Silver Lining

Do you remember this thought from the other day? Let’s bring that back up now.

If the market is bullish (still an if), it would be a shame to realize that in a 3rd of a 3rd to the upside (discussed here). Why? Because it would mean that we’ve missed a good entry prior to the most powerful leg of a rally. And if that’s so, it’s just going to get mostly congested in fours and fives soon before slowly rolling over and eventually having a choppy pullback in the fall. Well screw that, that’s not much fun.

However, if—from a technical perspective—we actually only bottomed on Tuesday, we’re not going to miss any third of a third at all. In fact, we would just now only be in a little tiny itsy-bitsy first wave right now.

There’s not even any full wave yet:


Let’s zoom in.

Notice that we came to the 1.618 extension of that first (orange) wave. That may mean we finished a first “3” (as that is the exact extension at which we like to find them). If we see anything like a consolidation and one more high, that could be a “1” of a higher (blue) degree. And if we then see a 3-wave pullback that does not take out Tuesday’s low, then we may enter a really big wave, just days ahead of us. That wave alone can carry us to 4300 but from 3990 or so. So maybe the party’s just getting started.


And in a weird way, this would sort of vindicate me a little bit, as maybe we haven’t really missed the beginning of a bullish run after all, given the technical fact that the bear market only ended on Tuesday (if this interpretation turns out to be true). Coming out of a bear, one would want to enter near the low, at a 2, and not chase into the middle of a 3 and that can actually happen here still.

So, what we need to watch is: do we sometime soon get only a pullback that looks and feels like a “2,” that does not take out Tuesday’s low? And if so, there’s a buying setup there where we’re not trying to chase into the center of a third wave, but catching it right where we would want to at the 2 instead.

This is all a big if right now, but I will be sure to update this thought over the coming days if I see what I am looking for.

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