Mar 01, 2023 15:55
Using the Elliott Wave Principle over several weeks, we were able to effectively monitor the highs and lows of the S&P 500 (SPX) (EWP). As a result, we discovered in our most recent update from two weeks ago that, "Thus, unless the SPX falls below Friday's bottom at $4060, we see no reason not to anticipate $4260-4295. Sorry there was no update last week, as I was on a vacation. The gauge will then likely retrace for several weeks before making a recovery to the optimal price of $4395+/-25.
Sadly, the $4060 low, which might have served as a stop loss, did not hold, and the index fell further until it reached a bottom of $3943 last Friday. Therefore, even though the EWP can be used to make many accurate predictions, nobody can always anticipate everything. Because of this, all we can do is "predict, watch, and modify as needed". We expected $4060 to remain stable. We kept an eye on it and discovered that it did not, so we adjusted our initial projections to the EWP figure depicted in Figure 1 below. So let me clarify.
The recovery from the December bottom was not a five-wave impulse structure based on the standard Fibonacci sequence (SFFIS). Quite the opposite. When we expect a fifth surge higher, the market falters and falls short, just like all rises we've seen since 2022. As a result, we continue to work with (possible) a-b-c structures, which are much less trustworthy than the SFFIS. Welcome to Super Cycle IV, the fourth cycle in this instance. In addition, an SFFIS is frequently present if we anticipate a C-wave recovery off the December bottom.
However, the rise can only be classified as five waves if the latest "sell-off," which has been rather orderly and overlapping, is classified as an Expanding Ending Diagonal (EED) C-wave. However, because they frequently travel in contiguous a-b-c patterns and do not have as precise (Fib-based) principles as an SFFIS, diagonals are unstable. An ED can basically do whatever it wishes as long as W-3 is not the smallest and W-4 does not extend below the commencement of W-3, which is the conclusion of W-2. The EWP regulations for the EED are shown in Figure 1 above.
Thus, regrettably, with last week's extended slide into the lower end of support, we are left with two less-than-ideal tallies since the December lows: an EED vs. a bigger a-b-c. To see an alternative a-b-c, refer to figure 2 below. Both EWP numbers are far from optimal and have their problems. Sadly, this makes it challenging to express a high level of trust in regard to our main anticipation.
Not my problem. Simply put, that is the setting we are in. For additional hints to determine the likelihood of each option, we at Intelligent Investing also inform our Premium Members on a variety of other signs and plots, such as market width, trends, and mood.
Mar 01, 2023 15:41
Mar 02, 2023 15:35