It may sound boring or crazy that I look back in time, and review my wave counts, as many times as I do. I have done this thousands of times before and will keep doing it until I can not longer tweak the wave positions. This is the only way I have ever found any better fitting wave positions and off line I review charts many more times than what I ever post. Any wave counts I produce off line are done with pen and paper first, and many are scanned into my computer as a record.
All it takes is one little critical wave position to be labeled to early, (wrong place) and the entire wave is then based on a wave count that will crumble with little difficulty. It has been my goal to find all the 5 waves in Cycle degree, because without those points all other higher degree wave positions are irrelevant. All forecasts based on those high degree wave positions, will never work, as they spent years trying to find the wave 2 top in Primary degree. This is far too slow of a reaction for our world today, as we have to forecast before the crowd moves not after they move.
We also need time for an early warning so an investor can take time to accumulate positions. Lower degree levels provide the sensitivity and warnings that any higher wave position can’t do.
Higher degree wave positions are all built on a smaller degree base, and without them we get calls like the 2009 call, that markets are going to go much lower. All the wave counts back in late 2009 had the DJIA, as an end of a wave 1 in Primary degree. This was the most extreme long term bearish wave count I have ever seen. Who in their right mind would take any long position when there were still 4 waves down to go? Only in the short term, could traders catch that 2009 bottom, leaving the majority high and dry again. This will never change, as the contrarians know all too well.
Every contrarian, I trusted at that time was turning bullish and were giving indicators that hinted that the recovery would be much bigger than anyone imagined. Even Warren Buffet was extremely bullish in late 2008, but the Elliott Wave Analysts were saying that he was wrong at that time.
Look back in time to the 2009 bottom and ask yourself, “Do I want to miss another bull market like that?” The answer should be “NO”. 2009 was also a wake up call, because stock insiders were buying their stocks at a horrendous pace. Kaplan was extremely bullish and originally coined the phrase, “The Biggest Bull Market Since The Depression”.
For those that think extremely high degree levels is the way to go, then I can update you and say that I also track the Supercycle degree wave 3. Yes, I’m tracking SC degree wave 3, not SC degree wave 4 which is still so far into the future, that it needs no real discussion time this early. If we are lucky SC degree wave 3 may top out closer to the 2029 time period than any time now.
I look at the 2009 to present bull market, as a diagonal wave structure, not as some big bearish rally, which would send the Dow back to the 1970’s price level. Not in mine, or my readers life spans will that happen! The reason why, is that we need to confirm Cycle degree wave 3 first.
We also need to figure out what 3 patterns are more likely to correct any Cycle degree wave 3, and still give us time to bottom when the solar cycle does in the 2021 time period.
Never underestimate the power of the return of the next solar cycle, as all bearish thoughts and wave counts will get wiped out at that time. Economic cycles are born at the bottom of solar cycles, so when the majority, are super bearish at that time, they will get left in the dust again.
I believe my wave 3 in Intermediate degree is still good at the 2015 peak, and what has followed after that, is still part of a correction. The real Cycle degree wave 3 top is still in our future. So the real challenge is to figure out where we are in this correction.
It is far easier to figure out the EW counts when we use a very well drawn idealized chart. Technically there are only 3 core simple corrective patterns that I use, and I think I can rule out a triangle and a zigzag this early in the game. The only difference between this wave 3 top and a Cycle degree wave 3 top, is 3 degrees in total. Once I looked at the little wave reaction last week, I also review the entire wave count since the 2015 peak. It can take just a small wave change, which then allows us to see a very different correction. The daily chart below shows the changes in greater detail.
I take this chart, and blow it up on my iMac and stare at it for a long time, then I print it out and stare at it some more. I have always said that we need to “see” the wave counts first, before we can count them out. Wave counting is a secondary act of mathematically trying to confirm what we are seeing.
Even RN, Elliott had to “see” the wave patterns first, before he could write down what he saw.
Since the 2015 peak, we have a great bunch of waves, that if they are not sorted out, will never produce a long term viable wave count in the future.
I mentioned that in the next decline I would take a 3 wave sequence or a 5 wave sequence, but the above wave count, will need a five 5 wave sequence to confirm. I see that, what we have is a potential expanded “B” wave in Minor degree, and also an expanded flat in Minute degree inside the “B” wave bottom. These two patterns tell me, that this market should go below the three bottoms of 2015 and early 2016.
I was not happy with the run from the early 2016 bottom, as the “C” wave just did not reach far enough. As it now stands it fits much better. The markets can crash further than the base you see above, but this pattern also tells me that this market can roar and take out all major tops one more time. Do you want to miss yet another big bullish phase if forecasts are for the DOW to fall to 1000?
If and when this DOW is getting near 15,000 we may have to dream up a DOW 21,000 forecast.