We will be long-short-longThat is long in the short-term (until the Fed), short in the medium-term (until October), and long in the long-term (until next Spring).
Through some creative analysis, I have us in Primary wave 4, Intermediate wave C, and Minor wave 2.
I expect Minor wave 2 to end tomorrow, likely earlier in the day and then we begin Minor wave 3 up toward 3975. It may take 2-3 days until wave 3 ends. Wave 4 will likely be a day long and I have currently plotted it halfway between the projected movement of wave 3. The final wave 5 will likely last around 2 days. Based on prior wave C movement, the strongest model agreement has wave C lasting 7 days. I figure 7-9 is safe. Based on prior wave 4 movement, the overall move has the most model agreement at 28 days. I think we will fall short of this mark as the Fed rate hike occurs two days prior to this point. We could drop into the rate hike and finish 4 with a wave 5 up after the hike if “it’s not as bad as forecasted,” but most of us are ready for the 100+ basis point future.
Wave 3s ending in 4C3 tend to extend 101% beyond wave 1’s movement 75% of the time (1st Quartile), beyond 112.68% on 50% of the occasions (2nd Quartile / Median) and 25% of the time (3rd Quartile) it will extend 125.81%. Wave 4s ending in 2A4 tend to retrace the wave 3 in which they follow by 29.58% on 75% of occasions (1st Quartile), retrace 54.82% half of the time (2nd Quartile / Median), retrace 84.72% on a quarter of occurrences (3rd Quartile).
We will likely top out above 4000, but how much further remains unknown. Early earnings may be paltry, but earnings forecasts post-Fed rate hike will likely take us down through 3400 over the next 2-3 months.
