I'm confused, because in your chart, you have the EW advance to date as wave 1... which would imply wave 2 down to start sometime soon.
In EW methodology, you would expect massive shorting at the end of wave 2, not at the top of wave 1.
It could be a flat wave 2, but nevertheless, you wouldn't be expecting a scorch from wave 1, unless for some reason wave 1 was extending or its a powerful wave 1.
But generally, wave 1s are pushed down by disbelievers and at the end of wave 2 is a heavy short position.
Good luck.
This is the same case as the extremely selling - high short position going into 8/16 climactic reversal.
Because of the extremely negative sentiment, the reaction to the 7/19-8/16 correction was strong, i.e. I noted Wave 1 which is 1 of 5 up.
Market sentiment is too sure of ST/LT top, many are loaded with short positions which make us to think that the market top is formed with the crowd high confidence in LT top - starting of bear market.
This is unprecedent.
When the high shorts are used as "fuel" to break to upside, we know that it is "Powerful Wave 1" which is induced by high shorts.
Well I'm not going to claim I'm an expert in EW, but I think you're still confusing wave 3 with what you're labeling as wave 1. Wave 1 is usually not very powerful, and is typically fully retraced by wave 2.
Wave 1 is initiation of a rally, and wave 2 is the disbelief in the rally. Wave 3 is the strongest of the rallies and usually follows wave 2, which at the end of is usually a lot of shorts.
But beyond your labeling of the wave, I do agree that there's a lot of shorts piled on here. One EW guy that I've found to be quite accurate lately has been Tony Caldero at objective elliott wave.. he's projecting more downside, but I think he says after labor day...
