The last few weeks appear to be what Elliotticians call a thrust from a triangle. If you know a little about Elliott Wave, then you may know that triangles are very common for a 4th wave of an impulse wave. What essentially that means, is once we can count the end to wave 5, then there is a strong risk of reversal. Short term there is a possible setup to suggest an expanded flat pattern for wave [iv] of wave 5, so a new high is seen for wave [v] of wave 5.

I am bearish and looking for a strong breakdown under 23500-23000 to support further downside. Even if a minor new high to end wave 5, I would still stay bearish and look for sellers. A corrective bounce that fails to move above 24000 would support a setup for a move lower, further downside under 23500-23000 would help the short term bearish case.

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The strong decline on UTIL and XLU is impulsive looking, so it supports an impulse wave. looking at the structure from the high made in Nov 2017 it would look much better if new lows were seen to end a 5th wave of an impulse wave and setup for a large rally thereafter, whilst I can force a truncated 5th wave, I am reluctant to force a wave count to suggest its completed when the current idea can suggest new lows for wave [v].

If a truncated 5th wave, then it should hold above 50.20 and continue higher, if the current rally is a 4th wave as shown, then a move back under 50.20 should see new lows for wave [v] to new lows, its then traders can turn more bullish and look to buy a potential 5th wave. Overall I suspect the Dow Utilities (UTIL) has ended the whole cycle from the 2009 lows and this current decline is the 1st leg of a large decline over the coming months. So the ETF of choice would be to buy SDP, although timing to get better entries is need to maximize gains.

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Snippet taken from the weekends post

Whilst there are enough gyrations to argue for a possible end to the trend from 1236, its not really done anything to derail the current rally, holding above 1310 can still argue for a small triangle for wave iv, or possibly it develops a small ending diagonal for wave v (wedge). There is still scope for a move above 1330 to end wave [a] of the larger wave [y].

A break back under 1310 should be enough to support more weakness and suggest wave [b] was likely in progress. Any weakness for wave [b] should prove corrective and remain above 1236, that can offer a bullish opportunity for members that want to jump on the trend. Bullish above 1236.

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Snippet taken from a this weekends post.

Short term a minor new high is ideally see to end 5 waves from 12744 to complete wave [c] of an expanded flat pattern for wave B, this idea makes more sense with the other markets such as the CAC and EURSTOXX, which are closely correlated markets to the DAX. Ideally any upside stays below 13400. If it starts to race away above 13400, then I think we seriously need to consider that wave [5] is underway. A strong move back under 13200 and then remains below 13200  is needed to support more weakness back below 12700.

A move lower for wave C to end wave [4] is still favored, a test of 12400 – 12600 is a good area to end wave C of wave [4] and setup for a move higher for wave [5]. A move lower can also allow other European markets to correct and pullback and complete their respective 4th waves.

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The recent gyrations over the last 2 months I suspect could be ending an expanded flat. With an expanded flat the [b] wave moves above the origin of wave [a], but the move into the wave [b] highs is in 3 waves, that appears to be the case with this example, you can count 3 waves from 1.2622. If any upside stays below 1.2700, then I favor more weakness for a small 5th wave of wave [c] and develop 5 waves from 1.2919. Thats when I will turn more bullish.

I am also tracking another idea which suggests the low is in for the whole correction from 1.2914, but unless a strong move above 1.2700 allow for minor new lows. There is structural support at 1.2450 if needed to setup for a rally higher.

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