Elliott Wave: October 2019 - Which way Witches?

October, the month of Halloween, witches and most importantly...baseball playoffs. Ok, market uncertainty should get a mention, too.

Elliott wave theory has many examples that reflect market uncertainty, including flat(s) and wedge patterns. One basic rule about them is this: The market generally exits in the direction from which it entered. In today's market that means up based on the move since 12/2018 and more recently in Summer 2019. I've added a triangle wedge pattern along with standard Fibonacci levels, etc. Note how MACD (and thus PPO) has narrowing peaks/valleys balancing near the zero line.

The remainder of October should eventually lead to an exit from the wedge. I expect that to be upward in support of higher degree wave 5 as described in my August and September charts. Meanwhile, the lower boundary of the wedge is higher and starting to hold above the .618 level from the peak of the widest part (May-July 2019 rise).

The calendar is now shifting to more favorable market conditions with every day that passes in October. Unlike 2018 when Fed Chairman Powell had visions of "autopilot" for quantitative tightening the conditions in 2019 are different. Today he faces Open Market Repo activity (quantitative easing) and a trend of lower Fed Fund rates. October also starts a new Fiscal Year for the U.S. government with itchy fingers ready to spend U.S. Treasury balances with additional borrowing supporting even more spending. Finally, Mutual Fund gain/loss activity to determine fiscal year distributions will wind down. In short, the wind is not in the market's face as in 2018, but instead at its back.

Enjoy the playoffs, and payoffs.