Down Big After Monday?We are likely still in Minor wave 4 moving upward. It was originally forecasted to last 7 to 10 to 13 hours. The 7th hour will be the first hour of trading on Monday. The 5 minute chart has a potential wave structure so far if we are inside of Minuette wave 3 inside Minute wave C upward:
The market could open upward or move up in the first hour of trading. The median historical models are pointing to a high around 4420, I am not sure it will go that far based on the amount of completed movement already but this is definitely a wait and see situation. I am more ready for the next decline which could begin as soon as tomorrow. For now I am projecting Minor wave 4 to end before 1330 eastern time tomorrow at a high of 4405. I am doing this to forecast the final Minor wave 5 bottom. This would mean Minor wave 4 lasted 10 hours, gain 69.69 points for a movement retracement of 44.96%.
The most specific models (pink lines) for Minor wave 5s in Intermediate wave 3s in Primary wave 1s is pointing at a minimum movement extension of 158.43% which is 4244.73 and aligns with one of the forecasted Intermediate wave 3 bottoms of 4248.04. The median and third quartile extension point to a low around 4204-4210. These models also agree on a length of 25 hours which puts the low at this Friday. This is pointing to at least a 160 point drop in 4.5 days which would likely require constant bad news this week. Second most agreement on length is only 11 hours which would be even more steep. The next set of models (light blue) on slightly broader data has a wider movement range between 110.57%-191.67% with the median at 167.775% or a bottom at 4230.25. There is not a strong agreement on duration as it is spread between 6-27 hours. The next broader dataset (yellow lines) have a much higher bottom than the specific models as the range 4237.71-4307.59. Model agreement on duration is quite spread out as well with 22-27 hours carrying interest while larger agreement can be found in the 7-15 hour range.
Monday is quiet on the scheduled economic data front which could allow the upward drift. Tuesday has home sale figures for July along with Fed speakers. Any mention of further rate hikes is likely unwelcomed news, especially for tech and high debt companies. Wednesday is mortgage numbers, building permits, manufacturing PMI and new home sales along with energy stockpiles. Thursday is jobless claims and durable goods orders for July and Jackson Hole kicks off on Friday with consumer sentiment numbers coming in within the first hour of trading.
Highlights of the analysis are a minimum 160 point drop at some point this week. I originally thought slightly unmanageable but we are finishing an Intermediate wave 3 which will have more steep movement and the economic data along with the Federal Reserve speeches are the perfect fuel for such an event.
