Oh my! That’s what I was hoping to finally see.
The worst-case scenario was that we are in an impulse wave down. And most of the bears counting it that way (and many of the bulls here, too—everyone is bearish here) want this to be a 1 down, 2 up (I’ve noted that in green), and for us to be in a powerful 3rd wave down. But, that has been invalidated with that rally. In reality, though many will try to force it, you wouldn’t want to see such a big overlap like this:
If we’re in 3 down now, the low today may have been 1 “of that 3,” and bears will want this rally to be the “2,” before we crash in the next wave down. However, 3rd waves need to be huge in every respect, and we should have fallen lower today and not have bounced nearly this high. So, the alternative is that it’s simply a 3 wave move in total, a correction lower, now done at today’s lows, and that we have now entered a new structure.
So, if we count it as—finally—”the low is in,” we can count today as the minute (blue) 1 and 2 at the lows, and that we’ve entered the 3rd minute (blue) wave. We would like to see a gap associated with it, especially if we are, as I suspect, coming out of a cycle degree bottom. So, we may gap up and run on Monday, steaming ahead towards the bullish wedge I pointed out earlier:
We should consolidate at some point for the blue 4, which I’ve stuck up at the April ’21 gap, but it’s also possible that that happens much higher, too. Impossible to say just yet. The reason I say that is that in the event that the blue “2” I have down there is really a nest, then we may actually gap twice in a row. Too hard to say until we see the consolidating 4 above us.
I hope you all have a nice weekend. I’m sorry I have not been trusting of the downside here, but, I’ve explained my reasons for that, and I hope you can understand. I want to remain psychologically prepared for the upside so that I do not get shaken out once we get going.
The one risk here is, of course, and I know some of you are wondering about it: was that merely a short covering rally in a bear market? It involved short covering, to be sure, but I doubt it was only that. Not while we’re in such a large bullish wedge, and not while the Russell has such a clear impulse wave to the upside (my articles from earlier today). We will know soon enough if I am finally right about that. But, with CNN’s “Fear and Greed Index” hitting 7, for the second time this week, combined with all the other signs and symptoms of a major low, I am more inclined to think it is a major low.
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