ES 4417 zone [+ higher] could be significant. See post referencing the chart from March 2021. Length of wave 'E-v' = length 'C-iii' on that chart at 4417 so this would likely be a nominal target zone
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See original post below. This one appeared significant enough to place at the top...maybe it's way off but it matches so many other 'studies' of this type that have been posted over the last year or so. It's a big pattern just like the others and takes time to complete. Expanding megaphones are corrective by nature but the 'corrective' aspect potential currently could be significant. If the weekly 200ma breaks below the 4-point center line, could be some real concerns. Particularly consider how this aligns with a similar look at the ARMS INDEX recently.
Original post:
Week ending frequently prints a top zone on legs up so next week may bring more indication. The weekly summation index is nothing if but persistent in rolling over. Breadth continues on a downward trajectory but the red [26] signal on the NYAD MACD is at +10 - it's lowest since 3/1/21 and it is a steep fall so far. However, not until it prints negative values can a terminal top be seriously considered.
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Note: numbered wave progression count is revised. [not necessarily EW rules]
Commentary: there were sudden drops in VIX volatility [VVIX] on 7/21 and 7/22 both on the opening hourly candles.
On 7/21 VVIX dropped 7.5% and on 7/22 it dropped 21%- each recovered quickly. These can be classified as volatility 'crushes'. It was extremely unusual in VVIX so not sure what that signifies as far as moving forward. Whenever these types of behaviors have exhibited in the past particularly in VIX, some kind of short-term down/up [to new highs] action in the market often follows. There is the potential for these lows to become targets at some point on an intraday/daily basis quite likely tied to these new market highs. No top yet but stay focused- breadth may continue it's slide and diverge from new highs.
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EOD: The drop that was expected has created a retrace back up. However, there are possibilities that the drop was insufficient so a closer look is required. A detailed investigation of supporting signals is under review. Please check back.
Morning headlines .. "Stocks Shrug Off Virus Worries" . . another poll from a trillion traders surveyed [not likely]. Just make something up. Sure that's the ticket or perhaps do some real analysis and publish that.
It is the market that LEADS the economy and events- not the other way around. It is always a bull market with corrections along the way. Period. Disease in the populace has never stopped the market from progressing even if a huge correction arrives.
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Breadth explosions in both directions do not speak to stability so could be more zig-zagging to keep everybody guessing but ultimately, new highs are required.
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Update: 11:07am EST: ES 4232.50 +/- is a measured extension wave [iii] down. Looks likely bouncing at ES 4231.25 - close enough to complete a wave [iii] down. Let's see how it closes the day.
Open update: the whole leg from 7/8/2020 in ES has been taken out. A slightly lower extension target will most likely form a bounce support zone. Daily breadth is way over-sold. Check back later for an extension calculation analysis. Thursday's expected pattern [7/15/20] looks likely to be playing out..[from the red dot].. The 'mkt top' comment is only a low degree top but likely will include some drama. For example- the low from 5/12/2021 will likely be targeted on the next top signal. [VXX below takes out 48.00]
Original post-
The market blog world is getting excited over the last pull back... and here we go again reading tea leaves right on cue.. pick any one from a few- "Delta variant..blah..blah" [of course it's the pandemic rising once again]. Sorry, it gets so old seeing knee-jerk reactions that are absolutely meaningless in terms of sensible analysis and trading prognoses. The pandemic was with us from 3/23/2020 and look at the market rise from there. That is conveniently dismissed or somehow 'reasoned away' with another one from the list- a constant reminder of how difficult proper market analysis can be without a data-based grounding that repeatedly works over time
Upper chart [first one below] describes a modest retrace that was proposed could occur prior to a new up leg taking off. ES 4391.50 zone was shown as a target area in a prior post and a pull back occurred just a few cents from that number.
A new leg up [when it occurs] will likely target the 'old' extensions already in place. [ES 4417 already identified + new highs likely short-term]. This phenomena has occurred frequently as readers will have noted. Not until weekly breadth [NYAD MACD] prints negative signal values [9-period ema] at the end of completed weeks [Fri. - Tues. nominally] can a meaningful correction commence.
If we have missed a signal in the near-term pattern sequence, that will become apparent fairly soon and we will complete a new analysis. It is not expected to vary greatly at the higher degree expectation however.
Lower chart [at very bottom] is a longer-term analysis based on a very detailed look at the progression of volatility vectors from 1995 to today. The development criteria is not shown as it is quite involved and is somewhat experimental but is based on historical observations. We thought to roll it out anyway at least as a possibility. Perhaps we are being reckless again. We shall see eventually. Yes- those are nominally 1,500 - 2,000 point moves overall in the SP-500 - a maximum -45% +/- corrective. Note: we just had an approximate -34% corrective move down to 3/23/2020 and this market is likely just getting started.
It was noted in prior posts that the breadth pattern [NYAD MACD] was 'floating' with little in the way of a stable transition print and the result would be short-term instability that would scare more than a few: 7/9/2021 post. Looks like that may be about to play out.
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2:48pm EST: ES 4340 zone is wave D-iv low area so could still be printing a wave D-iv down. E-v up likely still to come either from D-iv low or a new leg up after a deeper low.
Referring back to the summation index, a reasonable example of top building where the daily stochastic was bottomed [which often indicates a pending market bottom proximity] shows that 2018 created two 'tops'. See left-hand half of chart where entirely different summation patterns show at 'A' and 'B'. 'A' where the daily and weekly summation index stochastic was high and 'B' where the daily [and eventually, weekly] stochastic bottomed coincidentally with a market that had built a top.
Today's set up [right-hand half of chart] is similar but not exactly equivalent to the 2018 pattern at 'B' where daily stochastic has bottomed and weekly stoch. is descending which may also bottom, printing a top [pivot or pre-top at some degree] perhaps in another week or two?. It will likely not be much more than a pre-top given the positive nature of the weekly breadth NYAD MACD red signal level unless that changes dramatically to the downside.
If the pattern morphs into another form, a new analysis will be posted at that time. The main take-away was to establish that it was possible to build a top at some degree even with summation stochastic levels at zero however unusual that might be.
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