Microsoft, Meta, Alphabet and Amazon - the time is now!

Elliott Wave Principle is a form of technical analysis that investors use to forecast trends in the financial markets by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.

Typically, markets move in a five-wave impulse sequence followed by a three-wave corrective sequence.

1. Wave 1 (Blue Circle 1): This appears to be the initial impulse wave up. After a significant decline, this upward move signifies the start of a potential new bullish trend.

2. Wave 2 (Blue Circle 2): Following the completion of Wave 1, we see a correction, or Wave 2. This wave is typically a pullback of the initial wave. It has retraced to a level above the start of Wave 1, which fits within the principle's guidelines.

3. Wave 3 (Blue Circle 3): Post the Wave 2 correction, the price moves upwards again in what appears to be the strongest and often the most extended wave in the sequence. Wave 3 is typically longer than Wave 1 and never the shortest among Waves 1, 3, and 5.

Wave 4 (ABCDE triangle) - Textbook vs. actual price action:

A: The first move down from the Wave 3 peak.

B: A move back up, but not exceeding the Wave 3 high.

C: Another move down, typically going beyond the end of Wave A, but only sometimes.

D: A move upwards again but not beyond Wave B's end.

E: The final move down completes the triangle, often terminating above Wave C's end.

From the chart, we can infer the possible progression from the actual price action:

A: After the Wave 3 peak, the first significant downward movement.

B: The rebound upwards but did not make a new high compared to Wave 3.

C: The subsequent decline, which seems deeper than Wave A.

D: A subsequent upward move, which is shorter and does not exceed the height of Wave B.

E: This might be in progress or just finished. It's another decline, but it's shallower than Wave C.

After completing the Wave 4 triangle (ABCDE), we would expect a Wave 5, typically an impulse wave, in the direction of the primary trend, which would be upwards since the larger structure is bullish.

Assuming wave e of wave 4 is complete, and wave 5 would be following now, stretching as long as wave 1, the following applies.

And now Wave 5 (up to ATHs) or Wave C (right into the basement)

To determine the potential target for Wave 5 based on the assumption that it will be equal in length to Wave 1, we'll need to:

1. Calculate the length of Wave 1.

2. Add that length to the end of Wave 4 (end of Wave E).

Here's how to calculate it:

1. Determine the start and end of Wave 1:Starting point of Wave 1 (let's call this point S1). Ending point of Wave 1 (let's call this point E1).

2. Calculate the length of Wave 1: Length of Wave 1 = E1 - S1

3. Determine the end of Wave 4 (end of Wave E): Let's call this point E4.

4. Calculate the potential end of Wave 5: Potential end of Wave 5 = E4 + Length of Wave 1

Wave 1 moved from 10.671 to 12880 and traveled roughly 2210 points. This would mean that if wave 5 started yesterday, it might travel until around 16.600, making new ATHs.

If wave e of 4 is incomplete and we would get another leg down, the final impulse wave 5 may terminate around the old ATHs (double top).

It will all depend on the earnings guidance of the mag 7 companies. They have been raised considerably recently.

If true, we may see a raging bull. If this is not true, the lazy bear will wake up, and we may see a forceful wave c coming down upon the stock market and leading us to the old lows (autumn 2022).