More Correction Ahead

The correction which started from 2400 is now a little over three weeks old, and should soon reach the halfway point of its duration. It is primarily caused by a group of intermediate cycles, with the last one bottoming in mid-May. However, it is conceivable that the actual low of the correction will be made three weeks sooner, when the most dominant of the three makes its low. In that case, the last cycle would only bring about a re-test of the low, or wave 2. We’ll just have to see how it all plays out.

The first cycle should reverse in a day or two. Friday’s action did not quite look like a completion, nor did SPX squarely meet its projected target, but only flirted with it.  It’s also possible that the projection will be slightly exceeded if a little more congestion occurs at the current level before we make the final low.  The top pattern does provide for some extension of the count, if needed.

The first cycle should only give us the a-wave of an a-b-c pattern. After a b-wave rally, we could conclude the correction with the low of the next cycle, bringing a new low which will be made available to subscribers as soon as the confirming count of the b-wave has been established. If the second cycle low ends the correction with a c-wave, then the final cycle will most likely be the wave 2 of the new uptrend.   

Daily chart

The uptrend that we are presently correcting started at 2084 and ended at 2400. It’s part of a longer uptrend which started at 1810, and it’s unlikely that the move to 2400 ended the entire span from that level. This is why I only expect this correction to be moderate, while the next one which will start from a new all-time high should be far more severe.  

I have marked by two small vertical lines, the time frame which should produce a low of the 20-wk cycle. Although I believe that we have a little more downside risk, I suspect that the final print will be in the vicinity of the blue (55-d) moving average, and certainly not below it. Even though the chart shows that this low should produce the end of what looks like an a-b-c pattern from the top, it will not meet my expectations for the low of the correction.  

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Annalisa Christina Kraft 2 years ago Contributor's comment

solid technical analysis