During my studies, I observed that there are seven waves between 1985.17 and 1926.03. After considering the alternatives, the chart pattern on the left appeared to be the best interpretation. However, if we are to see a Pivot low Friday, it appears that Wave (b) of [b] would have to make a new low, but whether it gets as far as 1901.00-1908.00 as speculated earlier (or further) is unknown. A Wave (b) decline at the open Friday (for whatever reason) could work the market into a speculative frenzy. A Minute Wave [c] could be even more devastating.

But the powers that be will likely not allow SPX to close at the low on Friday, so they may launch a very strong countertrend rally into the weekend , being complete by the end of Monday or early Tuesday (the next Pivot day). Since the small Orthodox Broadening Top must have a point 7 back inside the body of its formation, the most likely target would be the 50-day Moving Average again.

Another influence on my decision was the pattern in the NDX. Same observations here, including a touch-back of the 50-day Moving Average at 4013.57 (Point 7), which hasn’t happened yet.

There seems to be a behavioral reason for everything, including the “kiss of death” at the 50-day.

Whatever happens Friday may scare the bejeebers out of investors, since the Cup with Handle suggests a jolt to 24.25 as early as Friday morning. Even more surprising was a fractal relationship that has already occurred twice, where Wave (v) of [c] is exactly 2.47 times the length of Wave iii and [v] of C is also exactly 2.47 times Wave [iii]. Fractals are self-similar, repetitive formations. No guarantees, but this has a high probability of happening again.

This could all take longer than a day, but I want to alert you that the near-term outlook may be developing something unexpected.

Regards,

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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