I love Elliott Wave – when it works.
I used to teach CMT III and the Elliott Wave principle and tried to make it easy. I am guilty, probably like a lot of you, of trying to count every squiggle and label this sub-wave that sub-wave and into oblivion we go.
So, here’s how I use it:
- LIVE BY THE RULES
- 2 can’t go below/above the beginning of 1
- 3 can’t be the shortest
- 4 can’t correct and overlap the end of 1 (we’ll get to this later)
- If you can’t count it, it’s probably correcting.
- If you see a 3rd of a 3rd figure out where it could end and BUY after Wave 4 correction over …
- If your going to study anything .. STUDY CORRECTIVE MOVES!
- Flats, Zig Zags, Triangles, Double and/or Triple Three’s, etc.
- Again, if your going to study anything… STUDY THE CORRECTIVE MOVES.
That’s it … if your a sub-wave of a sub-wave kind of guy/girl so be it. count away!
so, why bring this up now?
Well, we are at a critical juncture and, understanding the wave principle RULES will help.
below is a daily chart of the S&P 500 cash since January 2015.
note I didn’t label the top a 3 or 5 … I’m not ready to do that because I want to see what happens next week.
you see, let’s go back to the 4 can’t correct and overlap the end of 1.
see the blue rectangle around 1990 (go Navy, class of 1990 (that’s synchronicity at it’s best on Army Navy day) ? IF we are to go higher in the near term and take out the new highs for another run we cannot close on a daily basis below that level. I don’t mind if we get an intraday spike below it but close above it on a daily or weekly basis but if we take that level out then the August lows will be attacked.
it’s that simple …we are finishing a near perfect BUY pattern on the cash index. as we have shown when patterns fail, the move is usually big and strong in the opposite direction of the pattern. if this BUY pattern works, then wouldn’t be surprised, at all, if we attack 2120 and higher in the coming months.
here’s the BUY PATTERN ..