In green we have the bullish scenario we do not believe in. In brown the scenario that we actually expect. Things are taking their time but we are entering, or are already in the third wave of 3 which is where things get moving fast.

After this there should be another large 4-5 to complete a wave 1 or A of the correction. We will see.

So the gap was there all right but the index moved up nearly 700 points, not down. This is not unusual as when you are wrong with EW you are usually very wrong. So what could be happening. It is possible that yesterdays count is still correct but we have a wave 4 ( Of 3 of 3) first and only then we go down.

An alternative possibility is that all of this is simple an A-B-C correction in which the C wave is taking the form of a diagonal, read wedge. In that scenario we did wave 4 of C today, all or most of it. I must confess that I am biased against this outcome.

Below is the same scenario using the mini futures.

It is sometimes quite hard to come up with a plausible count, certainly in advance of events, but that is the point. Here, once again is my best guess for Monday and a few days thereafter.

We are in the third of the third which is often where gaps occur. Why not this time. If you are still wondering why, how about the argument that markets are grossly over-valued by almost every metric. What will be the trigger? Anything. Another “Stormy”, the third in the last few weeks. The anti gun parades in the US. Or how about Mr. Bolton becoming National Security Advisor. We know that the UN is a hotbed of intrigue, dirty tricks etc. etc. so this former ambassador is hardly the naive and innocent gentleman. In fact he is deeply involved through his “Super Pac”,  the American vehicle to subvert election contribution rules, which used and paid in excess of 1mln. dollars to none other than Cambridge Analytica. His appointment fortunately does not require senate confirmation and he already promises to sweep the WH clean. It takes a thief to catch a thief!  There are a lot of other triggers.

I try to draw these charts proportioning things more or less accurately. This time I cannot exclude the possibility that the index will drop at a much steeper angle than indicated. Also this interpretation could still be dead wrong which, of course, I do not believe.

This is a rough guess what might happen tomorrow March 23. At the top is the third 1-2 which should be part of wave 3. All of this chart is wave 3, after which we still have two 4-5s.

Today the Dow dropped 724 points!