Complexity Abound - Market Analysis for Jun 21st, 2021

As I have been warning for some time, we are in for a bit of a wild ride.  And, while I was expecting a rally early this week, the market has yet to tell us what this bounce represents.  So, allow me to tell you what I am tracking as our “options,” and we will have to eliminate some of these as we move through the next 24-48 hours.

First, the primary count in green is now pointing to this rally being the a-wave of wave [v] of v of 1 within an ending diagonal for the final wave of wave 1, as you can see on the 5-minute ES chart.   As I am writing this update, we are hitting our heads on the a=c extension off the overnight low in the futures, and if we top here, and break back below 4196ES, then we can reduce the probability for the yellow alternative count even more so. 

Remember, the yellow alternative count is still pointing us to 4440+ in a bigger wave 3 within wave [3], but we need to see a clear impulsive 5-wave structure (yellow wave i) off the low to still keep it in the running.  And, if we break back below 4196ES (the .618 extension off the overnight low), then it makes it unlikely we will complete a 5-wave structure for wave i in yellow.  Such a 5-wave rally for wave i of [iii] of v of 3 in the yellow count would target the prior highs, as long as we hold over the .618 extension at 4196ES.

Next, if we do top out right here at the 1.00 extension region off the overnight low, and we see a CLEAR 5-wave structure off that high to the downside, then we will have to consider that wave 1 in green as already topped, and the overnight low was the a-wave of wave 2, whereas this is a b-wave in wave 2. I am presenting this in the purple count at this time, but realize this is just a subset of the green count, and is only applicable if the wave 1 in green has already topped. Therefore, a 5-wave decline would suggest that a c-wave decline has begun, with a minimum target in the 4100 region, which is where this would provide an a=c decline.

So, that is the lay of the land, and it is clearly not an easy structure at this time.  The overlapping 3-wave structure with which we have been dealing over the these last weeks is what clouds the micro structure at this time.

Again, I would expect that we can take off some of these potentials over the coming day or two, but until such time, I want you to be very aware of what the potentials are within this whipsaw region.  And, yes, I still expect more whipsaw and a bigger pullback of 200-300 point to ideally take shape this summer.  Again, the question is from where, and if it will be as a wave 2 or 4 within wave [3].

Lastly, I know this is VERY complex, especially for those that have recently joined our services.  But, there is nothing I can do yet to simplify the structure until the market provides us with a bit more clarity in the smaller degree.  Over the coming weeks, the structure will become clear, and we will know where our next buying opportunity will take us, as we prepare for the further rally I expect to take us into the end of the year.

5minES
5minES
60minSPX
60minSPX
Avi Gilburt is founder of ElliottWaveTrader.net.