Elliott Wave Tutorial - Discovering the True Wave CountIn my last post I noted the SPX could be forming an Elliott wave Horizontal Triangle.
There are five sub types of Horizontal Triangles, the type I thought was forming is referred to
as a Running Triangle. In this pattern the wave "B" exceeds the point of origin of wave "A"
***See Figure 1-43 on page 50 of Elliott Wave Principle by Frost and Prechter.
The most common Fibonacci relationship of wave "B" to "A" is 1.236.
In the supposed Horizontal Triangle wave "B" was 1.28 the size of wave "A".
This supposed Horizontal Triangle count was eliminated today when the SPX broke below 2459.90.
It appears that from the August 8th SPX top I may have been temporarily off track.
Sometimes when a market is moving fast it maybe be difficult to discover the true wave count.
The SPX pattern from 2459.90 to 2490.90 looked as if there needed to be one more rally to a new high
after a pullback from 2490.90.
Today 8/10/17 the SPX and other US stock indices continued to decline.
The size and depth of the SPX decline since 8/8/17 now shifts the probabilities back to my
original forecast of a developing significant top. It now appears that top could be in place.
When confused there are two ways to determine the true wave count.
1) study smaller time increments. On the SPX 2459.90 - 2490.90 pattern- going down to the one minute chart level revealed the true pattern.
2) study a related index in this case the NYSE Composite (NYA)
The posted NYA chart illustrates what is most likely the correct wave count, a Horizontal Triangle followed by
a post triangle trust up to new highs. I unfortunately didn't analyze the NYA until today.
The decline from the 8/8/17 top appears to be either a developing Impulse wave down or a completed Impulse wave.
Wait for at least a multi-hour rally for short entries.
There could be a lot more downside to come maybe as much as 15% from the 8/8/17 top.
Mark
