Grand Finale: Wave IV Scenario (Update)
Updated
This has been a grueling past 6 months trying to complete this corrective Wave IV before beginning the final motive Wave V of a 13 year bull market. Bulls and Bears playing mid-term options have been punished continuously for staying too long. I think it is important to keep the bigger picture in mind here - i.e. SPY will very likely make one last All Time High before entering a bear market. If you read the headlines of mainstream media you'll probably contest that we are already in a bear market because there was a 20% decline off the Jan. highs; however, the mathematical basis for such a definition is unsophisticated. But I am not here to argue the nuances of bear market definitions, rather, to provide a scenario that could unfold over the next couple months to provide a dramatic exit from this corrective Wave IV and on to new ATH by end of 2022 or early 2023.
What I am seeing is a WXY double combo, currently trying to complete Y via an expanding triangle. I understand expanding triangles are very rare; however, SPY has been trading with characteristics of such, and expanding triangles are observed in environments of extreme uncertainty - so for me the math and the logic align with this possibility.
What does this mean near term? Swing City. Huge 40-60 point swings that I have provided an estimated road map for in the chart above. I will be taking this one leg at a time, as there are layered conditional probabilities dominating the dynamics of the successive expected legs of this scenario (and the sub-waves there within) - so updates along the way will be warranted.
Initial Expectations:
- dead cat bounce early this coming week to the 406-408 level to test the bottom of the channel that formed last week around leg (c) on the chart. Point initial target 406.91. This would form sub-wave b of leg (d) and mark a 0.618 retracement from the low Friday, 6/10, which was potentially sub-wave a of (d). Statistically, the move down at the end of last week put SPY in a very over-extended position to the downside and left a gap from 395.78 - 401.44 wide open. At minimum I would expect gap fill, but a perfect trap would be continuation to test the bottom of blue channel - and the latter would make more sense based on the ratios of the sub-waves of realized legs (a-c).
- high probability of rejection around 406-408. Rejection around the gap would have the same consequences: i.e., sharp downside to the 362-372 range (lower boundary of expanding triangle. I could see the initial dead-cat bounce to 406-408 unfolding into the FOMC next week around 6/15 (also a Supermoon that day so high volatility to be expected), and then harsh sell off to complete leg (d) by end of June. My point target for leg (d) is 364.49.
Projecting beyond the point of leg (d) is speculative based on the general structure of expanding triangles, but if leg (d) plays out then I think the probability the remaining triangle completes increases significantly.. so I'll just give approximate forecasts for now.
- following leg (d), given (d) is realized within the vicinity of expectation, I would expect either a 3-count sub-wave up to around SPY 424, or an impulse (dashed projection) up to around 429-430 to form leg (e) = B of (Y) of IV. Such a move would be an explosive reaction to the sharp downside from expected (d) that would indubitably make us oversold af. Side note*: observe the candle back on May 13, it essentially carved out the levels pre-determined for the gap that was formed last Friday, 6/10.. pay close attention to price action around those levels in the days/weeks to come.
- in the event leg (e) is realized in either of the cases above, there would likely be one final leg down to form C of (Y) of IV (and ultimately complete corrective wave IV. Time to completion is speculative at best from here still, but probably around August 2022. By this time everyone will be confused af after getting whipsawed both ways with the huge swings of the expanding triangle, but if you believe me that this is possible and actually the most probable scenario that I see from here, you'll be like "oh... I C (Y)...IV."
If you think they'll be mass confusion at the completion of IV, just imagine the reaction when immediately following this completion SPY begins wave V and takes off to new All Time Highs in the 500s. Don't guard the man, guard the ball... ball never lies.
Regards,
Coach Phil Jackson
P.S. watch out for those Bulls in transition #23
What I am seeing is a WXY double combo, currently trying to complete Y via an expanding triangle. I understand expanding triangles are very rare; however, SPY has been trading with characteristics of such, and expanding triangles are observed in environments of extreme uncertainty - so for me the math and the logic align with this possibility.
What does this mean near term? Swing City. Huge 40-60 point swings that I have provided an estimated road map for in the chart above. I will be taking this one leg at a time, as there are layered conditional probabilities dominating the dynamics of the successive expected legs of this scenario (and the sub-waves there within) - so updates along the way will be warranted.
Initial Expectations:
- dead cat bounce early this coming week to the 406-408 level to test the bottom of the channel that formed last week around leg (c) on the chart. Point initial target 406.91. This would form sub-wave b of leg (d) and mark a 0.618 retracement from the low Friday, 6/10, which was potentially sub-wave a of (d). Statistically, the move down at the end of last week put SPY in a very over-extended position to the downside and left a gap from 395.78 - 401.44 wide open. At minimum I would expect gap fill, but a perfect trap would be continuation to test the bottom of blue channel - and the latter would make more sense based on the ratios of the sub-waves of realized legs (a-c).
- high probability of rejection around 406-408. Rejection around the gap would have the same consequences: i.e., sharp downside to the 362-372 range (lower boundary of expanding triangle. I could see the initial dead-cat bounce to 406-408 unfolding into the FOMC next week around 6/15 (also a Supermoon that day so high volatility to be expected), and then harsh sell off to complete leg (d) by end of June. My point target for leg (d) is 364.49.
Projecting beyond the point of leg (d) is speculative based on the general structure of expanding triangles, but if leg (d) plays out then I think the probability the remaining triangle completes increases significantly.. so I'll just give approximate forecasts for now.
- following leg (d), given (d) is realized within the vicinity of expectation, I would expect either a 3-count sub-wave up to around SPY 424, or an impulse (dashed projection) up to around 429-430 to form leg (e) = B of (Y) of IV. Such a move would be an explosive reaction to the sharp downside from expected (d) that would indubitably make us oversold af. Side note*: observe the candle back on May 13, it essentially carved out the levels pre-determined for the gap that was formed last Friday, 6/10.. pay close attention to price action around those levels in the days/weeks to come.
- in the event leg (e) is realized in either of the cases above, there would likely be one final leg down to form C of (Y) of IV (and ultimately complete corrective wave IV. Time to completion is speculative at best from here still, but probably around August 2022. By this time everyone will be confused af after getting whipsawed both ways with the huge swings of the expanding triangle, but if you believe me that this is possible and actually the most probable scenario that I see from here, you'll be like "oh... I C (Y)...IV."
If you think they'll be mass confusion at the completion of IV, just imagine the reaction when immediately following this completion SPY begins wave V and takes off to new All Time Highs in the 500s. Don't guard the man, guard the ball... ball never lies.
Regards,
Coach Phil Jackson
P.S. watch out for those Bulls in transition #23
Note
If you draw a downtrend line through the Jan 4 high and the Feb 10 high (wave B), you'll see that is where we are sitting pre-market. That will be a decision point level. If it breaks down from that support could see (d) play out directly from here. If holds, then I'd expect a bounce from here to test gap around 395-401 (lower than initially expected, initial thought was 406-408). I think it will fill the new gap created today and then test within 395-401, but not fill all the way to 401 so that it leaves the gap open. From there I expect further downside to complete (d) in the 362-372 range. The open gap will then provide a technical catalyst for (e) to unfold following the completion of (d). Note* for the expanding triangle to be valid, minimum requirement is that (d) is lower than (b). So if we realize a low today < 380.54 it could techically count as (d).. it just wouldn't be as convincing as a scenario where we pop to ~397-400 and then drop to 370s. Honestly the pop to ~397-400 and then drop to 370s is what I am expecting now. We'll see based on if 380.55 - 381.65 holds or breaks at open. This will be fun.
Note
Look to swing long if it gets back above 381. Could see some explosive upsideNote
I see what's going on here after comparing with the price action in the futures.Looking back at beginning of leg (d) it is clear that the subwaves a and b of that leg were already formed, and it is on a final 5-count down to 362-372 to *complete leg (d)* here today or tomorrow going into the FOMC.
That means be prepared for an explosive upside move to the 424-429 range. After that there will be one last (likely deep) pullback to form a higher low as shown in the chart.. some will call it an inverse head and shoulder.. I will see it as a confirmation that wave IV corrective phase is through. AKA don't be fearful, be greedy here.
Note
I'm calling bottom here. My target range for (d) was 362-372 and we are already trading right around the upper range. I want to see SPY back above 380 before getting big long but I am beginning to leg in here to calls at a huge discount for a subset of names (I think my other ideas make it obvious what I'm most bullish on lol), as well as SPY, and TQQQ.Just to be clear, given the price action of futures and now SPY with a 5-count down to end (d), I am expecting leg (e) to begin tomorrow. That means over the next few weeks I am expecting a 50+ point rally to SPY 424-429. Initial targets for (e) are the gap fills at 390 and 400, pay attention to those levels to determine liklihood for continuation to 424-429.
Risky? Not necessarily considering the dire need for a technical bounce here and how heavily shorted this market is. Also with the pattern of past FOMC meetings, price action tends to be explosive upside surprise. This double combo/ET model has played out thus far, I'm banking on it to continue to provide the path.
~I'm literally dressed like Phil Jackson rn and drawing triangles on my whiteboard. Rodman hasn't shown yet... he'll get it though
Note
This initial path I posted is looking like the closest we will see. 436 by July 14-15 on the table as a best case scenario. Posted an idea describing the setup for QQQ that could actually produce such a crazy move. SPY has it too and I'm eyeing a move to 423-436 that will begin to unfold any day now
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