The DJIA and this SPX index look very much the same and are on the same path to wave 3 in Minor degree. The story remains the same as Cycle degree wave 3 ended with the January 2018 peak, not at the September 2018 peak. It’s not an extended top, but an expanded top, which is completely different wave patterns. I’ve searched for months and you will not find a single wave analyst anywhere on the internet, that sees an expanded top! Counting is a secondary act of trying to confirm what you think we are seeing.
This fast counter rally sent shock waves around the world as it seemed to have broken a few records. I was impressed that a Minute degree rally can cause such emotions around the world. A new low is coming if you like it or not, as the 5 wave sequence in Minute degree is far from finished. High-speed algorithms were blamed for the move but this has been going on since 2000 already. I’m sure we will see more, but fast moves like this don’t last very long as the algorithms can panic on the way down as well. The problem with any computer trading program is that the can’t judge human emotions. They don’t use COT reports or any sentiment reports like the Market Vane report I have used.
It might take a few more months for the 5 waves down in Minor degree to complete after which I expect a rally from another huge bear trap. There are no Primary degree sets of 5 waves down coming, as a run of 5 in Primary degree all come from much higher degree levels that I work with. You can bet that the Primary degree “A” wave will be wave 1 in Primary degree, which has “never” work in 18 years. If a set of 5 waves down in Primary degree has never been confirmed, then we must throw out at least 3 higher degree levels.
That means we have to check all the wave counts starting with the 1929 peak and look for all wave 3 extensions. You can’t have a 44-year 5th wave extension (1974-2018). If 1974 was the 4th wave bottom in Cycle degree, then the two bear markets we have had since 2000, should have entered its price territory a long time ago.
2019 is a new year and I expect more bearish action but it will come to an end sooner or later. Keeping our minds open for another month or so could show us a different picture that few expect.
Have a safe and happy New Year!