FFTY - this drop looks like the final subwave C of wave 4 down in expanded flat correction
FFTY is the Innovator IBD® 50 ETF that seeks to track the investment results of the IBD® 50 Index. That ETF is Investor’s Business Daily’s signature investing tool—targeting companies that are generating outstanding profit growth, big sales increases, wide profit margins and a high return on equity.
First of all let me confess you that I always loved to count this chart. It just has much cleaner count than Nasdaq. And I like composition of that ETF. IBD does a really nice job in picking up good companies to its holdings. I also love this ETF because it has been following my count for months. You can see the blue target box on the chart below. I drew that target box back in April 2018. And that ETF tagged that box in November, seven months later!
The reason why I want to present you this count now is that it really explains well the structure off the top reached in January 2018. That structure looks like a textbook expanded flat correction in wave 4 down. First leg down started off the top of the wave 3 up completed in January 2018. The following drop had a clear impulsive structure and bottomed on 9 Feb 2018. Off that February 2018 low we saw a very suspicious rally with an ugly structure. That structure can be ideally explained as wave B of 4. In my video course I explain in detail specifics of that structure. The strong rally in wave 3 that started in November 2016 and lasted until January 2018 made bulls so much confident that the first corrective leg down in wave A of 4 did not cool down them enough. They welcomed a sharp drop as a nice buying opportunity. That is why a corrective wave B up managed to make a new higher high over the top of the large impulsive wave 3.
An expanded flat correction is subdivided into three waves: A-B-C. Another distinctive feature of the final wave C in that structure is that it will always pushes prices under the low reached by the first leg of decline in the wave A of 4. And this is exactly what we currently have! November low was under the February low.
Normally wave C stretches to 176.4%, 200% or 223.6% extension of the wave A. November low was exactly 176.4% extension! Now the question is whether that decline has a completed impulsive structure subdivided into five waves. Waves C in corrective structures should always have impulsive structure to scare bulls and shake out their longs. From that perspective this decline does not look having completed. It rather looks like it is currently in a corrective wave iv up and once it gets completed it will drop to a new lower low targeting either 26.72 (200% extension) or 25.30 ( 223.6% extension ).
FFTY - Daily chart updated on 12 December 2018
