For the last several months I was working this market bullish phase as an Intermediate degree diagonal 5th wave. It all makes sense, but we also have an extra bump that might not belong, or I have an issue with it. This happens many times, forcing me to look for a potential alternate wave pattern.
I love to see any expanded flat before it happens, but many times we also have to wait until we are very close to completing the “B” wave before we can see it. It may sound silly, but we have to see the pattern first, before we can count it out, as wave counting is a secondary act, to confirm what you think we are seeing. Of course, if we constantly ignore expanded patterns it throws our wave counts off by a mile, and we will end up with temporary bottoms that can be far too shallow.
I consider any expanded wave very important due to the forecasting ability that is built in. Every simple wave pattern in the EWP, contains forecasting abilities, but as usual they are all degree specific.
Any expanded pattern I use would push any Cycle degree wave three back to the 2015 top, making the 2016 to present rally another three wave affair, which I labeled as a flat. (3-3-5) The expanded flat would be an Intermediate degree “B” wave, but it would also stop falling at a potential “A” wave in Primary degree. This may not happen until the SP500 falls below 1800 or even more.
In the end, we want all the stock bears coming out of hiding, shouting bearish slogans to mark the arrival of the bear market. Of course, as soon as they recognize that a bearish trend has started, it will turn and soar the opposite way. It may sound funny, but the markets have been fooling the participants like this for eons.
One recent big example of this was back in late 2008, when the majority were all bearish on stocks. Even all the expert wave analysts had extremely bearish wave counts, right along with the opinion of the majority. (Wave 1 in Primary Degree) Nobody saw the massive bull market coming except for all the stock insiders and a few smart contrarians like Steven Jon Kaplan.
A failure to recognize a bull market before it happens, is a failure of any wave count that we may be working on at the time. Yet nobody has taken advantage of this, by looking back in history to rectify the situation.
If we think we are floating around a SC or GSC degree top, and we are off, then we have to go back in history, and create another new wave count with new locations. Going back 100-200 years on chart sounds too much like work, and therefore has never been done consistently. The EWP has turned into a short term trade setup tool, where they don’t have to go back to the Roaring 20s and recount 1929-1932.
This wave count may not last very long, but the only way to eliminate any wave count, is to run it and see how soon it will fail.
Any “C” wave that crashes from an expanded “B” wave top can produce a very steep decline, even to the point where waves are next to impossible to see. In this case we would need 5 waves down in Minor degree.
As long as there is the potential for the markets to crash, the USD can keep on crashing as well. We can end up with investors seeking refuge in gold and gold stocks pushing them back into a bullish phase.