We Need to Be Cautious About Expecting Further Correction Here

Looking at all of the indices together, we need to be cautious about expecting a move up, followed by another swoon (expectation for that was noted here). There are signs that the correction may be over now. Some signs:

All we need are three wave moves. $QQQ has exactly that, in the wedge. It is common for these to complete a low, then a lower low, then it’s rippy time. So, the green 4 I am expecting might be in now, not at another low. We’ll know because we’ll break out of this wedge.

QQQ

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$AA May Be Completing Its Third Intermediate Wave

$AA counts fairly well all the way up and is approaching a former high that may introduce some supply. It’s a good place to have a correction, and if I have the wave degree right, then it should be about a month-long correction going perhaps as low as the orange box beneath us (though it is free to go lower). After that correction is complete, I would expect it to challenge the recent high in a new 5-wave impulse.

These reactions have the initial ingredients to form the right shoulder of a large inverse, but that’s getting way ahead of ourselves, so let’s wait on that until we see how this develops.

AA

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A $GOOGL Update

A quick recap on $GOOGL:

  • In this post, I interpreted $GOOGL bullishly. That call is still live, though it’s obviously taking longer to come about.
  • In this post, I anticipated the bounce to blue b, and we got that, and I also then suggested we may go lower again, and we got that, too.

So far, so good. Where do we stand now? The blue c I needed here needed to be a 5-wave impulse and that’s just what it looks like to me. There is a good chance that the correction is now over. (We are in the expected range for a wave 4 of this degree: big orange box.)

As readers of this post from earlier may note, I expect the indices to breathe first up, and then down, with $QQQ taking out its low on the next leg down. But $GOOGL need not take out its low as the pattern looks complete. So that breath may become its first impulse wave, blue one and two as I have it labelled here below (ignore their placement in time and price; I’ve stuck them on there merely as placeholders).

Once those materialize, I will be able to generate a target for blue 3.

GOOGL

Some Thoughts on the Indices

Nothing much has changed my thoughts on the indices yet, since my last posts regarding them. I continue to look for a continuation of this corrective period. But, I have a bit of crayon work to share.

The $SPY thought I expressed yesterday seems to look good still, as we have yet to take out lower lows and the lower trend line on that hypothesized pattern has been supportive. Using the general idea of that as a guide for the other indices gives us a few things. We probably need to go “up and then down” again to complete the correction. So, using that general drift, we can speculate on all three indices. I will show some examples here.

So on $SPY, we may have completed a and b of d. If this is true, then we should advance in 5 waves to the orange c above us, before pulling back for the e.

SPY

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Revised $DXY Count, Now Looking for More Upside

I had thought that $DXY was in the final stages of a 4th wave correction, after which I expected it to turn lower. However, given the recent price action, and its pushing above the 250-week EMA, I believe it may have a higher destination. Since it’s now pushing the limits of what can be credibly interpreted as a wave 4 of that degree, I am upgrading the wave degrees across the board, and I believe we are in a much bigger wave 2 correction.

It is still probably most of the way done (in time, as with the other count), it’s just that in this case, it probably needs to go higher first for a few weeks or so. The target range for a wave 2 of this degree will coincide with a retest of a long-term trend line, from beneath.

Ultimately, this is a much more bearish count for $DXY in some respects (in the intermediate term). On my other count, I was looking to take out the lows from early this year soon-ish, then have this rally we’re having now. But since we’re having it now, we’re likely to end up going significantly lower in the next move down, and sooner than I had thought before.

DXY