For many years I counted everything using Supercycle degree (SC) and Grand Supercycle (GSC) degree wave counting methods. The 2000 and 2007 peaks were relatively easy to track even with my degree levels being from another planet. The bottoms never inspired the confidence to make extremely bullish calls.
The entire planet works on price, but price is only a small part of what has happened. You can see there are no prices in the chart above, but the majority of wave analysts include, every conceivable price you can imagine! Still the majority of all wave analysts did not see the bull market coming in late 2008. Since 2000 we have seen three sets of wave 3 peaks with the 2007 peak being a bit subdued compared to other ones. This is ok as it still broke higher than the 2000 peak.
The reason that the SP500 has three sets of wave 3 peaks is because none of the wave 3s of the past has ever been extended. The entire wave counting world is working from a 4th wave base. I’m working from a wave two base, all the time. Thinking that all the extensions are 5th waves, will always put us into a much higher degree level, than we actually are.
From the 2009 bottom to our present top is one move, but subdivided into 5 moves in Intermediate degree. Once 5 waves in any degree level are completed a correction must happen. How big the dip may turn out to be, is entirely related to what degree level our present top is going to be. If Cycle degree wave 3 is the real target, then a Cycle degree 4th wave correction must happen, otherwise it’s back to the drawing board playing with our paint by numbers set. This is just a cosmetic wave counting method, and in reality you have to go back a minimum of 100 years and start a completely new wave count each time. I’ve done it 1000’s of times hunting each time for those missed wave three extensions.
Going back 100 years sounds too much like work, so it never gets done, which causes false degree levels to be perpetuated into the future. From my perspective and in sequential order, SC degree wave 3, GSC degree wave 3 and Submillenniun wave 3, are still far into our futures.
If we’re lucky we might hit a SC degree wave three, by 2029, and GSC degree wave 3 by the 2129 time period.
While all the analysts are busy forecasting an ever increasing rosy future, I’m busy looking at and building the alternate future.
I have two lines in the chart above, with the first one at the 1800 price level, which would retrace the entire 5th wave in Intermediate degree. The 2009 bottom fell well below the previous 4th wave of one lesser degree, which was in late 2002. Not quite 2 years for an Intermediate degree correction. It only took 3 years for a SC degree correction from 1929-1932, so a Cycle degree 4th wave correction might only last three years as well. We sure are “not” going to get some 600 year, GSC degree bear market.
At 1800, the SP500 would not even get close to any required previous 4th wave of one lesser degree, but anything below the SP500 1000 price level would. All the smart technical analysts will draw the megaphone bottom, which points to the SP500 price level around 500. Everybody on the planet will see the same thing, which usually means that it will never happen. The markets will pull out all the stops to try and fool us a again, and it may do that by “Not” falling below those 2009 lows.
Just because the SP500 may have dipped 10% does not mean that the correction is finished. Like I said, price has little to do with it, but the pattern is everything. Only one completed set of 5 waves in Minute degree does not complete a correction. You can wish hope and pray all you want, but you can’t turn a single 5 wave sequence into a completed correction.
Sure, all the 5 indices I covered soared again late last week, but that can all be due to short covering. Many traders are trying to short DIA and SPY ETFs already, to a point where no more DIA can be borrowed.
Protective sell stops are stacked up below present prices, and once they start to get triggered, we could get the next leg down. All the SP500 has to do is fall below 2530 again, which will help to confirm that, “The Big Dip”, is in progress.