The S&P 500 is behaving as if it is still within a 3rd wave of a somewhat significant degree. I have upgraded the wave degrees of this structure from minute (blue) to minor (green). It is possible that we’re well on our way within the first big drawdown anticipated in the “Roadmap” article from the end of July.
I have selected 4104 as a potential place of support for green 3 (because there is a good fib there), but it may go to a lower one, too. We may form something of a head and shoulders pattern if we do stop and consolidate soon.
One critique of this count is that we’re sort of forced to make Friday’s consolidation a “2” (in blue), which looks weird, but we’ve been moving from there as if it were a 2, so I’m not going to complain too much.
I am not very concerned about the trappy bullshit possibility at this point, as we seem to be in a markdown already. Having given up the 89-week SMA and the 250-day EMA without so much as a whimper seems to me to mean they mean business.
So, let’s see what happens and see if we stop at a good fib and consolidate. When we do get to green 3, I would expect Green 4 to take a day or so (?). It can take many forms and it can be complex. It can even be sharp, since Green 2 was flat. But, I think we should still have lower to go before we complete the first intermediate (orange) impulse wave.
Some of this remains a bit speculative at this point, as I do feel a little disoriented about the internal waves on the way down, but at least we’re finally moving down and giving up these moving averages so easily is pretty bearish I think so I’m not super concerned about a big bounce just yet. I will hold the call side of my recent strangle as a precaution against the unpredictability of the green 4 that should still be coming, but other than that, I think lower prices are probable.
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.