When i think about high probability setup this is what i think. According to Elliott wave theory we are in wave5 of a 5 wave move up . Within the 5th wave there are 5 internal waves. What we just witnessed as of Friday 2.3-0 am was a running flat correction that completed or as conventional analysts call it testing the lows. Once that happens what ensues is a trend move of 5 waves to the upside.
The rip the face off move we saw overnight thursday the 24th to friday the 25th almost a $2 move was indeed a 3rd wave move. Gap up’s occur in the 3rd wave . This 3rd wave is 3(5) meaning that this leg up is the last wave in a 5 wave move up and it should terminate around the 272 area with the 200 DMA converging around the same target.
Pre market update for $SPY today the 1/28/2019 is that the (iv)3 just happened and we should see a move of sideways or get the move up to $272 today.
You can call it that the stock market has been on a tear sort of , since the new years! Christmas eve and the day after the Christmas the $spy did a sharp almost 1000 pts a day reversal since it $233 lows . Such bull runs are typical on a bear market, and what seemed a wave 3 ( still very well ) could be a wave 3 on the way down of a larger AB move. With the way the political climate is with government shutdown in the United States and he Brexit deal not seem like its going to pass. The retrace that happened on the 25th and 27th in December 2018 is a W3 reversal and that reversal should have retraced 50% to 70% as you can see the magenta lines show that the price has retrace a little over 70% of the past down move which looks like wave 3 move down. The RSI has pushed past the crucial 60% level but that can always be a fake out move and start falling anytime now.
Another interpretation :
This this is a raising wedge in traditional sense of technical pattern and this raising wedge pattern when combined with Elliott wave 3-3-5 wave sequence suggests that it has come to an end and the trend move which is down is about to happen. A lot of technical analyst are suggesting that this uptrend would end at $270 , but the Elliott wave suggests that this is the end of the road for this sequence UP and we are going down from here!
OK so the $SPY has been getting hammered lately and on the last trading day the on the 24th on Christmas eve. The 5 wave had completed on the 24th
Now on the 26th I saw the beginning of a wave 1 and 2 with a deep retrace after the initial move 237.90 and did a 70% retrace which set the stage for the all day 3 move , got some $SPY calls when the price action moved past the 1 and holding it overnight taht has topped out at 245.54 after market. Haven’t got the 4wave yet and 5 after that is still coming. The RSI is 36.38 and will hit resistance at 40 level around the 249-250 area and time to reassess !
It took a while but i think we have a good idea as to what the $spy is going to do next. It just completed the “w” move in the correction move on the daily , we have had a, b and c most likely completed on 12/21/2018. Should start seeing a reversal move (x) at around $235 when the $SPY tests the 50 MA of the monthly!
MU:Micron broke the rule of wave 4 overlapping wave 1 on weekly and monthly, so its a w1-w2 move and on the weekly and in the daily we have a 5th wave move in progress
On 12/11/18 took a put position the red arrow after seeing the 5 wave move down and took a put position, that paid off in 30 min or so.
This was an amazing experience to have identified a wave 2 although it would have been great if it had happened in real time, anyhow it is found and can be found again!
Below is a 15 min chart of $SPY on 12/6/18 . The market was plummeting like a rock per-market with news that the CFO of Huwei the Chinese phone maker the 3rd largest behind Apple and Samsung was arrested on charges of selling products to Iran in spite of sanctions by the US. Anyways, I think the news is a catalyst for already setup waves to progress and some how make sense. The bottom happened at wave 5 and I saw a impulse move of wave 1 and mistook the A move to be part of a ZigZag and placed a trade on the arrow mark thinking that will be the 2nd leg of a ZZ, but instead it turned out to be a wave 2 and then the wave 3 progressed after that and now in postmarket is a wave 4 , possible that the wave 5 would even terminate in the per-market.
It will be very interesting to see how the market reacts on Monday the 3rd. As of no Saturday the 1st President Trump is having dinner with President Xi of China. The stock market on Friday was in a holding pattern awaiting the result on Monday to react. But the Elliot wave analysis of the $SPY says that the market is going down. If you see the chart below the $SPY is coming to the end of the 5 th wave on an uptrend and by the way that is also the long term trend, as I believe we are on the 4th wave in the 5 wave and doing side ways correction for a while.
In the chart above you can see the dotted yellow line is the move that is expected to happen. Which means that the outcome of the G20 is already doomed! But that would mean that the cart is in front of the horse. Or that I am predicting future using the wave theory. It sort of feels good to predict future 🙂
Caterpillar Inc $CAT
As you can see in the naming AB =15 BC=
The Weekly chart is below AB=15, BC=7 it is coming to an end and the 30 min chart shows as the 5th wave just ending , so the next wave should be the corrective wave.