It has been about a year since the markets topped, followed by a sideways pattern that gave us one wild ride and kept everybody guessing as to what the real trend can actually be. I was bullish at the beginning of 2016, and now we have had a run that started to stall and even reverse.
For both indices and since the 2009 bottom, it has been a constant back and forth effort, counting between a diagonal 5th wave and a “B” wave bear market rally. All this back and forth has to eliminate some probabilities and hopefully this has started to happen. Connecting the 5 simple wave patterns in their right sequence is the key to helping us figure out where we can be, in the bigger scope of things. As I have mentioned, my work all comes from looking at the markets from a Cycle degree perspective. The trouble is, we have to find out where the wave three may have actually peaked at. I spent years, counting in GSC degree and then dropping it down to Supercycle (SC) degree for a few years. They both made no sense as I always had more patterns left and big bullish moves were missed
I did see a big improvement when I switched down in degree levels, but SC degree was not low enough. Since about 2013 I no longer chase that SC and GSC degree dragon, but chase the Cycle degree dragon instead.
The entire work of this blog will be in looking for and chasing the entire 5 wave sequence in Cycle degree, without it we can never travel into the SC or GSC degree worlds. Many have tried and many have failed, besides Cycle degree comes before SC degree, so why waste our time on a degree level that still could be decades into the future.
With this wave count I have switched my Cycle degree back to the 2007 top, creating the “ABC” crash into 2009 as my “A” wave in Primary degree, possibly topping in May 2015. This keeps the 2010-2011 correction as a running flat inside the “B” wave bull market. Since I am chasing Cycle degree patterns, the wave pattern I would need is 5 waves down in Intermediate degree, of any type. Chances are very high that diagonal waves will dominate all the way down, and it will not be a walk in the park to catch all the turnings.
What we see now can be the first wave 1-2 that we would need and then we have to see if the wave 3 ends up being extended. This is where the 1-2, 1-2 wave count would come in, and it would all have to play out when it got close to a double bottom or even 6000 before it ended. If and when this gets completed, they may still be calling for it to get much worse or even calling for DOW 400-1000. This is when I will be “EXTREMELY ” bullish as we would have just completed an expanded flat.
Expanded flats are very bullish wave counts depending on the degree we think we are in, and they seldom have very long extended “C” waves.
From the 2000 peak to the 2009 bottom we had about 8 years, now from the 20017 to the 2015 peak we have had about 8 years. Could we have a decline that takes about 5 years? This would put us at the 2020 time period. If we use a potential 13 years as a bear market for stocks, then from the 2007 peak plus 13 years, gives us the 2020 time period. Is 13 years long enough for a Cycle degree 4th wave correction? Of course it sure can be as it fits very well into whole Fibonacci numbers.
Besides this 2020-2021 time period, we also have solar cycle #24 ending, which are always followed by a 4-5 year solar cycle bull market. I cannot stress it any more, if all the wave counters, and others are still showing you bearish wave counts, then you will miss the bull market bandwagon again.
For the short version, we are looking for 5 waves down in Intermediate degree, with wave 2 possibly already completed.
This is the Mini SP500 with the basic same wave count. Many times there are differences, but they all end up in the same place sooner or later.
Are we heading into a depression? No, I don’t think so, but another wicked recession sure cannot be ruled out. When they start calling it a depression, chances are good the next bullish wave 1-2 will be ready to start. All we have to do is go and look back to 1932-1942, when we had a complete Cycle degree come and go. If you did not read your history books, but looked at stock market charts you would never figure out that there was this big depression in the 1930’s.
Since rolling over, the markets have been struggling to push higher so this is always a good sign of a bigger potential bearish move to come.
Can the anticipated (not confirmed ) 5 waves down go to the 2009 bottom price range?. You bet it can! It can even go a bit lower, but the idea of a long drawn out “C” wave going back to the 1970s or even 1930s price levels is not in the cards at all. The SC and GSC degree wave counters will be in their glory as they will end up being proven right if this decline is real. Technically speaking a SC degree 4th wave could be completed so all the SC crowd must turn super bullish when this decline has fully played out
What is dramatically different is the degree levels we think we are at. Being out, by just one degree is like being out a mile, or out by a “Fibonacci multiple”, would be a more accurate description.