Dow Follow-Up (2)

In a further follow-up to the May 18th post (see post at this LINK), now some two months later, the market continues to take its time to complete this pattern. Now at 139 two-weekly bars, the Elliott Wave Oscillator's (EWO or AO) fourth wave signature, dipping below the the zero line - which is not always required, but did happen this time - is apparent. So too, can be seen the initialization of the fifth wave up bars in the oscillator. The EMA-34 can be seen to be winding through each numbered wave for good form and balance.

DOW (YM) Futures - 2 Weekly - Likely Diagonal

The pattern could take a while yet, especially if the next Minor B wave becomes a triangle. The pattern is trying to put you to sleep and make it difficult to trade at the same time. And, it may be waiting for some news to make you think there is a reason for the decline - whenever it comes. And, yes, the Minor A wave can go a bit higher if it wants.

Is it possible for a pattern like this to fail? It definitely is. But, as of yet, there is not real good evidence of such. And based on the lengths of the prior waves, we are trying diligently not to rush the count and would like to see if the full A,B,C zigzag develops.

Have an excellent rest of the weekend.

TraderJoe

It's Summer 🔥- 5

Between yesterday and today, Jul 9th and 10th, we could count five-waves-up in an impulse to the local higher high today as shown as the right-most c wave on the SPY one-hour chart, below.

Green volume appears to be declining as bulls lose some interest at the highs. Red volume is picking up but nothing to write home about yet. The volume profile on the left of the chart shows the point of control (orange line) for this particular up wave being located within the gap in the triangle. This is a level to keep an eye on.

From the left the first a wave up is an impulse, then a b wave triangle followed by a thrust from the triangle for the first c wave. The next a wave up is an expanding diagonal, followed by a brief and sharp b wave down. The diagonal is then followed by the impulse up of the last two days for the c wave and good alternation in a corrective wave.

I haven't done much intraday posting as few seem interested. Have an excellent start to the evening,

TraderJoe

It's Summer 🔥- 4

So far, the overnight action has an a-b-c, up, as in the ES/SPY (CFD) 30-min chart below. The intraday slow stochastic is meandering around the 50% level.

ES/SPY (CFD) - 30 min - a,b,c up

The a wave up is an expanding leading diagonal, and the c wave is an impulse for good alternation in a corrective wave that has a marginal higher high. Three waves unfortunately does not provide that much information yet except that it looks corrective at this point.

Please be sure to translate this to the instruments you are following. Have an excellent rest of the day and start to the week.

TraderJoe

It's Summer 🔥- 3

Nothing wrong with the current count. Today in the ES/SPY was a halting, grinding, slow day upward to the new high. There could easily be more, within limits. Here is the current count, simply continued from the previous chart on the SPY 15-minute timeframe. We'll be switching to the SPY 30-minute shortly.

SPY Cash - 15 min - Count

There is no clear indication that wave (iii), up, is over, yet. It does not have to be. For a contracting diagonal it must remain shorter than wave (i). So far, it has been. If a fourth wave (iv) occurs it should remain shorter than wave (ii), to continue a contracting diagonal.

Retraces can definitely occur, but not below the low of wave (ii) without repercussions for the count as is shown on the chart.

Have an excellent start of the evening, and an excellent rest of the possible vacation week if you are taking it off.

TraderJoe

It's Summer 🔥- 2

Today was the end of the month and the end of the quarter. How long will they drag it out? We had a near-perfect Elliott Wave analysis today, including the suggestion of the 'front-running-of the-beginning-of-the-month-money'. No one apparently cared much. No one commented. No one charted. So, here's the chart we are left with at the end of the day.

The Principle of Equivalence tells us to be patient. To be cautious. We are so being, we are holding no overnight positions at this time.  Although a further wave 5 can not travel below the low of wave 4, there might be some other clues like the EWO turning below the zero line again. There are definitely ways for prices to extend higher. So, we are again flexible, patient and cautious.

It will be interesting to see how much money is committed to the market tomorrow. And it will be interesting to see if any remaining downside gaps get filled.

Have an excellent rest of the evening, and possible start to your holiday week if you are going on vacation or taking some time off.

TraderJoe

It's Summer 🔥

Readership is down as is usual at this time of the year. Everyone's hitting the beach or their camp to try to stay cool in the heat dome. The tried and true 'Wall Street' expressions of Sell May & Go Away did not work again as they have failed so often. So, we'll just chill and show you the same chart we have been showing for months and months, remembering that since there are so many years now involved, including years in which inflation was rampant, we have switched to log format as Elliott advises.

We have been counting this wave using 'degree labeling' the way it is defined: longer waves are higher degrees. Thus, Primary ④ down is longer in time than Intermediate wave (2), down and longer in 'log price' or percent change. And Minor A wave up of Intermediate (3) is shorter in price & time than all of Intermediate (1), up, the prior highest degree wave in the same direction.

So, if we have entered Intermediate (5) of Primary ⑤, as the new roll-over futures high suggests, then Minor A should remain shorter than all of the previous Intermediate (3), the prior higher degree wave in the same direction. We are looking to confirm its closure, now, along the upper diagonal trend line. And Minor B should remain shorter in log price than Intermediate (4) down - the prior higher degree wave in the same direction.

If and when Minor B gets under way, we just provide the reminder that it could be "any three". It could go over the high again in an expanded flat. Or, perhaps more likely, it could be any of several types of triangles. Those triangles could potentially take months if they occur.

So, drop another cube in the lemonade. It may have to last a while. Have an excellent rest of the weekend.

TraderJoe

Less Absurd

Today in the comments for the prior posts I posted links to two charts I labeled as "Patently absurd" but still following the Elliott Wave rules. By the end of the day those counts had busted by narrow margins as I expected they might. Part of the reason for posting the links was to show what wild things are possible under the wave rules unless a good measure of adherence to the guidelines of wave formation is also thrown in the mix. So, below on the ES daily chart is the best interpretation of the current state of the waves given the extent of today's up movement. The key is not to let the truncation in the lower left be ignored.

ES Futures - Daily - To Minor A

I tried counting without the truncation, meh, I wasn't happy with the results and measurements have since likely busted. I did suggest in prior posts I could see a way we were still in the Minor A wave, but it needed new highs. Today provided them. And there is no sign the up wave is over. A clear reversal candle set, and a break of the new trend line is needed along with a back-test that fails. So far, we haven't had that. The truncation at the low, and the "running fourth wave" both spell strong conditions. 

And, the ES 2-hr chart which is its analog is shown below. The two waves are so self-similar (i.e. fractal) on different time scales it gives one goose bumps to consider it.

Yes, this sure is a weird wave minuette (v) of minute ⓥ. It is hugging the rail along the lower parallel line and keeps threatening - like a summer rainstorm that doesn't happen. But at some point, in the not-too-distant future, it should have a clear turn. The lack of fourth waves that don't make their downside targets is a learning experience to have up here at these extraordinarily high prices and against the daily Bollinger Bands.

Have an excellent rest of the evening,

TraderJoe