Invisible Trend-line Support & Elliottwave Triangle
By Bennett Tindle December 10th, 2018
In the near-term we anticipate a period of consolidation which should result in a move to new all time highs. Most analysts have been bearish, citing a potential head and shoulders reversal pattern. Meanwhile, they ignored the larger/higher degree trend, which, from a traditional technical analysis standpoint, shows an inverted head and shoulders reversal, indicative of a move to new highs. Once this initial 5-wave, post-triangle, motive-impulsive advance comes to completion, we’ll be watching for any corrective move to support our more bullish outlook and stance. In the event we see impulsive price action to the downside following this 5 wave move, we’ll refer to our contracting variety triangle count, an interpretation that we’ve been tracking as our primary count for well over a year.
You might be asking yourself, what good is the wave principle if there are multiple counts and possibilities? The answer is simple… context! Trading is all about having a plan(s)! In fact, our company motto is ‘Plan your trade, Trade your plan’. When plan A fails, see plan B…. In the world of the wave principle, your plan ‘B’ is an alternate count or interpretation. It gives you context in the event your initial plan fails, as opposed to leaving your scrambling to figure out what could happen next. In fact, most forms of technical analysis don’t even leave room for a Plan B…. but the wave principle does! We view this as a benefit, and when both interpretations support the same movement, your level of conviction increases, as does the statistical probability of the forecast movement. A perfect example of this would be our most recent breakout to new highs… Not only did our bullish interpretation support it, but so did our contracting variety triangle count! If you haven’t figured it out yet, we are major proponents of the wave principle here at TradingAnalysis.com. If you are looking to learn more about the wave principle, consider checking out our Elliott Wave Mastery course!
Love your Wed webinars! You’re making me a believer
Thank you! Excellent video. Clear and concise. Love your analysis as well as your command of Motive Wave. Thank you for posting!
Maybe you should get that cycle 4 wave positioned where it should be: at the bottom of the massive cycle degree sell off concluding Jan 30 2018. Structuring that event as a sub wave of an ongoing correction given the extremely strong motive wave action off that low is simply an improbable model; amusing alternatives, but improbable. The structure of the motive wave action since is primary 1-2, intermediate 1-2, and minor 1-2-3, with minor 4 now in progress. Note that as a result of your inaccuracy, you now have a minor 2 at 8 bars and counting, probably going to 15 or so as the triangle plays out (though it could be 10-12 if a flat develops), matching a 2 bar minor 2 wave. Nope. Way out of proportion, obviously. This minor 4 matches the minor 2 consisting of the mid Sept high to the Oct 2 low. So try again with the positioning of that cycle 4; put it on the patently obviously low marking that cycle degree event, and get on with a straightforward bull count please.
The issue with viewing the Aug 6th to Sep 18th high as an impulse is the lack of a clear 5 wave motive-impulsive advance. In fact, it counts best as a 3 wave. In addition, the Sep 16th high was a near exact 61.8% extension of the Jun 3rd to Jul 26th advance, which is indicative of a triangle (often times points on a triangle are related by alternating .618 relationships, in this case D vs B). In regards to the proportionality of 4 and 2 in our count, the guideline of alternation actually supports this. Although corrections of the same degree often tend towards equality, when you have such a swift and directional wave 2, often times your 4th wave is more sideways and prolonged, and is better viewed with a 4 v 3 fib time extension. From a macro standpoint we also have evidence of a potential risk-off event on the horizon, which is why we are not abandoning the contracting variety triangle count. That said, we never discount any possibility and have the 1-2, 1-2 potential as an alternate. Love the feedback, thanks for watching!
Thanks for your thoughtful response. We’ll have to agree to hold different models as our #1, for now.
The Aug 6 – Sep 18 move is legitimately (legally) countable as an impulse, albeit not the most traditional looking. I find no logical reason to not position the cycle 4 at the epic sell off completing Dec’18. And the action since is clearly impulsive despite some minor challenges counting it. There’s no compelling basis for assessing it as part of an ongoing correction. IMO. Certainly the odd structure of this minor 1 is insufficient.
The support for a nominal bullish count of the Dec 18 low lies in technical indicators, historic set up analogues, market internals, and even demographics. A few technicals: the monthly MACD just did a bullish crossover, the monthly squeeze is now in month 2 off after 8 months “on”, and price has just broken strongly up and out of a almost 2 year consolidation zone. Analogue studies of similar technical set ups across numerous different set up types show extremely high stats for 2-5 years of strong bullish price action following (15 and 16 out of 16 type of statistics; see Ciovacco Capitals “short takes” work). OBV and AD at the weekly/monthly have been supporting this price movement as motive wave action for some time via consistent new highs matching new price highs. The millennials are moving into their prime economic generation years, which historically drives a business and market growth cycle on the order of 14 years long. More immediately, there’s a lot of pent up energy in the form of money on the sidelines as a result of the consolidation. That money is likely to soon be chasing yield in equities, driving this market much higher. My model is price is in a Super cycle wave V from 2010, with a cycle wave V starting Jan ’19, with a primary 1, 2, intermediate 1, 2, and a minor 1, 2, 3 in play now. Notice this count also meets Occam’s razor. What to expect coming? A minor 4, 5. Then an intermediate 4, 5. Then a primary 4, 5. Each larger in time and price to the prior. Completing the cycle V. My rough estimate for completion of all of that is Fall ’21. Followed by a Grand Super Cycle wave II? Not impossible, but one day at a time…. My $0.02. Thanks for your thoughtful response again, I do value all the work you are showing.
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