Early Gains Friday Followed By More Red

2023년 9월 7일

NOTE: All times eastern. Current position is SubMillennial 1, Grand Supercycle 5, Supercycle 2, Cycle C, Primary 1, Intermediate 3, and likely Minor wave 2.
As we likely settle into Intermediate wave 3, it is time to find the potential end of Minor wave 1. To recap: Intermediate wave 3 (magenta/purple numbers) is comprised of 5 Minor waves. Each Minor wave (yellow numbers) is comprised of at least 3 Minute waves (green numbers), while the impulsive waves 1, 3, and 5 are made up of 5 waves.

I have taken the current wave breakout and identified Minute waves 1 and 2 while maintaining a decent idea of where Minute wave 3 ended which was during the 1230-1330 trading hour on September 6. Based on the completed data from the likely Minute waves 1 and 2, I begin to forecast what Minute wave 3 can do. Based on the most specific historical dataset for Minute wave 3s in Minor wave 1s in Intermediate wave 3s, the minimum movement extension is 121.69%, with quartiles (pink levels) of 161.2%, 200.07%, and 300.76%. Strongest model agreement for duration of Minute wave 3 is a tie of 3 or 14 hours long, with secondary agreement at 4, 12, 19, or 20 hours. The next dataset is slightly broader and applies to waves ending in 1313. The minimum historical movement extension is 107.15%, with quartiles (light blue levels) at 129.54%, 178.48%, and 265.83%. The duration models have strongest agreement at 2 hours long, secondary is 4 hours, third is 5, fourth is 11, 14, 16, or 20. The broadest dataset is based on waves ending in 313 with extension quartiles (yellow levels) of 145.98%, 180.89%, 260%. Strongest model agreement is generally less than four hours long, while fourth strongest agreement is 12 hours, and fifth is 8 hours.
My current placement of Minute wave 3’s endpoint was during hour 11 at 4442.38 and it is based on the wave 3 of 3 signal obtained during the 15 minute trading window at 1100 on September 6 as seen below. This is likely Minuette wave (white numbers) 3 inside of Minute wave 3

Marking this the end of Minute wave 3 would place the end of Minute wave 4 in the final hour of trading from September 6.
The next question is what should Minute wave 5 look like? Based on the most specific historical dataset for Minute wave 5s in Minor wave 1s in Intermediate wave 3s, the minimum movement extension is 100.27%, with quartiles (pink levels) of 110.26%, 132.685%, and 149.24%. Strongest model agreement on duration is at 9 hours, with secondaries at 2, 3, 6, 10, and 15, third at 18 hours. Fourth most agreement is at 1, 4-5, 7, and 11 hours. The next dataset is slightly broader and applies to waves ending in 1315. The minimum historical movement extension has not changed while quartiles (light blue levels) are 107.03%, 121.73, and 141.35%. The duration models have strongest agreement at 4 hours, second at 2 hours, third at 9, fourth at 1, 11, & 12, with fifth at 3 & 5 hours. There is a chance the opening drop in the first hour of trading on September 7 ended Minute wave 5 and Minor wave 1 based on the upward drift of trading during the rest of the day. If Minute wave 5 has not ended, it would be 7 hours long with more downside expected. I will conduct one final analysis due to most duration targets not fitting this narrative indicating the market is likely in Minor wave 2 upward.
What will Minor wave 2 look like? Based on the most specific models Minor wave 2 could have a minimum movement retracement of 17.45% with quartiles of 31.03%, 48.98%, 60.38%. Duration models have strongest agreement at 2, 4, 6, and 12 hours long, with secondaries of 3 or 10 hours. The next slightly broader dataset places the quartile retracements at 11.80%, 38.26%, and 55.24%. The duration models agree the most at 21 hours, with secondaries at 7, 8, 10, 12, and 15 hours. Since 21 hours was the length of wave 1, it is not likely in this instance. The final dataset places quartiles at 27.66%, 43.675%, and 61.32%. Duration models agree the most at 21 hours, secondary at 10 hours, third at 3 or 5 hours, fourth at 4, 7, or 8, with fifth at 14 hours. It is possible Minor wave 2 also ended in the final hour of trading on September 7, but confirmation will not occur until noon on September 8. It is possible the market opens high early on Friday but returns to decline by the afternoon. I should put out the Minor wave 3 analysis this weekend.
Looking ahead August CPI and the Fed could be interesting catalysts for the rest of Intermediate wave 3 down. Minor wave 3 could last until Monday of Fed week followed by Minor wave 4 drifting upward until the Fed speaks on that Wednesday. Minor wave 4 could top before that day ends and then the declines should continue for the following week and a half of September. A government shutdown could occur on September 30, and markets have typically been bullish during shutdowns so this should help spur the short-term October recovery.