Will we ride wave 5 up for 4 days?Similar to last night, the market appears to have hit its cue for a more convincing bottom today. Using the 3918 bottom as the end of Intermediate wave 4 until proven otherwise, we will begin to look at the end of Intermediate wave 5 and Primary wave A inside of this Cycle B.
Based on waves ending in 2BA5, the models agree the most that wave 5 could last 10 days, with the second most agreement at 1, 3, 14, and 32 trading days in length. The quartiles for movement extension off Intermediate wave 3 are 114.64%, 159.625% (median), and 204.63%. These are the blue levels on the chart above and they respectively correlate with 4159.42, 4340.42, 4521.50.
Based on historical waves ending in BA5, the models agree the most on wave 5 lasting 4 days, then 10 days, while the next tie at 1, 2, 3, 11, and 18 days. The quartiles for movement extensions are at 114.64%, 116.69%, 155.66% which brings the values closer to my original forecasts around 4200. Respectively the news levels are 4167.66 and 4324.46 while being the yellow lines above.
Lastly, the valuable while less precise data is based on waves ending in A5. Models agree with 2 days first, then 3 days, 10 days, 4 days, 19 days, and a solid tie at 1, 5, 9 and 11 trading days for potential lengths. The quartiles are slightly less while the third quartile repeats at 155.66%. First quartile is 112.36% (4150.24) and the median extension is only 119.84% (4180.34).
Most of the targets fall below 4200 which keeps the top within 250 points of today’s low. Even 250 points in 5 days or less is a tall feat and unlikely as the next inflation report waits around the corner. Trendline resistance is decreasing quickly and is all below the prior Intermediate wave 3 top. This could insinuate three scenarios. 1) Where I marked the end of Intermediate wave 3 could be the end of Intermediate wave 5 and we are only heading lower from here. 2) The trendline proves a solid resistance and we do not take out the prior high at 4100.51. 3) We briefly break above the trendline resistance forming a bull trap and hitting other levels of resistance between 4150-4250.
If the first case is true, the declines should continue tomorrow, and we will not head toward 4100 this week. The second case could hold true if we slowly move upward without conviction. The third case would likely require larger movements over the next two days to even have a chance at holding true. Regardless we shall see which one occurs.
My initial call of Intermediate wave 5 lasting 5 days does not appear to be an option from the models, even though 3 days for Intermediate wave 4 was not a strong choice I stuck with it. The models had strength at 2 and 3 days in length, but we need to at least get above 4100 which is nearly 160 points from today’s close. That would equate to a 100% retracement of Intermediate wave 3 which is rare. There is a strong pocket of data placing the top between 4150-4180 which is where I will target. Three days is not enough time, so I think it takes at least 4. Four days will be sometime next Monday, which still puts the top before the pre-market release on Tuesday of the latest inflation reading. If the days and levels hold true, we are looking for an average daily gain of 52-60 points per day. We likely wont get those gains each day so some would have to leap beyond that. If these gains do not begin tomorrow we are either delayed or the inflation report WILL NOT be the downward catalyst. Let us see what tomorrow brings!
