#SP500: Worse Case Scenario: #elliottwave Extended Flat to 2043?
Friends,
WOLFE WAVES SIGNALED A PENDING FALL IN PRICE:
As you may recall, the Wolfe Waves pattern ("WW") posted this past week successfully signaled the tumbling that ensued. At the time, we set out two targets at 1987.00 and 1984.75. In fact, as price plummeted over two US trading days, it neared the targets at such a momentum, that it was pretty much a sure thing considering the great performance of this advanced pattern. The predictive/forecasting model was submitted to a worse case scenario as well, offering 1982 as a possible target, and 1964 as an extreme, unconfirmed target ("TG-x").
WOLFE WAVES UNDER-PERFORMED AGAINST A RESILIENT BULLISH MARKET:
Well, as with all things in life, you've got to find exception to validate that the rule is indeed a rule. And it appears that exception was made here, as the targets were neared multiple times, but never validated. In fact, the pattern was not even able to validate its own 1-4 Line, a.k.a.: Profit Line.
Instead, price continued to rally from these would-be target validations, and market closed at 2007.50, near the beveled top, nearing a Triple-Top formation (pattern traders will likely see a Kiss of Death pending as well).
RSI SIGNALS FURTHER ADVANCES:
As with any of my other traders, I considered running a "Worse Case Scenario", a sort of contrarian use of the predictive/forecasting model.
Before providing the rational for the current chart construction, what caught my attention was RSI's Positive Divergence ("+ Div.") highlighted in the middle of the RSI window below the chart. Positive divergences are rared technical events in RSI defined as a lower low in RSI against a higher high in price.
PATTERN TRADERS MIGHT SEE A BEARISH OPPORTUNITY:
What RSI is indicating here is an imminent rallying in price. If we were considering the current situation in price near the 2011 high achieved this week, the novice pattern traders might see a Triple-Top formation, or the advanced pattern traders might also see a Bearish Kiss of Death formation - In sum, a consensus could build in anticipation of a counter-trend opportunity as price would be expected to fall from these bearish patterns.
EXTENDED ELLIOTT WAVE FLAT:
instead, by running the model against this consensus, a loftier target is defined as:
TG-Hi = 2043.25 - 06 SEP 2014
Considering the 5-Wave construct of the decline in Wave A in the chart, as well as a near-linear ascent in what we would assume is a Wave-B of a total A-B-C corrective construction, then it goes without saying that we are probably dealing with an Extended Flat for TWO important reasons:
1 - The correction in Wave A has occurred as a 5-wave descent - We know that only zig-zags have a 5-wave construct in their first corrective leg.
2 - As price rallied from Point-A, Wave-B broke above the origin of Wave-A
Thus, only ONE pattern can result from this, and this would be the Extended Flat, with a termination point that I placed at the model's upper most level, which is the "Worse Case Scenario" target at 2043.
The retracement drawn from Wave-B is nothing more than a translation of Wave-A's height, which ended up pointing to a significant structural level to the left of the chart.
OVERALL:
So, up? Down? I marked 2011 as the structural high achieved this past week, as as a marker that should cause bears to take pause.
Cheers,
David Alcindor
Predictive Analysis & Forecasting
Denver, Colorado - USA
-----------------
Twitter: @4xForecaster
-----------------
WOLFE WAVES SIGNALED A PENDING FALL IN PRICE:
As you may recall, the Wolfe Waves pattern ("WW") posted this past week successfully signaled the tumbling that ensued. At the time, we set out two targets at 1987.00 and 1984.75. In fact, as price plummeted over two US trading days, it neared the targets at such a momentum, that it was pretty much a sure thing considering the great performance of this advanced pattern. The predictive/forecasting model was submitted to a worse case scenario as well, offering 1982 as a possible target, and 1964 as an extreme, unconfirmed target ("TG-x").
WOLFE WAVES UNDER-PERFORMED AGAINST A RESILIENT BULLISH MARKET:
Well, as with all things in life, you've got to find exception to validate that the rule is indeed a rule. And it appears that exception was made here, as the targets were neared multiple times, but never validated. In fact, the pattern was not even able to validate its own 1-4 Line, a.k.a.: Profit Line.
Instead, price continued to rally from these would-be target validations, and market closed at 2007.50, near the beveled top, nearing a Triple-Top formation (pattern traders will likely see a Kiss of Death pending as well).
RSI SIGNALS FURTHER ADVANCES:
As with any of my other traders, I considered running a "Worse Case Scenario", a sort of contrarian use of the predictive/forecasting model.
Before providing the rational for the current chart construction, what caught my attention was RSI's Positive Divergence ("+ Div.") highlighted in the middle of the RSI window below the chart. Positive divergences are rared technical events in RSI defined as a lower low in RSI against a higher high in price.
PATTERN TRADERS MIGHT SEE A BEARISH OPPORTUNITY:
What RSI is indicating here is an imminent rallying in price. If we were considering the current situation in price near the 2011 high achieved this week, the novice pattern traders might see a Triple-Top formation, or the advanced pattern traders might also see a Bearish Kiss of Death formation - In sum, a consensus could build in anticipation of a counter-trend opportunity as price would be expected to fall from these bearish patterns.
EXTENDED ELLIOTT WAVE FLAT:
instead, by running the model against this consensus, a loftier target is defined as:
TG-Hi = 2043.25 - 06 SEP 2014
Considering the 5-Wave construct of the decline in Wave A in the chart, as well as a near-linear ascent in what we would assume is a Wave-B of a total A-B-C corrective construction, then it goes without saying that we are probably dealing with an Extended Flat for TWO important reasons:
1 - The correction in Wave A has occurred as a 5-wave descent - We know that only zig-zags have a 5-wave construct in their first corrective leg.
2 - As price rallied from Point-A, Wave-B broke above the origin of Wave-A
Thus, only ONE pattern can result from this, and this would be the Extended Flat, with a termination point that I placed at the model's upper most level, which is the "Worse Case Scenario" target at 2043.
The retracement drawn from Wave-B is nothing more than a translation of Wave-A's height, which ended up pointing to a significant structural level to the left of the chart.
OVERALL:
So, up? Down? I marked 2011 as the structural high achieved this past week, as as a marker that should cause bears to take pause.
Cheers,
David Alcindor
Predictive Analysis & Forecasting
Denver, Colorado - USA
-----------------
Twitter: @4xForecaster
-----------------
