December Selloff No Matter This Week’s MovementWith a few more days of data from the last analysis it is time to lay out the next possible paths. The index and markets are very much so overbought. A downturn is coming. No matter what happens this week, December will likely contain the next selloff. Does it continue tomorrow, or can the market find another new high above 4521 first? I will lay these out along with the reasoning and see which plays out.
The continuing theory and first explored here is that Primary wave 2 ended with the top on November 15. If this is true we are somewhere in the early stages of Primary wave 3 which will ultimately move down as covered in the last analysis:
Although Thursday continued to move down, Friday nearly lead to a new high which would have completely negated the theory Primary wave 2 was over. That near new high could have been the double top of resistance or a prelude for a new high later. I am trying to determine if the move down on midday Thursday was a micro wave 1 and the preceding move up was a micro wave 2, then at what wave degree was it? Primary wave 3 will be comprised of 5 Intermediate waves which I mark with pink alphanumeric values. The first of the Intermediate waves will contain 5 Minor waves which I mark yellow. The first Minor wave will contain 5 Minute waves which I mark in green.
The wave 1 in question moved down 33.34 points after which wave 2 moved up 32.29 points. This was a retracement of 96.8506%. While this movement is common in double-top formations I went to the data to see what could happen next. I sorted my historical datasets to determine when similar retracements in a wave 2 occur in Minute wave series. There were only five occasions thus far in which a retracement greater than 96% occurred. If we just ended Minute wave 3, the likely next stop is a low between 4408 and 4457 over the next 11-49 hours. I then determined how much of the larger wave wave 1 comprises and wave 2 comprise to attempt an early estimate for the placement of Minute wave 5 and Minor wave 1’s endpoint. This is the larger white box with the green numeral 5 in it. The estimate is that Minor wave 1 would last between 40-100 hours with a bottom between 4370-4402. This is the theory plotted on the main chart as it is the leading theory, however the movement tomorrow will likely confirm or deny this reality.
I further researched the 96% retracement but applied it to one macro level higher. Instead of assuming we were inside of Minor wave 1, I looked at the data if in Intermediate wave 1. I am already thinking we are moving too fast for this scenario, however, using the same data from before and searching Minor wave series there were 10 results. Minor wave 3 could end in the top yellow box and last 9-22 hours ending between 4463-4473. Similar to before, the entire Intermediate wave 1 could end between this Friday and next Tuesday between 4430-4463. This path will greatly shorten the overall length of Primary wave 3 if it plays out.
For the third theory, I have moved the end points of Minor wave 3 and 4 around to reflect the ongoing effort of Minor wave 5. On a 30 minute chart, I get a wave 3 signal at 1100 on November 14. While this was originally believed to be a wave 3 signal and where Minor wave 3 ended, it could be the end of Minute wave 3 inside of Minor wave 3 instead. This could place the end of Minor wave 3 at the current high of 4521.17. Minor wave 4 would have followed at the low of 4487 at 1130 on November 16.
Based on the models, most of the duration models are already busted last potential viable window is at wave 5 lasting 14-16 hours. The 16th hours is late Monday afternoon. Most models agree on a top between 4545-4555. As mentioned in a prior analysis, the highest ever retracement for this particular wave set was 89.08% which is at 4552.11 in the current case. Just because this is the maximum does not mean it cannot be broken. Before it was the maximum retracement something lower also held that title.
I can also apply my new derivative modelling in solving this Minor wave 3 theory for a separate target area. The broadest area for the derivative model places the top between 4516.74-4538.76 between 2-19 hours. The next more specific target in this model is the yellow box. The most specific box is too small to display, however its values are important to note. The placed the length at 8-10 trading hours between 4520.65-4523.12. The derivative model sets a far lower target than the other modelling system. The most specific target is where the current top in this possible Minor wave 5 sits. It is possible the top occurred as this model projected while falling to move 100% of Minor wave 3’s movement. It is possible for a wave 5 to come close but fail to break above Minor wave 3. This circumstance would also mean the market moves down immediately, however, it cannot be confirmed this occurred until the waves in Primary wave 3 Intermediate 1 finalize to see if they have too many waves or not. Although the derivative model is still being tested, it has been highly accurate. I will move the endpoint for Minor wave 5 and Primary wave 2 below 4540 understanding the top could already be in.
Going with the leading theory likely makes Primary wave 3 much longer than the last analysis forecasted which could put it more in line with my initial assessment of a bottom around May-June 2024. Theory two seriously shrinks the size, both duration and drop, to much less than initially forecasted. I currently see this as the least likely scenario. The third scenario would likely be confirmed on Monday or Tuesday this week. A holiday shortened week typically comes with larger price movement on low volume. This could see the new high achieved, however, the next key resistance is 4607 and would be tested quickly and appears to look less likely after this analysis. A new high will further move the market into overbought territory continuing the absolute certainty of a massive drop to follow.
