Value of Perfect Information

For my first post, I thought I would breakdown the waves off of the March low.  I had originally counted this as a triple zigzag, but as I was looking at the corrections and seeing how the puzzle pieces would fit best together, I came to a different conclusion: a 5 wave move with a subdivided 3rd wave. 

To start my analysis, I took all the corrections off the bottom and compared them in terms of price and time.  All together there were 9 waves.  Standard EW says that 9 waves is an impulsive move, so I wanted to see if any impulsive wave formations could be formed using these 9 waves without breaking any of the cardinal rules (i.e. wave 4 overlapping wave 1, wave 3 cannot be the shortest, etc.).  In addition, I was looking for guideline of alternation where waves 2/4 alternate between a zigzag and a complex corrective wave structure (i.e. flat, triangle, etc.).  What I came up with is shown here:

Minor Wave 1
This was the fastest and strongest part of the move: 166 points in 20 days.

Minor Wave 2
This was the first correction off the rally.  It lasted a mere 4 days (2 trading days) and was a 32% correction of wave 1.   

Minor Wave 3
This wave subdivided with 2 corrective waves of just under 50 points each (minute waves 2 & 4).  In the subdivision, minute wave 4 alternated with minute wave 2 to form a corrective flat.

Minor Wave 4
While this wave only corrected 32% of the previous rally, it did last 8 trading days (a corrective triangle) and alternated with Minor wave 2.

Minor Wave 5
This was a quick burst out of the triangle and was instantly sold.  It lasted less than one day and was good for 28 points.

Intermediate Wave B

We’ve finished minor wave A (67 point correction in 12 days) and are currently working on finishing minor wave B (so far a 39 point move lasting 6 days).  We are hitting against a very strong resistance level, but we do have the end of month/quarter tomorrow, which does have a bullish bias.  Either way, the high for July will likely be either Wednesday or Thursday.  I’m looking for a minimum of SPX 815 to finish off Intermediate Wave B.

One more thing to add. If we somehow move to new highs, then that would put in a play an 11 wave move off of the low, which is a corrective wave count.

Categories: Charts ,Markets

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