Weekend Update: SPX Futures AnalysisENDING DIAGONAL BLACK EWT COUNT
My primary analysis is the SPX Futures have been mired in an overlapping decline that will conclude on an Ending Diagonal provided we head to new lows soon without breaching the 3928 level first. I will admit my primary analysis has come perilously close to invalidation (as is the nature of Diagonals). Additionally, my black ED path could have academic similarities with an overall ABC to conclude what I'm classifying as a cycle wave IV in a SC wave III. Allow me to make the case for my primary analysis first, then I'll discuss the alternatives.
The area where we get a major clue in the ES is a breach of 3590 which is displayed by the thick black line in the above chart. However, as you can see from the below Nasdaq Futures chart, that area has already been breached. The retracement has breached the .786% Fibonacci support area and looks poised to make a new low.
I do not analyze the NQ chart but in as much as the index looks similar to the ES structurally, it appears to be further along towards bottoming. The obvious question “Is NQ leading the ES...or vice versa”? Nonetheless, it is a clue we should take note of.
Also, the heavily weighted stock of Microsoft at 5% of the SP500 index has already breached its low and is almost complete from a pattern standpoint.
This is the same structure I am looking for in the SPX/ES to turn from bearish to bullish.
The chart of Apple has yet to strike that new low and is the largest component of the index. SO this bolsters my primary analytical point of view that regardless of what happens in near term, the SPX/ES is not complete in making its bottom despite what the financial news media may or may not report.
The below chart is the difference between the life of the Black count and Purple becoming my primary...and it boils down to a breach of 3928. Above 3928 and the ending diagonal count will be taken off the chart.
As of today, the SPX/ES has the opportunity to bottom quickly without interjecting more uncertainty. Whether it will do so or not remain to be seen. Nonetheless, it is my primary thesis that the index will head to new local lows and bottom this month.
CORRECTIVE RETRACEMENT PURPLE EWT COUNT
Below is the purple pathway and my secondary analysis of the path the ES Futures will take. If a breach of the 3928 level is to happen, this is the path price should take . I prefer a quick bottom as outlined in the black count but the purple count manages to do something I am in favor of when discussing stock market bottoms. It features a capitulation ending, only after getting its participants thoroughly confused. This is a slightly lower probability to the black count in my mind, but in truth statistically equal.
RED COUNT IMPULSIVE MOVE HIGHER, BULLS RUN WILD TO 5200-5500
The red count is my second alternative and structurally is valid but contains too many unknowns and therefore at this juncture maintains a shaky analytical foundation. First, it features a leading diagonal to start off the next bull run. Diagonals are declines or advances in which the trader sentiment is so UNDECIDED it makes for a choppy pattern that just frustrates participants. Diagonals are not reliable trading patterns and therefore it's hard for me to get behind this next bull run based on such feeble sentiment. Nonetheless, the red count is a 100% viable option within the rules of Elliott Wave and therefore I am including it.
The main difference between the red and purple count is where as the purple count concludes in the area of 1.0% to 1.236% Extension area, the red count surpasses that area in just the iii of 3-wave. The red count is an impulsive 5 wave structure that would complete as high as 4500-4600.
As an analyst all I can do is wait for the individual components of my analysis to eliminate themselves to finally arrive at a tradeable thesis. AS OF THIS AFTERNOON I HAVE NO REASON TO ABANDON THE BLACK ENDING DIAGONAL PATTERN FOR FINAL COMPLETION.
Best to all,
Chris
