Hi SE,
The SPX started the 5th wave lower off the 9/1/00 highs on 5/22/01. The 5th wave itself breaks into 5 waves, with wave 1 finishing on June 1st, wave 2 on June 8th, wave 3 on June 18th, and wave 4 on July 2nd. Wave 5 has been operational since, with 1 of 5 completing at the July 11th low, and 2 of 5 at the July 19th high. The sell-off since last Thursday's (the 19th) highs was the beginning of 3 of 5, with 1 of 3 of 5 completing at yesterday's 3pm lows, followed by a 2 of 3 of 5 rally, which has taken the typical wave 2 zig-zag formation.
If you look at a 10 minute chart from yesterday's late lows, you see a clear ABC zig-zag formation in the rally, which is simply a wave 2 retrace of the 1 of 3 of 5 sell-off from last Thursday's highs. The retracement has covered 42% of the wave 1 of 3 of 5 decline, which is just under the most common retracement of 50% for wave 2's. Will we retrace further? We shouldn't but can.
On deck once this rally fizzles will be wave 3 of 3 of 5, the meat of the move lower off last Thursday's highs. |
