The Longer-Term Count Possibilities

In the “Roadmap” article, I expected this rally to fail sooner. This rally is stronger than expected, so I need to take the “L” and reassess, unemotionally (but it does suck).

Here’s what I see. I’ve already discussed possible levels for this blue 5, but I’m going to slightly alter those. Let’s look at that (I posted the other article quickly, to warn of higher prices, but I’ve recounted this a bit more slowly).

  • If this is a bear market rally, when we finish these five waves in blue, that should be the conclusion of Green C of Orange B. And if that’s right, we’re going to fall sharply from there (the green path).
  • However, if I’ve been an idiot and this is all one big impulse wave and the forever lows are in, we will need to adopt the Red count, counting this as an impulse wave. And so, if that’s the case, then I would expect that when the 5 blue waves complete, that we do something else, such as revisit the 250-day EMA from above (where the red 4 is), before rallying again for the 5th Red wave.

SPX

So, if we’re doing that, then Fed-speak be damned, the market is pricing in a pivot whether the Fed thinks it’s going to or not, or the market can simply handle the rate hikes. I originally entertained that thought earlier in the year, but the market was getting so badly destroyed that I had to call that into question. But if we keep going up, the market knows something.

Or, that Red count is just a really, really big “C-wave” of a really, really big “B-Wave.” So, we’ll have to see. In past bear markets, bear market rallies can be huge and go on for months. But, since we have not rejected the 250-day EMA, us replicating the dot-com bust fractal becomes unlikely.

I pointed out a statistic the other day: no bear market rally since 1950 has retraced more than 50% and then gone on to make new lows. I went and checked that man’s work, and there’s an exception: the GFC. In May ’08, it retraced almost 61.8% before resuming lower again. So, it’s possible for this to become quite big and still fail.

Nevertheless, let’s see what it does. We’re at blue 5 = 50% of blue 1 now, as I type this (the lowest rung on the chart). That might work, though I cannot find an “external” wave balance here, at least initially. But, if we keep heading up, I will simply begin crossing these off one at a time. I’m sorry that I did not expect such a big rally. Clearly, the market wants the risk right now.


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