In a market that has been especially ugly as sin to count since the COVID lows, the market Gods (or Demons, pick as you see fit) have gifted us a beautiful 5-wave decline:
There are a finite number of things we may do with such a beauty. Let us review each of them in turn.
Option #1: It’s the C-wave of a flat:
If that is so, then there must be a 4 under it, and we would expect it to form an impulse wave coming out of the lows, but it doesn’t make a good impulse wave. For starters, we have that weird, spiky flip-flop thing coming out of the C-wave low, and if that’s a 1-2, it’s very deep for a 2. I discussed the possibilities of this count here and here. If that were a 1-2, we should be in a 3rd wave today, and I wouldn’t have expected so much resistance. Third waves are somewhat obvious: they run and run, free of hinderance. Now, if it runs and runs over night and in the limited hours coming up, I would expect this count to be it.
Option #2: It’s an A-Wave of a larger correction.
This is the triangle idea I suggested earlier today here and here (there are a couple of things we can do with it if it is a triangle). However, as we continued to grind higher, we’re losing some of the nice contraction that makes triangles triangles, and we’re almost parallel now. On the basis of that, I think this is becoming less possible.
That actually leaves us with the most bearish possible alternative, believe it or not.
Option #3: It’s a 1st leg of death incarnate.
It fits all of the criteria I would like to see for a 1-2. The two counts well as a flat, and this can account for the spiky thing (in this case, minute [blue] a). It came right to where we’d like a 2 to come. So, let’s see what happens, but until I see otherwise, I actually think the last option is the best here.
Note: When articles are first posted, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.