Restart Easter Rally For Great ReasonOne day makes a difference! I now have us in Sub-Millennial wave 1 (began June 1877), Grand SuperCycle wave 5 (began March 6, 2009), SuperCycle wave 3 (began March 23, 2020), Cycle wave 2 (began January 4, 2022), Primary wave C (began March 29, 2022), Intermediate wave 2 (began April 12, 2022), and Minor wave A. The shorthand for this wave is 1532C2A which is based on wave letters and numbers combined.
Minor wave 1 was 18 hourly bars long. Minor wave 3 was 17 hourly bars long. Minor wave 5 could not be longer than 17 hourly bars, and it was 17 exactly. This bottom must hold for the current wave count to be accurate. The bottom yesterday appears to have been the end of Minute wave 3 instead of the end of Minor wave 5 which still keeps us on track. My Elliott Wave indicator (created by @LazyBear) was the lowest (-57.75 on an hourly chart) as was my RSI indicator at Minute wave 3 in Minor wave 3 which confirms Minor wave 3 was marked correctly.
Based on the hourly chart, I would assume Intermediate wave 2 will end right around the time the bars touch or cross above the 50 or 100 hour moving averages. It is possible these two moving averages cross each other near the reversal. Instead of this being a Bearish indicator, I think it we be the resistance level.
The 15 minute chart provides a better idea of what happened today and leading up to it. Once again, Minuette wave 3 of Minute wave 3 in Minor wave 3 was the lowest low on the EW indicator.
INTERMEDIATE WAVE 2
But if you are reading this you really care about Intermediate wave 2. My models still have the most agreement on 4 days in length. We only have 2 left this weekend so that would push the top into next week. This could be explained by high expectations based on the initial earnings reports. The inflation pressures on companies will likely look different when future earnings are determined for non-banks. The banks stand to have positive future outlooks even with higher interest rates and inflation. Larger companies will not be as fortunate. The market will likely dip after enough companies begin to account for rates and inflation impacting their bottom lines which would make sense after 2-3 days of earnings calls. This trend will likely cascade.
Because we have dipped lower than I initially called, I would expect a rally of 3.40% now instead of the 2.50%. History has not changed how wave 2’s ending in 32C2 retrace their wave 1. The likely levels of 58-70% (4530.10-4562.23) for retracement of wave 1’s movement have increased. Now that movement appears to move through the weekend, 3.5% gains are much more realistic over 4 trading days. I am still looking for a conservative target at the bottom of the historical moves (4530).
The models also have more precise pockets of target highs. One tight pocket is 4460-4490 (14 targets) and the other is wider at 4505-4595 (30 targets). Target tops tend to fall off after 4588, so I almost certainly would not forecast the highs above this level. The list of potential retracement levels have not changed percentage-wise from yesterday, however, the associated prices have changed slightly. These levels are now:
4474.56 which is 36.42% retracement of Intermediate Wave 1 as ended on April 11
4480.37 ----------- 38.69%
4506.20 ----------- 48.78%
4512.32 ----------- 51.17%
4530.10 ----------- 58.12%
4541.32 ----------- 62.50%
4562.23 ----------- 70.67%
4578.99 ----------- 77.22%
4597.24 ----------- 84.35%
4611.55 ----------- 89.94%
INTERMEDIATE WAVE 3
Intermediate wave 3 is where we are forecasting the most significant downward movement still. Just like the wave 3 in the wave 3 in the wave 3 above, I would expect this area to contain the most significant drop in this continued bear market. My reasoning from yesterday is restated, “This could be Russia related, but it will also occur during the bulk of earnings season. Our guess is the economic outlook, inflation, interest rates, transportation costs, along with the Fed’s pace and rate of rate increases will take center stage during earning calls. This outlook may look bleak in the near-term, but we continue to anticipate the market to find its bottom before the end of the summer.”
THE REMAINDER OF PRIMARY WAVE C
Primary wave C is officially moving slower than originally forecast. This is not a problem but some adapting muse be considered. This chart has had 5 dates identified for at least a month now. These timeframes are based on how long Cycle wave 1 lasted. Cycle wave 1 ended January 4, 2022. These timelines indicate the days in length for Cycle wave 2 could last based off historical movements of similar scenarios. I was originally looking at the bottom by mid-May, but Primary wave B lasted a week longer than expected, and we are barely into Intermediate wave 2 in Primary wave C. I will leave these date lines up, but I will have a better idea of the final market bottom at the conclusion of our current Intermediate wave 2.
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