More Room For Markets To Drop Says S&P 500 Historical DataI have classified the current downturn as a Primary wave 2. This should be an ABC corrective wave. These waves last half the length of time that Primary wave 1 did. All my acquired data dates back to 1932 where I believe our current market Grand Supercycle run began.
Based on primary wave 1 lasting 86 days, wave 2 could last around 43 trading days from May 1, 2019 which is somewhere around the July 4 holiday.
Primary wave 2's retracement of wave 1 is also interesting. The minimum retracement a Primary wave 2 has occurred in nearly 85 years is 32.81% of wave 1. This means the bottom of the current pullback will likely see the index fall 199.34 points at a minimum from the May 1 high of 2954.13. These means the index should fall to at least 2754.79. The average and median retracements are 50.49% and 48.57% respectively. Based on these figures, the pullback could end between 2659.04 and 2647.38. What is the largest retracement for a wave 2? That would be 86.64% which would bring the market to 2427.75. Hopefully, this level remains well out of play for now. Another unique metric is that Primary Wave 1 typically moves 2.06 times more than Primary wave 2. Another potential level of interest would be 2659.20 (which is close to the aforementioned 2659.04).
Intermediate wave A of this Primary wave 2 could last around 16 trading days from May 1. This is based on all 29 Intermediate A waves over the past 85 years for this index. Waves A and C roughly last 38% of the entire Primary wave they are located inside of. Based on the projection the Primary wave will last around 43 trading days, this means waves A and C could last 16 days each and the internal corrective wave B (which will move the index up) would last the remaining 11 days. These are all based on medians and averages, but they provide a timeframe in which to spot reversal activity.
Intermediate wave A's movement averages 74% of the entire Primary wave's movement. I currently project the bottom of the primary wave to occur between 2659.04 and 2754.79. 74% of these total moves would have wave A end around 2806.62, 2735.76, or 2727.13 by May 22, 2019. Based on this data, the index is set to fall through the next two weeks at a minimum. Intermediate wave B tends to retrace wave A's movement by 60%. This means the index could bounce back up to a range of 2863.33 and 2895.13. After this rise, we shall fall to the bottom and end of Primary wave 2. A greater opportunity to sell call options could be for action above 2900 (or ~290 on the SPY ) near the end of Intermediate wave B. We will likely wait a few months before we move about 2900 again and take out the all time highs.
So what does this all mean? Between the close on May 10, 2019 and around July 4, 2019, the index could drop between 4.39% and 7.72%. A caveat to this is the Intermediate wave B which will bring the index up before it settles at its next bottom between 2659 and 2755.
All of this information is based on historical statistics and is not a guarantee to be an accurate barometer of future movement. Please share and feel free to respond with your ideas.
