Update Feb 6
Quick Update
Hang on, it's about to get bumpy.
Why is it going to be a rough road ahead?
Because we have just completed a wave 3 and are getting ready for another leg higher, but first, there is wave 4 to complete. Wave four is corrective. Prices may meander sideways for an extended period of time (this is why you give yourself TIME on your options), wave 4 usually retraces less than 38.2% of wave three. Volume is lower than wave three. This is a good place to buy a pullback if you understand the potential ahead for wave 5 because at the end of wave 4, more buying comes in, and prices start to rally. 4 waves are often frustrating because of what seems like a lack of progress.
Wave 4 acts this way because of the big bull push of wave 3, where everyone was certain it was a bull market, information was positive and looking up, and volume was high. Now, it has run a good deal, so profit takers come in. This is combined with less positive news and a generally bleaker outlook. However, investment is strong because of the high volume of wave 3, which is why wave 4 generally has a small retracement. It is also why wave 4 can be prolonged. As profit takers sell, new buyers must step up at the elevated prices (investors who missed the bottom now must reconcile with higher prices and determine if they are willing to invest, or if they believe it will go lower - it won't). Another note about wave 4s, if wave 2 (the first corrective wave) is flat and not a large correction, then wave 4 should be a steeper correction.
An example of this is Tesla $Tesla (TSLA.US)$ as shown. You can see how flat the 2 wave was, and you can see how steep the wave 4 of 3 was. I expect something similar. A steep drop followed by quick rise as buyers enthusiastically step in to buy (HELLO 🙋♂️)
Divergence on the 2 hr, Tesla is showing resilience (its a dragon) but I expect support to eventually fail.
Now that you know WHY price action is going to act the way it will, how about a final destination?
$E-mini NASDAQ 100 Futures(DEC4) (NQmain.US)$ 2 hour is in free fall. Can we hit 12300? i don't think so today, but you never know. It has been trying to turn around and hasn't yet been able to. **** I have 12446 as the new retracement , and we hit 12458 ***** I'm waiting to see if this is a run to 12580 and then another sell down, or if this is the pullback to continue towards 13000
the hourly shows a reversal approaching. And it started rising as I'm writing. It depends on what sort of push we get. this could go to 307 before resuming selling. This COULD be a bottom, I doubt it, but it does qualify as a bottom.
I apologize for this being short, but I have substantial Silver & Gold & Oil futures contracts running, so iam a little preoccupied.
Be Safe, Be Careful, Be Wise and as always
Good Luck ![]()
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jimmychoos : OIH and XOP looks set for a deeper correct. Or am I wrong? Time to buy the dips?
iamiam OP jimmychoos : looks to be deeper, they rebound first, usually, I will have to really look.
iamiam OP : $Invesco QQQ Trust(QQQ.US)$
I see today going bullish for the first hour or two after open, up towards 305, probably 306.5. Then it should reverse and continue down... I believe this because it would smooth the downtrend out while keeping the market in this small correction, allowing the individual tickers to go through their corrective waves gearing up for the next leg higher. 298 is my bottom still, but iam always watching for an earlier reversal. This currently looks weak.
Golden_Spoon : how did you come across bbai and what is your reentry target?
Violets : thanks iamiam.... you sure know your stuff. question? Wave 2 was very deep and corrective so wait for probably will not go lower correct? or I guess the end of wave three LOL sorry I'm just learning this whole Fibonacci
iamiam OP Golden_Spoon : buying most things AI, I don't have a reentry, this is a long hold, I'm not even charting it.
iamiam OP Violets : sorry I didn't get back earlier. yes, it is very possible we have a shallow pullback. I still like 298, or 12350. but as I write, this is trying to reverse here at 12522 or 304, but we will see. both are possible. sorry I couldn't be more help.
Violets iamiam OP : oh you are great help! have a great day
iamiam OP :