After updating the charts I did a little research into the past. Reviewing what I would consider the last normal bull market. The one which occurred in the 1980’s following the 1982 cycle wave low. I recalled several instances when the DOW plunged more than 3% in one day after completing an important uptrend. The three instances occurred on 7July86 (-3.25%), 11Sept86 an interesting date (-4.6%), and 13Oct89 (-6.9%). In all three instances the actual low of the selloff occurred the very next day, after the large percentage drop. Then the results varied. The weaker of three 7July, bounced for a few days and turned lower. The 11Sept decline, which was stronger, bounced for a few weeks and then retested the low. The bigest decline 13Oct, made the low the following day, and that was it. Since today’s decline compares with the 7July86 weaker one, we might anticipate the same results. Also of note, all three of these selloffs occurred after the conclusion of a third wave, two of which were Intermediate degree. Which is what the market just completed, in its ending of Intermediate wave three. The charts are posted below. It’s still a bull market, we just need to get through this correction before heading higher again.
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Hi Greg,
Very good analysis.
I have Intermediate wave two as a failed flat in the SPX, and a flat in the DOW.
This would normally indicate a zigzag for wave four, and possibly as you mentioned a complex correction.
Either way support remains at the 1361 or the 1378 pivot points. Which is exactly in the 1360-1380 range.
tony
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Ok…..Intermediate wave iv is here….let\’s start talking about it.
Some random thoughts:
Minor wave 5 of intermediate iii formed a diagonal triangle. Diagonal triangles are frequently retraced back to the beginning of the triangle. Conveniently enough, that is also the end point of minor wave 4. Since intermediate iv is a 4th wave, it has a high probability of terminating within the range of minor wave 4. This range, as you have highlighted on the chart, is roughly 1360-1380. By my calculation, a .382 retracement of intermediate wave iii targets roughly 1369 (right in the middle of our range). This is 3 good points for targeting the range of 1360-1380 with a focus on 1369 specifically.
Additionally, let\’s consider the projected form for intermediate iv. I think you have intermediate ii labeled as a simple/sharp type correction (although it wasn\’t particularly deep). By alternation, intermediate iv should be a complicated/flat or some version of it. While today\’s action doesn\’t feel too complicated or, in fact…FLAT at all……I would offer the possibility that wave iv may end up taking the form of a horizontal triangle. It\’s certainly too early to tell but it\’s something to keep an eye on….this would portend a multi-month sideways action after the near-term "damage" is done….
We shall see….again, time will tell.
Your thoughts?
Thanks,Greg
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