We Need To See A Bounce To Stay On Track

Even before the IWM confirmed that it was topping in a b-wave rally, we had our current target zone as our goal for the c-wave of this 4th wave.  And, when the market actually struck the top, we calculated the 123 region as the ideal target for the c-wave, wherein a=c for this larger degree 4th wave which began in the summer of 2018.

However, in order to me to more confident that we are going to hold that 123 level as the bottom of this c-wave of 4, we are going to need to start seeing a bounce very soon, as I outlined in the weekend analysis.   And, as I have been highlighting, that bounce should be a 4th wave within this c-wave.  The bare minimum target for that 4th wave would be the 137.50 region, with an ideal target in the 143.50 region.  However, as you can see from the attached 60 minute chart, it is even possible to see it extend as high as the 148.50 region, but, for now, that is not my expectation.  How we initially begin the 4th wave structure should give us more indications as to how high it can reach. 

However, if the market is unable to bounce, it can open a slightly more bearish target for the IWM down in the 111 region before this 4th wave concludes.  For now, I will only consider that an alternative.  My primary expectation remains to see a 4th wave bounce begin soon. 

In the SPX, as I outlined yesterday, it is still an open question as to whether it follows the IWM, and provides us with a running flat, as presented in yellow and explained yesterday in my update, or if we see the SPX significantly outperform the IWM in the “bounce,” and provide us with a b-wave bounce. 

So, at the end of the day, nothing has really changed from my expectations yesterday, other than I am really going to need to see the market bounce soon or else we may get further extensions to the downside in the IWM beyond the 123 a=c target for this 4th wave.

60minIWM
60minIWM
IWM daily
IWM daily
60minSPX
60minSPX
1SPXdaily
1SPXdaily
Avi Gilburt is founder of ElliottWaveTrader.net.