Called the top, now the next 2 bottomsIt appears Minor wave 3 (yellow number 3) may have concluded. I called the top around 4112 and it hit 4110.75 near the close on Friday. We shall see how Monday opens but a new low should be in the making over the next two days. Next up is Minor wave 4. The historical data has been very consistent with a 47-49% reversals for wave 4s in wave 1s in wave Cs. I initially thought that is too much in a 1-2 day span (drop of nearly 100 points), it is certainly not impossible with the market’s volatility during this overall bearish market.
The gains should continue for a final hurrah to end the week after Minor wave 4 is completed (most likely) on Tuesday. Minor wave 5 is also the end of Intermediate wave 1 (purple number 1). Historically these waves extend around 117% of their respective wave 3s. The top should not really be higher than 4150, but the current placement on the chart is temporary and will get updated once Minor wave 4 is complete and the data is applied to the program.
Minor wave 1 was 7 days long while Minor wave 3 was only 5 days long. Elliott wave rules state wave 3 cannot be the shortest wave therefore Minor wave 5 mush be 5 days or less. If wave 5 begins on Tuesday, day 1 would not start until Wednesday. This means Minor wave 5 and Intermediate wave 1 must end by Wednesday April 12 (April 7 is a market holiday). Intermediate wave 2 will likely require a later event to setup at least a week of declines. With the CPI report coming out before the open on April 12th, this is the likely catalyst for Intermediate wave 2. It most likely means Intermediate wave 1 would end on or before April 11th around 4145.
The placement of Intermediate wave 2 is even more of an estimate with an initial forecasted length around 6-7 days. This would coincide with the beginning of earnings season. The banks kick it off next week, but reports start coming in around April 20th. Complete WAG is a low below 3990 by April 19.
We will continue to watch how this all unfolds as we climb to the next major peak around 4400 early this summer.
