Three Waves Down

From the weekend video, we said sudden set-backs could be expected at any time. Today resulted in only three waves down.

SPY - 15 Min - Three Waves Down

Yesterday, we counted out a potential diagonal lower in real time. Today, that diagonal was confirmed as a leading diagonal. Absent more information we have three waves down from the high, down to a c = 1.618 x a, and then an upward overlap.

As a result more information is still needed. If it's a complete correction it seems very short in time. Three waves could also go on to form a triangle or a diagonal. As a result more waves are needed for the market to show us what it might have in mind.

Have a good evening.

TraderJoe

Mixed Market

The NASDAQ 100 (NQ) futures made a marginal new higher high today. For this reason we need to show the clear invalidation level of the potential 5:3:5:3:5 Diagonal in the NQ futures. The invalidation would be because the fifth wave is not allowed to be longer than the third wave in price.

NASDAQ 100 - NQ Futures - Invalidation Level

So, even with the divergence on the Elliott Wave Oscillator on a four-hour chart, beyond this level (about 8,045 - given the accuracy level of this particular tool) a 5-3-5-3-5 diagonal would invalidate, and a different count must be in play for this index. Because each of the waves is shorter in time and in price, it could be that an impulse would explode upward in a third wave, but that seems to run directly into the upper daily Bollinger Bands. Not impossible, but the presence of the upper band raises a caution.

Kindly remember, different indexes can do different things at times. Just look at the Russell for an example. It's still time to remain patient, calm and flexible until there is more information.

Have a good start to your evening and your week.

TraderJoe

New Weekend Video Update

Here is an automated Elliott Wave Video Report prepared for any idle hours you have over the weekend. To be respectful of your time and mine, the video is kept to about 7 minutes.

The video may best be viewed in full-screen mode.

TraderJoe

Powell Re-spaketh

On the second day of Fed Chair Powell's testimony, this time before the Senate Banking Committee, there was no change in the overall count. 

SP500 Cash Index - 2 Hr - In C Wave Up

Today, we spent most of the time trying to count this next impulse up, and, in particular, counting the long "triangle-shaped" fourth wave as below.

SP500 Cash Index - 15-min - Finishing Fourth Wave

It was surmised that because the ((A)) wave of the fourth wave was so deep, and rather quick that a triangle might form. It was also noted where the 0 - ii trend line (from 2 / b) is on this chart, and that the trend line broke. This means we are not likely in a continuing third wave, and are just waiting for the fourth wave to wrap up. The ((C)) wave of a potential triangle made another 78.6% retrace on the ((B)) wave - which was shown live during the day, and then a potential ((D)) wave took off upward back towards the highs.

This wave absolutely does not have to form a triangle. If the market is unusually strong, then the fourth wave could have ended as a truncated flat at the ((C)) wave low. Still, the wave is taking so much time, that the ((E)) wave of a triangle should be allowed to form before a fifth wave higher. In other words the triangle has a 'high likelihood' of forming properly. Now, it's just a question of if it does. 

The pundits are already out on T.V. claiming Dow 33,000. That gets my sentiment antenna up, making me say I am "neutral only - and counting towards a top". I will have more to say about that on the weekend.

For now, have a good start to your evening.

TraderJoe

Powell Spaketh

Stocks rose on dovish comments from FED chair Powell testimony in front of the House Financial Services Committee. There is now a new 0 - 2 trend line until there isn't.

S&P500 Cash Index - 2 Hr - New 0 to 2 Trend Line

This A, B count in SP500 also recognizes that there was downward overlap in the SPY at B, as well. The current 1 / a, 2 / b is in recognition that the C wave up 'could' be starting a diagonal, but there are insufficient waves to make that claim yet.

Have a good start to your evening.

TraderJoe

Corrective Wave Down

So far, a corrective wave down has played out as anticipated and held above the ES 2,952 level - which would separate a "second" wave, lower, from a larger "B" wave lower. As of the cash close today, the downward wave is best counted as a double zigzag because of the unmistakable contracting diagonal we counted out live yesterday. 

SP500 Cash Index - 15 Minutes - Double ZZ

If the diagonal wave to "a" is not counted as part of a zigzag, it results either in degree violations or lack of alternation (take your pick - I want neither). But, also note that since (y) is slightly longer in both time and price than (w), then the wave could be the start of an expanding diagonal lower. And that is shown as the alternate count (i), (ii), (iii).. in red, so far.

For the diagonal to occur, however, wave (iv) must become longer in price than wave (ii), but still stay below the high of wave (ii). And those are some pretty finely structured criteria. But, the reason for mentioning it is that it could be a larger "a" wave down in a larger "B" wave lower.

Of course trading above (ii) would invalidate that alternate.

That's all for today, except we are happy to say we were ready for the price spike at the end of the day as we had earlier counted out this five-minute contracting diagonal on the Dow.

CHART Link

It was just a question of whether prices went under the low of the morning or over the high of the diagonal, first. They exceeded the high first - making the structure a contracting leading diagonal shown to you in near-real-time.

Have a great start to the evening.

TraderJoe

Dow Hourly

Without the overlap noted in the futures, the DOW cash index may best be counted as "five waves up" to the minute ((a)) wave, of the Y wave of Intermediate (B), as follows.

DJIA Cash Index - Hourly - Minute ((a)), Up?

Reviewing the Elliott Wave Oscillator, this is the case where the first wave is the "extended wave in the sequence", and makes the highest high for the EWO. This wave is designated as x (i). Then, each subsequent shorter wave makes a lower high on the EWO. 

I watched that Dow triangle form on a different time scale (much as  the S&P500's triangle) and it fits in this location just fine as a fourth wave triangle. In this case, the triangle's a wave is likely a flat. One leg of a triangle is allowed to be some corrective structure other than a zigzag, and this is thought to be the case for length purposes in minuet wave (iii).

If the ES futures break below 2,952 as noted previously, then this is probably the best way to count the S&P500 cash index, as well. As noted previously, there is a discrepancy in contract months on the ES futures as to whether there is overlap or not. There is not such overlap in the Dow (YM) futures.

Have a good start to your evening, and to your week.

TraderJoe