Still early in Bear Market, a review

23 Ağu 2023

NOTE: All times are eastern. New assumption is Intermediate wave 3 has not begun yet.
Most of the forecasts have been accurate, at least through Minor wave 3. My wave 3 indicators have also flashed at appropriate wave 3 endpoints. Today clearly confirms the index is not where I had it so going backwards and re-testing is the next step. I am first returning to Minute wave 4 in Minor wave 3 in Intermediate wave 1.
I had this top at 1230 on August 4. The three questions to answer are where was Minor 3 expected to end, where was Minute 5 expected to end and where do they overlap? The most specific data fails to specify a duration but suggests 12, 32, 52, and 56 hours. The minimum historical movement was 112.55% of wave 1, max is 408.88%, with a median at 247.84%. Slightly broader historical data points to a minimum of 121.16%, max at 285.18%, with median at 214.395%. The durations fail to strongly agree with lengths of 19, 32, and 48 hours. The broadest dataset referenced points to quartile extensions (1st, median, 3rd quartile instead of minimum, median, maximum) of 142.54%, 181.715%, and 242.61%. Model durations agree the most at a duration less than 10 hours with secondary and tertiary agreements at 32 and 48 hours respectively. My first questionable placement for the endpoint of Minor wave 3 based on the actual movement is between 1030 on August 8 or 1130 on August 9. The August 8th position was 43 hours into Minor wave 3 and the August 9 position would have been 51 hours.
Now for application of Minute wave 5 inside of Minor wave 3 endpoints. The most specific data has a tight window with a minimum extension of 131.06% and maximum of 166.07%. The durations lack strong model agreement but note 9, 12, 16, 21, or 32 hours. The next set of slightly broader historical data has quartile extensions at 112.85%, 133.75%, and 166.07%. Models agree the most at 4 hour duration, second most at 5 hours, third at 9 hours, then 16, 19, and 12 hours. The broadest dataset used has quartile extensions at 117.88%, 134.35%, and 165.21%. Model agreement for durations beyond 8 hours agree the most at 16 hours. Additional model agreement in descending order is 11, 18, 19, 13, and 24 hours. Minute wave 5 likely lasted 12 or 20 hours. The 20 hour duration outlines 5 waves inside of wave 5, however wave 3 would be the shortest which is a potential red flag. I have placed the end of Minor wave 3 at 1030 on August 8. The levels and placement are viewable here:

After computation of this point, Minor wave 4 would have then ended at the high during the first hour of trading on August 10.
Next step is forecast where Minor wave 5 should end. Did it end before the open at the low on August 18, earlier, or not yet? An endpoint of August 18 would make Minor wave 5 42 hours long. The most specific set of forecasting data points to Minor wave 5 extending a minimum of 101% of Minor wave 3, a maximum of 165.28%, and a median of 108.58%. Duration agreements are difficult again, most is at 18 hours long, secondaries are spread at 33, 39, 52, and 64 hours. The next, slightly broader dataset has the minimum movement at 128.39%, maximum at 220.5%, and median at 147.93%. Forecasted durations are at 38, 45, 46, 48, 52 hours long. The final dataset from broader historical data has quartile extensions at 114.04%, 131.845, and 159.44%. Forecasted durations point to 43 hours long, with secondary at 52 hours. Next is 39 hours and then 32 hours.. A wave 3 indicator was triggered up to the bottom on August 18th which can be confusing. This indicator does fire at wave 3 endpoints, however, it also signals the end of waves 2, 4, and B. Sometimes it does indicate the end of wave 1 when quick movement occurs. August 18 triggers a wave 3 indicator on the daily and hourly charts which doesn’t provide great clarity, but does indicate a sudden drop on a daily level too. All highlighted levels in this analysis point to much shallower levels than the achieved low on August 18, however, a majority of the duration models suggest the actual length of 42 hours could be accurate. Here is application of these levels and placement of Intermediate 1 at the low on August 18:

If August 18 was the de facto end of Intermediate wave 1, what would Intermediate wave 2 look like? The most specific historical data points to movement retracement quartiles of 28.26%, 41.09%, and 68.49%. Length forecasts agree the most at 27 hours while the secondaries are a broad tie at 26, 29, 31, and 42, hours. The next dataset has quartile levels of 32.13%, 51.87%, and 55.28%. Strongest model agreement for duration is 112 hours (which was the length of Intermediate 1, an unlikely). Secondaries are scattered at 26, 32, and 62 hours. The final broader dataset has quartile retracements 39.70%, 55.28%, and 71.83%. Model duration agrees the most at 112, with secondary at 37, 56, or 75 hours. Third agreement is heavy in the 22-37 hour range. Lastly, I have redrawn trendlines for the top and bottom of the overall downward trend. At the time of writing, the index has a current top from the 1330-1430 trading hour on August 23 which also coincides with the top trendline. Furthermore, the duration is 25 hours and the top matches the 39.70% quartile retracement mentioned above. A few more hours are required to see if all this analysis is correct and IF Intermediate wave 2 has just ended.
My models are only as good as the information entered into the system. The cause for the misjudgment last night is likely related to in the moment wave assignment. Hindsight and broader review of data makes the future reads stronger. I have zero doubt the market is in the early innings of a second bear market correction. If Intermediate wave 1 indeed lasted 112 hours, the original endpoints from this forecast:

point to the market bottom being later in 2024 and deeper than 2700 instead of September 2024 around 2800.