Daneric's Elliott Waves

The preferred primary count is that Minute [i] of 5 of (5) topped yesterday and today wave Minute [ii] pullback which either is over or will be soon with another move below today’s low.

Overall sentiment-wise there is a high degree of “bearish market watching” where everyone from GS to my grandmother is looking for the bottom to fall out. There is certainly good reason for this as market internals are historically the worst there ever was in so many ways indicating a major peak is forming. It’s being reported commonly on places like YAHOO! Finance and MarketWatch. So, I believe they might be a month early, get tired of reporting it, get bullish again because prices keep going up – and THEN the bottom falls out after a historic IPO, another rigged election and whatever.

Zooming out a little it would look like this (see next chart below). And the key pivot support is where Minor 4 is marked: 7616 SPX. In fact, it really shouldn’t get too close to that.

The real place to watch is SPX 7700, the top of the open gap in Minute [i] of 5 up. If prices drop back into the large open gap, the count is likely over. That would be a decent entry place to add shorts. This is not investment advice; it’s just a logical entry point based on the Elliott Wave structure. Why? because 7700 or so is where prices would begin to invade the price area of Minor 3 up and indicate a major downturn that the overall pattern has changed to down.

But again, the primary count is that Minute [ii] of 5 settles somewhere higher, perhaps the low today is sufficient (as marked) as it bounced off the top of the triangle upper line. So yeah, tomorrow will be an interesting day.

The market must go up…

There is another interesting potential squiggle count in play: The ending diagonal triangle, megaphone pattern. Yesterday’s peak wave [v] = wave [i] in points.

But I prefer a further rally, perhaps toward the election day and/or Anthropic’s IPO in early November. It would only be fitting that the world’s biggest bubble – the AI bubble – will peak with the dumping of one of its champion losers onto the public.

The DJIA supports this. It could be Minor wave 1 down is finished and Minor wave 2 up – a retrace – is just beginning. This would imply the SPX finishes out its Minor wave 5 up.

So that’s the preferred counts.

Primary count:

For wave 5 to “look” correct, higher prices are needed. But not that much higher. See all the charts below.

From a pure price point perspective, wave 3 was .618 X wave 1, and IF wave 5 is .618 X wave 3 then it projects too about 8,000. Which would make it look great and have a nice Fibonacci relationship.

However, the squiggle count supports lower price points – 7906 for starters or lower – although SPX 8000 is not out of the question. That is assuming this is the correct squiggle count or close to it. As I like to sometimes say, there ARE enough waves in place, and of a decent structure to consider the pattern complete. Not that it is, but that everything from here is bonus pattern to reinforce the overall “look”.

I drew that channel when prices hit [iii] earlier today and drew the opposite. And prices came to rest on my lower channel at the end of day. Was kind of neat to watch in real time. So, it’ll be neat-o if this is the correct squiggle count.

Junk finally acting more like junk.

It seems to me that the market cannot truly crash until Anthropic goes public. Which may not be for another month or so. We’ll see.

The count for the SPX could be a running Minor 4 triangle. Two versions are shown below:

Overall, it looks much better:

The best bearish count is that today was peak Minute [ii]. But I don’t like this count because sentiment has bled off over the last few months, not increased again on a wave two. Running out of price. But if the market suddenly drops below 7500 SPX, at least we have a count for it.

On the long-term chart, the underside of this triangle is the upper channel line.

Well, the market finds itself at the opposite end of where we were last Thursday (see last post). The best bullish case was that it had to go up immediately and violently and it certainly did over the last few sessions. The NASDAQ Composite came within 7 points of a new all-time intraday high however today was a new closing high. Its count seems unfinished. Therefore, it seems the bullish count overall is back in control. However, the DJIA is of course lagging badly the SPX and Composite.

Looking for the top of Minute [iii] of 5. Today’s big open gap up has to stay open for this count to finish.

So, as we did last Thursday, we leave the best opposite (in this case bearish) count. Which again implies prices need to move immediately – in this case down.

The market is at a key junction. Tomorrow will likely be volatile one way or the other. The high is probably in.

Still no signs of real panic.

Market is already screaming for another 1/4 point hike.

The best bullish case from here is that a falling wedge will bounce very violently upwards. One last “AI” dance. The NASDAQ has yet to crack, so we shall see.

Well, here we are. We’ll label the recent low which bounced off of major support Minute [ii]. The call is for wave [iii] of 5 of (5) of [5] up. Should be grand if it happens.

Time to check in. Either the top is in, or we have wave [iii] of 5 of (5) of [5] still to come. But first, we need to confirm a low in Minute [ii] which I suspect will close the open chart gap. We’ll give this AI mess the benefit of the doubt and that the rally continues through the end of summer. This blog had said as much a few months back so might as well see it through.

Waves getting tinier and tinier. Compressed. There is certainly room for a last spasm upwards. Maybe another month of madness.

We’ll all has come to pass. One more small higher high and a completed impulse up would have formed. We’ll label this Minute [i] of Minor 5 of (5) of [5] up.

It’s been a few weeks since the last update, but to be honest, I was just being patient in that a predicted triangle pattern was probably playing out. And now we have nearly reached its end. It’s an obvious ascending triangle so the fact that many can recognize this pattern could actually doom it to failure.

Regardless, Minor wave 4 need not be a triangle as it could morph into a more complex corrective pattern continuing to move sideways overall. In the last update, it was noted that, technically speaking, Minor 4 could drop all the way to SPX 7100 and still be valid since it would not have overlapped wave 1’s price range. But yeah, a drop that far would be harder to recover because the market overall is showing extreme signs of bubble behavior and things are being stretched beyond belief. A final burst up here from a triangle would do the wave structure complete justice.

Take note that a very long term trendline (blue upper channel) is being “hugged” above.

They are going to have to raise short term rates because the market is signaling that they must.

Again, I believe the market will hold up through summer. Perhaps a Minor 4 triangle is forming. The truth is, the SPX could drop 400 points from here – from 7500 to 7100 – and Minor 4 would still be a valid count. I would not be surprised if it did.

Oh oh, not good. A .25-point interest rate hike is beginning to be signaled by the market.