Elliott Wave 5.0 "Reboot"

Sunday, August 14, 2016

DJIA Weekly Chart 2007-2016 Review




Last week the markets were pretty slow as many traders are gone for holidays or other reasons. The DJIA has only moved up in small increments which is usally a sign of a slowing market. In the markets, "looks" are always deceiving, especially when it comes to any wave counts we can produce. 

When wave analysts declare a wave count position that "looks" clear, then chances are good this will  not be the right wave count. I have worked the 2009 to 2015 run using every trick in the book. Sooner or later we run out of options, and when that happens, we have to completely redo every wave peak as far back as necessary to find out what went wrong.  

Every major wave analysts had the 2009-2015 bull market as a huge bear market rally, and they were waiting for the "big one" to come. Obviously the big one hasn't arrived, which should be a lesson for all of us, that our wave counts are dramatically off track. 

If a wave count did not prepare you for the 2009 bottom, and the following bull market, then what good is this type of wave analysis?  Now we are on the opposite side of the game, as we try to see if a real top is going to happen. 

It is futile for me to work the same wave count as all the rest, because then I'm just following the herd as well. If the wave count I have, has any validity to it, then the wave positions in 2007 and the 2009 bottom will never be needed to get changed anymore. If a wave count does not work any better in 1-2 months, then chuck it and find a better fitting pattern. 

So if the 2009-2015 bull market is not a big bear market rally, then what can it be? The answer lies in how well we use the diagonal wave pattern, especially the diagonal 5th wave.  I have switched back and forth several times and now the diagonal makes a very good fit.  What degree this diagonal wave is, must be kept in sequence to what happen in early 2009. We should get 5 diagonal waves up, but uncertainty as to where the 4th wave is, still remains. 

My trend lines will fool us, as the markets are between two channel line extremes, and it seems like it is rolling over. Rolling over can mean many things as 4th wave corrections look like they are rolling over. 

All the wave counting I do is based on finding the real 5 waves in Cycle degree, as without them we don't have a base to work with.  If Cycle degree wave 3 is still ahead of us then we can look at the three simple core patterns, that may unfold in the next 4-5 years.

My two favorite corrective patterns for Cycle degree wave 4,  is a zigzag or a flat. Once we calculate out all the required wave counts for these two, then we know all the idealized wave structures we should get.  Any Cycle degree wave 3 peak I want, will last forever as no higher degree can exist without finding the Cycle degree base first.  

The market gyrations has more to do with anticipating a winner in the US elections, as stocks hit world record highs. Any "E" wave decline I may get will have a bottom to it, so until that is cleared up, we have to keep our short term options open.