Big Correction
The STI did take a dip and what a big one it was today. Due to the surge in community COVID-19 cases, stricter people contact restrictions will be in place on Sunday. Market sentiment fell sharply. What was labelled as Subwave iv (brown) last week dropped to an intraday low of 3023.95 which almost reached the top of Subwave i (brown) at 3017.15. An Elliott Wave Principle (EWP) rule is that a fourth wave must not drop into the territory of a first wave. This rule was not broken today, so last week’s wave count remains valid. However it is too close for comfort.
I have therefor revised the wave count, which conforms to EWP rules. Wave 4 (red) must not drop below the top of Wave 1 (red), (as indicated by the blue horizontal line), or it will be back to the drawing board. This situation shows the difficulty in wave counting on a “live” basis as wave patterns can morph from one day to the next. We have to be alert to changing scenarios and adjust wave counts to ensure that no EWP rule is broken.
Although I have put in the Wave 4 label, it is possible that the wave has not ended. Let us hope that market sentiment will recover next week, and the drop could offer buying opportunities.