CoD

This is a Friday morning Chart-of-the-Day (CoD), the SPX500 (CFD) 30-min intraday wave counting screen (IWCS). After a pop up on the dismal Payroll Report, with traders hoping for a rate cut, the up wave could not sustain the fourth wave of an impulse and instead lost the embedded reading of the intraday slow stochastic (black circle).

SPX500 (CFD) - 30 min - IWCS

When that occurred, price returned to the intraday 18-SMA and also overlapped the prior wave downward, with a longer wave in price than the prior down wave. Since then, price has popped again in whippy volatile trade. This seems to suggest that price will either make a triangle or a fifth wave expanding diagonal upward.

Comments for this blog remain on moderation. Have an excellent rest of the day.

TraderJoe

Based on the Wave Sizes Alone (i.e. Degree Labeling)

I wasn't a big fan of the triangle sketched out earlier in the comments for the prior posts. So, after the heat of the battle, I took a step back to weekly chart, and the following count occurs to me that it can not be ruled out.

SPX500 (CFD) - Weekly Close - Looking for Minor C

Based only on the sizes of the A and B waves, that is, based on degree labeling alone - it can not be ruled out that Minor wave C will be a contracting ending diagonal. We all know the (b) wave went essentially nowhere and had different forms in different markets. This might be a reason why.

Price is making higher highs which is also a potential sign of a diagonal or something larger upward. If this is what should wind up occurring, it would also be one of the trickiest waves of a lifetime. I will also offer the caution that this is still hypothetical and very risky.

Have an excellent start to the evening,

TraderJoe

The Ups & Downs = Be Flexible

Here are two scenarios for the current wave movement. The upward chart is first. Triangles are a pretty 'typical' pattern and often happen before the ending sequence of a wave. As such, it has slightly better odds than the downward pattern.

The purpose of the above the triangle is to still better equalize the wave travel downward between wave (e) of the potential triangle and the second wave circle-ii, minute-ii. The Elliott Wave Oscillator (EWO) is still in range for a fourth wave.

The second scenario is high risk & lower odds. It is that a downward diagonal has started without a really large downward reversal candle. With the three-waves down that we analyzed in the prior post, the down movement would likely have to be a diagonal, and it has a pretty strict invalidation limit.

It merely assumes that the triangle has already occurred as there IS a potential wave four and weak wave five signature on the EWO. The triangle is also a bit skewed and that increases the low odds of the pattern. But, it is what it is. Lower odds, but possible. One thing to like about the second pattern is that the equalization between minute-ii, circle-ii & minute-iv, circle-iv is that the equalization has already occurred.

So, just be careful, flexible & patient until something begins to take over the count. 

Have an excellent start to the day.

TraderJoe

The 'Exact' Number - 2

As readers of this blog know, the 18-day simple moving average (SMA) is something of a demarcation, a "line in the sand" between a daily closing positive bias and a daily closing negative bias. On Thursday and Friday the ES futures played around on both sides of that line, with Friday (in the extended hours) closing below it, or in the regular settlement, probably just about on it. But the ES 4-hr chart does have another exact point of division between two counts, as shown in the chart, below.

ES Futures - 4 Hr - Location of Expanding Diagonal Invalidation

That point is 7,563.50 and above it an expanding diagonal lower would be ruled out. Should it not be ruled out, and the expanding diagonal continue lower, then that would put a truncated top on July 15th, with the expanding diagonal lower as the first wave in a lower sequence. 

However, if the 7,563.50 point is taken out, higher, then The Principle of Equivalence, says "consider other options", and one such option is shown below. That being the case, we need to ask, "do we know literally anything about this wave sequence, or is it all guesswork?"

Well, were are as certain as one can be that there was an overlapping expanding diagonal downward that completed on Thursday, as shown in the chart below, numbered ➀ - ➄ from what is shown as wave b to c. And that small degree expanding diagonal lower was already exceeded higher in less time than it took to form - a true diagonal.

That would leave a very large running triangle as the middle structure, and cause the whole count to be a-b-c, down. And such a structure could still be a leg of a triangle that is eventually still pointing upward - as a larger (c) wave down. That is because, if the prior wave, the (b), up, of the triangle was the complex leg, then this leg down should be a simple zigzag - which it clearly can be formulated to be, even if it is ugly.

This is part of the essence of The Principle of Equivalence. A portion of it alludes to being very careful when only 'three-wave' sequences are involved. It helps stems the "fight or flight" instincts we are all prone to and urges some degree of caution, patience and flexibility until the wave count clears.

And, when you have a single point of departure between two counts, that patient wait becomes a bit more tolerable. Yes, the market knows you just want to make a profit. The ambiguity in the counts is one of the market's very survival mechanisms so that it can't be clearly read and it avoids having all traders on the same side of the trades.

IF we get only an a-b-c, down, is that necessarily the end of the down move? No. But it would likely mean that any further down move is happening by a larger diagonal. And, if the market hasn't been brutal enough, already, I don't personally relish even larger sized whippy waves, especially in three-wave sequences.

Well, it's simple. That's a large extent of what we have available now. There is some significant probability Monday will be an up day due to "the first-of-the-month-money", but I have seen it fail on rare occasion. So, unless you have some much better market metrics, you might want to wait just a bit to see what the next few days bring and/or tread ultra-lightly to see what the market might be saying.

Have an excellent rest of the weekend,

TraderJoe

Back-test of Line in the the Sand

In the SPX500 (CFD) Daily the up movement overnight and this morning is back-testing the 18-day SMA or "the line in the sand", as in the chart below.

Locally, the swing line could turn up, but needs a close above the 18-day SMA. The daily slow stochastic is curling up. One might watch the local fractals for clues. There are still both up counts and down counts. 

Have an excellent start to the day,

TraderJoe

Good Brakes

Yesterday, we pointed out three options for local price movement. The NQ futures made a new daily low today. The ES futures did not. I don't know if you had the money to stop the ES futures from declining through the lows today, but somebody did. Twice! The exceptional number of double-bottoms is getting very suspicious. The ES/SPY (CFD) 1-hr chart is below.

SPX500 (CFD) - 1 Hr - Double-Bottom?

With the higher local high around noon there is now the possibility, not the certainty, of sub-waves ① and ② of a third wave, iii, upward, as these waves are currently shorter in price & time than the larger degree waves i and ii, the prior higher degree waves in the same directions.

There is nothing definitive that rules out further down movement at this point, and it is still possible that the (e) wave could be a triangle itself.

Have an excellent start to the evening,

TraderJoe

Trois Choix

IF we were in France, it would mean three "choices" or three "options" for the local count. The ES 4-hr chart and the ES 1-hr chart with further explanation are below. On le menu are blue x, blue i or red (ii) of diagonal.

ES/SPY (CFD) - 4 Hr - Three Choices

Alot currently depends on whether we go through the low again. That can not be emphasized enough. The option of a i ?, up, depends on the entire up wave having been an expanding diagonal, as below. It does have the right measurements and internal structures.

ES/SPY (CFD) - 1 Hr - Whole Up Wave as Expanding Diagonal

The (e) wave of the triangle simply has not invalidated yet. So, all we're getting thus far, is volatility.

Have an excellent start to the evening,

TJ