This past week, our expectation was that the market was setup for some event.
We did get the event, but the problem is most of the action happened overnight.
We had the North Korea score that only temporarily pushed the markets down. By the open, the market just ripped higher and never came back down. While this is not what I expected this past week, it does give some potential clues as to what may happen next.
Unfortunately, the market reached 2421 ES and reversed at this support region–and it happened at like 4am — not even during market hours — and not allowing us to exit our position for a profit. Instead, this time we exited for a loss when the market ripped above that critical 2452-2454 ES resistance region. Once that happens, the orange count is no longer valid. In fact, even before the North Korea news, there was some initial sign that it wasn’t following the orange count exactly– because of the orange circle region. That was really a clue that the ideal pattern was not following through on the setup.
Still, I thought with the North Korea news, that maybe that would be the catalyst to whack the pattern back in shape — but no — it stopped right at the support region of 2420 ES that we needed to break.
So what does this tell us?
Now we have the yellow and blue options — the blue option is what I would prefer while the yellow option says that drop is all we get.
The problem with the yellow count is that if you zoom out on the daily chart — it would look better with a larger size correction.
Initially, I was looking for 2300 ES to be retested — but based on the size of this bounce, I no longer think we will get there — instead I’m looking towards 2360 ES — if the blue count plays through as I expect. However, if the more bullish yellow count is in control — then we may be heading towards 2600 ES sooner than I had expected. That’s expectation at this moment.
The market MAY have topped in the B-wave just before the market close on Friday heading into this long labor day weekend in September. If so, we would need to see some downside heading into Tuesday.
The orange A-B-i-ii-iii-iv-v setup did not play out. The key 2452 ES was hit twice — which is ideal for that pattern, but it did not proceed to go straight down on Monday Aug 28 – which was critical in order for the pattern to follow through.
Failure to do so introduced a 5-wave ending diagonal to the downside — completing a B-wave low at 2420 ES. What followed next was a much quicker and steeper raise than I had anticipated.
Usually when the market rips straight up like this — it forms a B-wave high. Without the “proper” coiling –usually such a move to the upside is not sustainable. So my preference is for the below blue count to play out rather than the yellow count.
From a daily chart perspective, it would look a LOT better if we get an orange c-wave down with an ideal target of 2360 ES.
Given that wave a completed at 2420 ES — the size of this c-wave does not seem to be able to able to reach all the way to 2300 ES as I initially exected. So for now, the 2360 to 2390 region should be support while the 2480-2490 region acts as resistance.
IF the Nasdaq topped out — it would be a B-wave high that is a new all-time high formed on Friday — higher than the previous high. This is technically still valid under Elliott Wave rules — and is more common than I would like to believe. So while the chart itself looks super bullish, I can’t discount the possibility that a C-wave back down to the lows is still on the table — though targets are less bearish than before.
For the Nasdaq, 5650 may be all we get –IF the bearish wave count were to follow trough.
I would be very surprised if the only bearish action we get in this historically bearish time period from August to October is just this tiny pullback we’ve seen so far. That said, best to always adapt to whatever the market gives.
Silver appears to be breaking to the upside. Our entry from a while back is looking good.
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