Academic Discussion - Market Analysis for Feb 5th, 2024

There is not much for me to add to the general analysis provided over the weekend.   But, I wanted to take the opportunity to discuss the academic point I made over the weekend.

If you remember, I said that I believe it is academic as to whether the market has topped in wave 3 and that we are within an expanded flat for wave 4, or if the market is going to try to stretch a bit higher to complete a more extended wave 3.  Well, the latter scenario would suggest an expanded wave [iv] structure completed at the low struck on January 31, with the rally since then acting as wave [v] of wave v of 3, which is noted by alt [v].  

With today’s pullback just barely holding upper support with a spike and reversal, there is a reasonable view that it was a 4^th wave pullback in the alt [v] noted on the 5-minute chart.  In fact, the probabilities have increased for this potential at this time.   And, as long as the market holds today’s pullback low, then we seem to be trying to stretch wave 3 to the 1.764 extension of waves 1-2, which is in the 4997SPX region.

In fact, we often see the 5^th wave develop as .618 the size of waves 1-3 off the 4^th wave low.  And, if we see that in this case off today’s low, it also points us to the 4997SPX region.

So, to keep the analysis rather simple, as long as we hold over today’s low, there is a reasonable perspective that the market is now trying to stretch wave 3 to the 4997SPX region in the coming days. Thereafter, I would expect wave 4 to begin, unless we break down below today’s low, which would also suggest wave 4 likely being in progress.