Daneric's Elliott Waves

Well, that was quite the rally today and ruined the primary squiggle count. But not too badly. The top bearish count is that the market has formed a huge series of “ones and twos” down. What’s great about this count is that it shouldn’t take too long to figure out if it’s correct. Either the market “gets on getting on” to the downside or it doesn’t. I’m impatient I’ll admit.

The top bullish count is of course the opposite as the market is still at a legitimate crossroads. It keeps coming down to the theme of an extended wave [5]. Where [i] tops, it would have made a nice top…. but then we have a “three” into the true price top…and it doesn’t make good Elliott Wave counting sense.

It will make good counting sense if we get a higher high which, of course I have no objection to because the market is what it is and I still generally sense that Anthropic will go public with a highly elevated market. Makes sense the AI bubble finishes on Anthropic going public at the top.

I’m ok with either, just tired of all the F”’k”’g around the past many months LOL.

But yeah, here is the “bullish” count but as you can see, the market did a massive “backtest” of the upper long range channel line it fell out of last week. It has to punch through that first and foremost. We shall see!

Exciting times.

Well, after Wednesday’s rally, it gave pause to the overall primary count that the market is on the verge of a third wave down. Yet we always want to see what the next day brings. Was there follow-through to the upside? Or complete reversal?

Well, we have our answer. Complete downside reversal.

The key level is SPX 7500. Certainly not 7525 SPX (pink horizontal line) The market has no business making prices above this line (if there is a hard bounce up) if our count is correct.

The next pivot point to be challenged would be Minor 4 low, the green horizontal line.

All indices are seemingly aligned to the downside count:

A twinge of panic finally. Breaking above the long-term down trendline.

Bearish-type price action today. The primary count of wave [iii] down remains intact.

Prices are at the top of the long-term upper channel line.

Zoomed in, we see what that looks like:

The best bullish count is technically the Minor 4 ascending triangle. Its actually still technically intact. But prices need to rally now. If prices fall beneath [c] pivot, this count is completely useless.

And the market knows it. The wave [c] low is the KEY price pivot the market cannot afford to lose.

Well, I generally still believe the market will hold up until Anthropic’s IPO. Which might be in about 2+ weeks. We have various options in the squiggle counts.

At the moment however, things are aligned for a bearish wave three down in all 3 indices. SPX downward wave [ii] flat.

Composite wave [ii] downward flat or expanded flat.

DJIA Minor wave 2 consisting of many overlapping waves.

Ok, ok, so yeah, there is a count to take us to SPX 8000 upon which gyrates around Anthropic’s IPO in a few weeks.

We have 2 flavors. A long-winded Minor 4 triangle which pops above to about 8000 SPX.

Or the ending diagonal triangle which falls much short of SPX8000 but still makes a new all-time high. The problem with this pattern is that wave [iii] really didn’t climb much higher than wave [i]. So instead, it might be an ascending triangle type pattern (hence the chart above showing exactly that).

Everything is seemingly aligned to the bearish side of things.

The best SPX count is actually bearish. Great wave structure and form. This now aligns with both the DJIA and the Nasdaq Composite.

The best bullish SPX count is an ending Diagonal triangle that squeaks out yet another new high. This looks pretty good if it pans out. Would give time for evil Anthropic to go public in an overhyped IPO for the ages. Would make fitting sense that the world’s largest bubble makes a top on such an event. We’ll see.

Overall big pic on the SPX. We are merely tweaking ending wave matchsticks on the coming bonfire.

We had that other move down this morning, but it rallied fairly quickly and recovered. The primary count is still shown below. No sense in repeating the alternates. Now would be about the time for “upside surprise”.

Again, if Minor 5 of (5) of [5] stretched its legs a bit, the entire 6+ year Primary extended wave [5] would look simply awesome.

Let’s talk about this chart. Wave (1) WOULD have made a nice [5] peak. But the eventual price move above forces that instead to be labeled (1) of [5]. Then we count (3) and (4). Finally, where 1 of (5) of [5] resides, WOULD have been another spot where wave (5) of [5] could have ended. But instead, we label that 1 of (5) of [5] indicating a classic extended wave in the larger structure of a 17-year cycle-sized wave.

It’s a beautiful picture. We charted this monster for 17 years. Not going to give up on it now. (Note: the chart below shows the “alt” whereas wave 5 of (5) of [5] has already finished up and we are merely awaiting wave count confirmation).

The S&P500 dipped to that 7700 level. This does not bode well for the continued bullish count toward a market peak if there is another leg down. As was stated last week, there are enough waves in place to consider the wave count complete.

The AI bubble narrative to starting to crack as it should. However, this is still a valid wave count. Again, the market has reached a point where it “has to rally”. Especially if they want an Anthropic IPO in about 3 weeks.

The best count might be the ending diagonal. We’ll know quickly if this is the case.

The NASDAQ could be an ending diagonal wedge.

Primary count:

CPCE:

Best bearish count:

The primary count hasn’t changed. Minor wave 5 up. In yesterday’s update, it was suggested that a move lower today may mark the low of Minute wave [ii]. In fact, it hit precisely on the predicted trendline. A 50% pullback is a healthy wave [ii].

There is actually a decent count for yet a lower low than today and still be Minute [ii] however, prices need to land above that 7700-level talked about yesterday. The chart below is drawn from a bearish perspective, but you can see Minute [ii] could go one step lower and still be Minute [ii].

The next best count I like is this one. Alas, if this is truly an exhausted ending diagonal (expanding) pattern, I expect the market should crash as if it is exhausted.

This pattern would account for the Composite also.

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.