ADI rally slowing already?My overall thesis is we are in the very early stages of a multi-year decline ultimately with the S&P 500 below 3500. I have been wrong many times before so I will just take this thing in stages and see if it plays out. After this massive decline, we should be in for a great market rally of many decades. I am expecting the market to end its recent rally this week. The current rarely would be about a week in length depending when it began for individual stocks. The rally has done a few important things with its slow and prolonged upward movement, mainly prevents a wave 3 signal from occurring during the next decline.
My wave 3 indicator tends to signal wave 3s and 3 of 3s. See my scripts for the specifics of the indicator. If the market had a short wave 4 up and then a sharp or prolonged drop during wave 5, a new wave 3 signal would occur which violates the currently placed Minor wave 3 (yellow 3). Allowing separation from the current wave 3 signal enables wave 5 to drop quick or slow.
This chart applies select movement extensions based on wave 1's movement on the left and then another based on wave 3's movement on the right. I keep the values between 0%-100% on the chart for wave 2s and 4s retracements of the preceding wave's movement for reference even though the retracement values would be inverted.
Specifically for ADI, Minor wave 3 was longer than wave 1, which does not place a maximum length on wave 5. Assuming wave 4 ends on Thursday or Friday, Minor wave 5 could be a week or longer. Wave 4 does not need to gain too much more to meet completion criteria, but the sideways movement of the past few days could place the top below 218. During Minor wave 5, at the very least it should drop below wave 3's bottom of 202.59. Using some basic movement extensions, it will likely go lower. The 5 wave lower pattern for this fifth wave is hypothetical, but a bottom could occur between 186-195. Once we bottom, we should see another rally over a few weeks. I will forecast what that could look like as Intermediate wave 1 nears its end.
