This post by Daneric40 has been promoted from StockTock Social.
Primary count:
Today Green wave 2 traced out an ABC flat correction with the “C” leg as the end of day high. Downside should come soon tomorrow, if this is indeed the pattern.
Well 800 didn’t happen. I have learned in this market that you pick a target and subtract 10-15 SPX points and you’ll get your likely REAL target.
Examples:
Bounce from Oct 11th. Many had 1070 pegged as a target. it made it to 1044.
Election day rally. Many had 1020 as a target. It made it to 1007
China “stimulation news” rally. Many had a 965 target, it made it to 951.
Bailout rally. 910 was a logical target. 896 was the real mark.
Today I thought it would dip to 800. Of course it never did. 15 points from yesterday’s low. NOT that it WON’T eventually will make the downside targets, it is, after all , a bear market. I am confident 800 will be revisited soon.
ZIG ZAGS:
I couldn’t believe I was watching some of the intraday waves and I saw a really familiar looking zig zag play out from opening to 848 peak in middle of the day.
This zig zag pattern has repeated on different scales several times. Election day rally was a 5-3-5 zig zag. The rally from 741 to 896 was almost an identical type move. And today’s move up was essentially the same.
You can see from my charts how they compare. I was awaiting today’s zig zag peak. You can even calculate the peak fairly accurately using Fibonacci expansion ratios. Once you can see the second half of the zig zag form for wave 1 and 2, you take wave 1′s price move and multiply that by 1.618. That should get you the wave 3 peak and just be a little patient for the final push up. So I bought FAZ at 847ish SPX. I sold for a nice profit after the hard plunge down. I have learned that its best to sell after a hard plunge and take the profit.
These zig zag moves have so far these things in common:
1. Deep retrace sharp correction in wave 2 position of the start. (blue 2).
2. Sideways shallow correction in wave 4 position (blue 4).
3. Struggle for wave 5 to first peak (blue 5)
4. A declining triangle in the B wave position. This is a confusing triangle that can be mistaken for a bear type. But it really is just a consolidation period. Don’t short it at the end!
4. Big push for wave 1 in the second half of the zig zag (green 1)
5. Followed by another wave 2 deep retrace (sharp correction). This affirms the move and often sets the next trendline up.
6. Wave 3 (green) pushes 1.618 of wave 1 price (green)
7. Shallow sideways correction for green 4.
8. Struggle to new peak for wave 5. Hits the upper trendline again.
One thing about studying and applying wave patterns is that I had considered a “flat” correction could play out and that means after the 819 was hit in the afternoon, a bounce back to 850 might be in order. Indeed that is what happened. Its nerve wracking though.
These huge flats are a temporary balance of forces between bulls and bears.
Who will win? I still think we have a huge downside coming. Yesterday’s 9.5% market drop is not typical of a “correction” leg in a bear rally. So until proven otherwise, I maintain a bearish primary count.
“Who will win? I still think we have a huge downside coming. Yesterday’s 9.5% market drop is not typical of a “correction” leg in a bear rally. So until proven otherwise, I maintain a bearish primary count.”
I think that wraps it up all right there. However I have a question, does it matter how long it takes for the waves to play out?
Depends on what scale your referencing.
Waveforms always are part of larger structures in one wau or another.
Regardless of whatever structure your looking at, the proportions and time lines pertaining to that structure should be appropriate. Simply put it should “look” correct and follow EW rules and guidelines.
So an intrady structure will have a shorter timeline than a large bear market intermediate waveform that takes months to play out.
My losses today convinced me that my trading paradigm is not strong enough to continue shorting/bottom finding. I am calculating that we may have found a soft bottom and have started to place incremental longer term, long positions. The big bottom/drop off may be an elusive target that never comes. The SKF and TWM short funds were trading at very high volumes today and I may be deluding myself thinking that is a bottom indicator.
Compared to what was typical during the Oct. crash, their volumes were actually paltry.
I’ve been trading the opposite of Daneric’s analysis and doing really well.
Really. Can you tell me what you have done over the last week (entry and exit levels). How about tonight? Are you long or short currently and where did you get in? Also where are your stop levels and take profits. Sorry for all the questions, but if you have been making a lot of money then maybe we can all learn from you.
Thanks in advance,
Pete
ditto. What a lame post after so much effort. More power to you, daneric!
Lets see if that holds off in the long run. Its ridiculously more difficult to play this market now that it has been in the past. If you continuously have a good strategy please be sure to let us know.
You are a shithead
Seconded.
Please don’t take this the wrong way because I love these charts, they’re big and fun. They also teach some wonderful EWT, not my strongpoint. EWI is fun to read too, but had we traded Danerics chart predictions in the past few days/weeks- you would have been toast. In the blog post Dec. 1 this line made me smile “Tomorrow’s target is the 800 gap as a minimum. ”
Just a simple check of MACD, RSI, Slow Stoke among other simple TA made me cringe when a big important looking chart suggested that gap fill.
Predicting a rise up to 910 after the Black Friday day?…smile. Sometimes EWT is just a crapshoot with future prediction. Keep them coming, Daneric, they are great, but sometimes we all need a little criticism to keep us honest, because no one gets this market. Sorry to upset the community, not my intention.
I had decided to change my last post because I had a feeling this is how you felt. I would have to agree with pretty much all of which you said in this post. Daneric’s charts are awesome, especially from a learning standpoint. Is he always right? No but hes got a very good idea of where this market is going. For example, last week he came in with an elliot wave post predicting a target of ~915 and then we sell off. I’d say that’s a pretty solid call in the midst of our largest bear market rally yet. You shouldn’t be trying to catch the absolute top or bottoms of this market anyway.
he gives good information but, in my opinion he tries to be too predictive. Draw the retace/extension numbers and see what the market does. Market roared ahead last week, and as hard as the pullback was Monday if was a 50% retrace of the last move and market has churned higher for last two days. Closed above the retrace nmbers he gavein his last post.