusion from final week: “… until the index breaks again beneath the December 22 low, with a primary warning beneath $3850, there isn’t any cause for this [Bullish, dip-rally] sample to not unfold, and the next multi-day correction must be thought of a low-risk shopping for alternative,” was right.
It’s a matter of “all of W-ii is full” vs. “W-ii will grow to be extra advanced.” We are going to know quickly sufficient as such element can’t be elucidated but primarily based on the restricted value knowledge obtainable. However for now, I choose to look greater short- to intermediate-term. As soon as SPX4300+ is reached, I’ll grow to be way more cautious in anticipation of the blue C wave.
