Good Start To Wave 3, More To FollowNow that last week has settled, it looks like PATH TWO was the chosen path from
Like most of my analyses the original analysis is normally the correct one. Most premature analyses tend to rush a process that should otherwise be left alone. What does this mean? Intermediate wave 2 was later than initially projected and did not go as low per
In fact, the analysis from last weekend using Minor wave A and B data indicated it would no longer drop to 3950. The likely floor would be no lower than 4000 and could break just below the end of Minor wave A which was 4049.35. The call for the bottom could have been at 4049.03 and for now the bottom was 4048.28. This low provides Intermediate wave 3 the room to gain the original projection of 300 over a few weeks, however Friday got a chunk of that.
The projection for the end of Intermediate wave 3:
Based on waves ending in 2BC3, Intermediate wave 3 could last 17, 42, or 48 days. The quartiles for potential movement (light blue lines) are a 110.75% extension of Intermediate wave 1, 302.37%, and 371.04%. Based on waves ending in BC3, strongest model agreement for length are at 12, 25, and 48 days. The quartile movement extensions (yellow lines) are 142.75%, 244.81%, and 261%. Based on waves ending in C3, strongest model agreement has Intermediate wave 3 lasting 12 or 25 days. Next strongest is at 24, 36, 50, and 62 days. The models become more diluted after that. The quartiles (white lines) are 144.13%, 209.13%, and 302.37%, respectively.
In digesting the models, a slow wave 3 is not likely to occur especially with a diagonal trendline (thicker dashed red at top) which has been a pillar of resistance since Cycle wave B began in October 2022. 42 days long would put the end of Intermediate wave 3 around July 6th. The aforementioned trendline would be around 4424 at that point. 25 days long would place another potential wave ending around June 9th. The trendline would be around 4390. For Fibonacci traders this is pretty much at the 161.80% “Golden Ratio.” 12 days would be around May 19th, aligning with a 150% extension of Intermediate wave 1 at 4350.
Another possibility is the diagonal resistance line is temporarily broken as a bull trap. This would mean the index strongly goes above the trendline before correcting significantly. We are near the end of the larger corrective wave which began in October. After the impulse wave up, we should have a drop in the index possibly over a single week before a quick move up again.
If Intermediate wave 3 is shorter than Intermediate wave 1’s length of 25 trading days, then Intermediate wave 5 must be equal to or shorter than Intermediate wave 3 as Intermediate wave 3 cannot be the shortest wave. This is crucial to keep in mind. This is my most expected scenario if the index moves above 4300 within the next 7-10 trading days.
I have laid out many possibilities and only time will tell, but I doubt Intermediate wave 3 is longer than 25 days, especially after a strong day 1 on Friday. I further expect the top to remain below 4393. I will continue to provide updates as the index moves along and completes the Minor waves inside of Intermediate wave 3. I am not settled on the end of Cycle wave B yet, but the current estimation is before the end of June.
The potential catalysts for tops the summer remain Debt Ceilling Debacle and China action against Taiwan. A potential scenario for the end of Intermediate wave 3 is a temporary impasse on the debt ceiling vote in which the US defaults for a few days leading to Intermediate wave 4 or wave 3 ends when a band-aid 3 week extension is permitted. End of cycle wave B could be brought on if there is no solution by the end of June and no band-aid bill is passed. The China scenario would be a decision to invade Taiwan and taking control of the semiconductor chip market. All countries and products requiring chips would be impacted. Some companies have been working quickly to establish plants, factories, and resource mining in other places throughout the world, but China could cause chaos by taking more control of Taiwan.
Wave3forecast
Buckle up as SPX history's ride is not overUpon research, waves ending in C33 (our current situation) perform wave extensions greater than 150.98% for the S&P 500 index. A cluster of wave extension maneuvers occur around 200% for this same dataset. Inside of Intermediate wave 3, where we should be now, we are also inside of Minor wave 3. Minor wave 1’s name structured ends in C31. It began shortly after the open on April 21 at 4512.94. It then dropped 312.12 points and ended before noon eastern time on April 25. Mathematically speaking 312.12 x 150.98% = 471.239. We would then take this value and subtract it from the level Minor wave 1 began from to determine a possible bottom for Minor wave 3. 150.98% could place the bottom around 4041.70. However, 150% is the minimum drop according to historical study of the index. The maximum drop is 401.66% of Minor wave 1 which would bound our possible drop here to 3259.28. I think we are safe from the latter, however, the most common drop zone is between 192.65% and 202.84%. I like strong pockets of data as long as they are realistic which is the case here. This means the index is not done with quick large drops. We could get below 3911.64 while remaining above 3879.84 within days. This is a minimum drop of 263.57 more points based on today’s close (3879.84 bottom = drop of 295.37).