A revisit with some discussion of ideal targets and patterns vs failure targets and patterns.
Basic 5 waves up here on SPX monthly according to the ideal pattern:
W1 up - strong, impulsive, itself a zig-zag
W2 down - normal
W3 up that subdivided into 5 waves of its own - classic longest and strongest wave
W4 down - zig-zag, also normal if W2 was not.
W5 up - in process from February 2016 low
There are all kinds of nifty relationships here which I will simply list and not chart:
W3 top was 161% of 2007 high to 2009 low (to the point actually)
W2 = W4 within a few points
W4 zig-zag portions also equalled each other
Ideal price high of W5 is 61-100% of W1 shown on this chart:
So that's 2241-2510 but let's make it easier and say 2250-2500. I highly doubt we will see blowoff 161% target. But we could see a failure zone 38-50% 2075-2160. Hm. That's done, even exceeded slightly. More on that in a bit.
We can also do the same exercise in time. Currently we are not even 38% of W1, which would be 12/2016. The ideal time zone of 61-100% of W1 is 6/2017 to 4/2018, or again for ease, 2017 Q2 to 2018 Q2. Why would such a powerful rally have such a fizzle at the end? I guess that is possible, but this is one reason to stay bullish for a while yet.
I am expecting the 5th wave in the monthly to be comprised of 5 waves on the weekly. So far we have seen this. My ideal version is below.
So ideally we are in W3 on the weekly, which should be the longest and strongest wave. This will also divide and show most clearly on the daily chart.
The entire move from 2/11 low to 6/8 high, then to 6/27 low fulfilled the ideal complete pattern, meaning an ABC down following the 5 waves up. Then a new pattern began. This is not a hindsight call - the 6/30 post said: "If all this is correct then we are about to get the last best move of the bull market over the next year or two." (You can also read that post for details of the ideal complete pattern on the daily chart.)
According to all this, we "should" see higher, and this is just the first portion of a larger W3 on the weekly that will sub-divide.
It is possible that we just saw 5 waves up on the daily like this:
But is also possible that we are still in W3, and that we'll go on like this:
As I've said before with all this stuff, if all this boggles your mind just keep it simple with the pivots alone. But let's keep that in perspective. SPX went from below YS1 to YR1; Tech set from below YS1 to 2HR1; INDU from YS1 to YR1 within 59 points; RUT from YS2 to near YR1. That's a lot. Ideally all these targets will complete, but perhaps it will take some more time for that to happen.
OK, what about the failure idea? If I do the same basic pattern on Dow monthly, then W5 is at 50% of W1 here, and due to the low structure, we have already seen 38% in time and will be at 50% 12/2016. A major high within 100 points and .3% of a YR1 - it has happened before and could happen again!