Since the chart below is rather busy, I’ll explain it below step-by-step. Note that here the bearish count is shown. Our bullish count has the market in wave ii. However, since it’s always prudent to be conservative, let’s go with the more bearish count until proven otherwise.
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We’ll started in the upper left corner with blue Primary III. Then we get red intermediate a and b, which both consist of green minor a, b, c, and which in turn consist of white minute a, b, c. Intermediate b ended above primary III meaning we’re dealing with an irregular/expanded flat. As such intermediate c should end well-below intermediate a, which it currently is, and end often at around the 1.618x extension of a measured from b (see red box). So far so good. We can also count intermediate c as consisting of 3 minor waves, which in turn consist of 3 minute waves. Beautiful. Price is now in minute c of minor c; the last and final wave down. Last but not least, intermediate c appears to be forming a falling wedge. This is a bullish set up, out of which price will explode to the upside: major b.
Note that the minute c = a of minor c extension (white vertical line) targets exactly the blue horizontal support line at DOW 17,050, as well as the (green) minor c = 1.236x a extension, and falls within the red target zone for intermediate c. Hence, we have 3 different wave degrees pointing to the same level. Doesn’t mean the market will get there, but it adds weight to the evidence. In addition, it’s also right at the 50% retrace of the move from the 2014 mid-October low to the Primary III high.
Now that we have a possible target in place (note: timing not to scale), I’ve drawn the possible path major b could take (white lines, red “a?, “b?” and yellow “b?”). Last week I mentioned: “Based on alternation between 2nd and 4th waves: given that Primary II was steep and fast Primary IV can be expected to be more shallow and slow: a triangular to flat correction.” Hence, and IMHO, IF the market is in Primary IV, then it could very well become a large flat correction, possible also being irregular like major a. It is the hallmark of a strong bull market; it’s more a correction through time then price, and the market is taking more of a pause/breather than anything else before the next larger leg up, in this case Primary V.
Finally, the DOW 17,050 target means an additional ~1.8% drop in price from current levels. Translated to the S&P500 that means a target of around SPX2040. The S&500 has then completed a picture perfect flat correction: where wave a=b=c.
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