Friday, April 16, 2021

It's Time to talk about 'Time'.

The first observation I have alluded to before. The two up waves since the 23 Mar 2020 low are now approximately equal in 'time' at roughly 58-59 bars each. See the ES 2-daily chart below. This, of course, is a very reasonable 1:1 Fibonacci relationship.

ES Futures - 2 Day - Time Equality

If the waves are labeled as Intermediate (W), (X) and (Y), then, in fact, in the last two days Intermediate (Y) just became 'longer in time' than Intermediate (W), and that even accounts for the fact that the (X) wave low may have truncated. So, using the principles of degree labeling, that means that the two waves should at least be of the same degree, or else the second wave is of one higher degree. In this chart, I am not interested in price, or a top, just the rough equality of the waves in time.

There is also something else one should note from the above chart: there is virtually no alternation in the wave segments. Each segment (Y) and (W) start off with something that looks impulsive. Then there is a big hump in the middle which may be a running wave, then there is another segment that looks impulsive. Let me diagram that for you.

ES Futures - 2 Day - Lack of Alternation

This lack of alternation suggests there is something very, very incorrect with those who are counting impulsively. The wave simply does not have the right look due to this lack of alternation. Right, but I thought this was about time? Well, it's about time! So, on to the next chart. This is the weekly chart of the ES futures.

ES Futures - 1 Week - Time Comparison of 'B' Waves

Here on the weekly chart, you can see on the left that the Intermediate (B) wave, up, of Primary ((A)) took about 60 bars. What is the significance of that? Well, we are now at 16 April 2021, and in about one month - or roughly 20 trading days - this upward wave would also exceed the length in time of the prior Intermediate (B) wave up, of the Primary ((A)) wave down. IF this up wave is a degree higher - as the Primary ((B)) wave I think it is - then, it stands to reason that it might not only be longer in price, which it is, but also longer in time to express that degree difference.

So, even if the Intermediate (Y) wave ended this coming week, it is still possible that (W)-(X)-(Y), the double zigzag, will extend in time to become the triple zigzag (W)-(X)-(Y)-(X)-(Z). It does not have to happen that way. But it could. The other way for it to happen, of course, is for the Intermediate (Y) wave to last another 20+ days. 

But, being a Primary ((B)) wave, then it can also be another zigzag longer in time that the Intermediate (B) wave, as well. We'll have to wait and see (no pun intended), and so I apologize for taking up so much of your time. Thanks for reading.

Have an excellent start to the weekend.

TraderJoe

Thursday, April 15, 2021

Revision to Daily Count

From a degree labeling perspective, the up count to an Expanded Flat Minor B wave lost some credibility today. The upward wave may have gotten too long. As a result, the best idea I have is to keep the ES count compatible with the Dow count, with both indexes in the Intermediate (Y) wave, as below.

ES Futures - 2 Day - Still Intermediate (Y)

At this point, there is insufficient impulsive action lower to assume a second Intermediate (X) wave has started downward yet. From, the first Intermediate (X) wave the count upward is Minor A - which might either be an impulse or a diagonal - barrier triangle Minor B, and now a Minor C wave of Intermediate (Y).

Note that - at this time - Intermediate (Y) is just about as long in time as Intermediate (W). That likely indicates the waves are of the same degree. The slight alternate is that Minor B is back one trough at the beginning of March, as a "running" Minor B wave, and we are in the third wave of C of (Y). However, this wave is beginning to feel a lot like the thrust from a triangle. It has also a slight "throw-over" of the former wedge up trend line.

Have a good start to the evening.

TraderJoe

Wednesday, April 14, 2021

Higher HIgh on Further Divergence

Yesterday, at 2 PM, as per the comments, my market view changed from neutral to negative - at least temporarily. This is based on a completed Elliott Wave Count, and a break of certain trend lines. Today, after making only a marginal new high, we closed below that level.

ES Futures - 4 Hr - Completed Minor B-3?
 

Better confirmation would occur if prices trade below the EMA-34, if the Elliott Wave Oscillator trades below the zero line, and if prices trade below minuet wave (iv) of minute ((c)).

Have a good start to the evening.

TraderJoe


Tuesday, April 13, 2021

Outside Range Day Up

In a twist of events, today was an outside range day, up, near the high. This is unusual because most of the outside range days have been fake-out outside range days down.


In a minute ((c)) = ((a)) count for a Minor B-3 wave, it is possible to count a top. So at 2 PM today, my market view shifted from neutral to negative - at least for the short term. The current up wave, minute ((c)), measures between 1.0 and 1.27 x ((a)). And it is now possible - if we are forming an Intermediate (X) wave - that this Minor B-3 wave would be the B wave of an (X) wave triangle. That is because, as the chart above clearly shows, the B-3 wave is now beyond the 1.618 external retrace on wave A-3.

Yes, the wave could still make a Flat, but then it would likely be a "running" or "failure" flat. Further, remember if the low of an outside range day up is taken out in the next two trading sessions, it would constitute a trap for the bulls.

But, right now, the market bias is still up - over the 18-day SMA - and the daily slow stochastic is still fully embedded. So, while it is possible to count a top, it is also possible as was discussed in the comments, that there are a few more waves higher.

Have an excellent start to the evening.

TraderJoe

Monday, April 12, 2021

Nothing New Yet in ES

Same count in the ES 4-hr as in the SPY 2 Hr. Nothing new here. There are still two divergence levels at the marginal new highs.

ES Futures - 4 Hr - Minor B-3?

 

Price looks like it is getting squeezed into a pretty tight wedge at the moment. Earning season is getting underway. So marijuana stocks are under-performing, or well, are just laid-back. Lol. Bank earnings get underway Wednesday morning. I am less concerned about earnings as I am about guidance given or not.

Have a good start to the evening.

TraderJoe

Saturday, April 10, 2021

Elliott Not Being Followed?

Some people say that Central Banks are running rough-shod over the Elliott Wave theory - destroying patterns and making wave counts obsolete. What part of Elliott Wave theory is not being followed here? Below is the SPY 2-Hr chart.

SPY - 2 Hr - Channel

Starting on the lower left, there are two approximately equal lows. Moving up the chart, there were some pull-backs, but - after what we think is a truncation low - then there nothing on the order of 50-62%. We thought we had detected a diagonal as part of that wave. But, we noted that the beginning of the diagonal would have to be exceeded lower in less time than it took the diagonal to form in order to be an ending diagonal. It was not. Hence, the risk is that the wave is a Leading Diagonal, and not an ending one. It looks like it was. That is almost always the risk with diagonals.

Leading Diagonals are usually "A" waves. If the usual and typical is the case here, then the up wave can be a minute ((a)) wave, and the down wave is a minute ((b)) wave. As the Fibonacci ruler shows, the minute ((b)) wave retraces exactly between 50 - 62%, as is also typical of a larger retracing wave.

Next, following the minute ((b)) wave, we likely have an impulsive minute ((c)) wave, higher. There are a pretty clear five movements, with a large gap likely in wave iii of (iii), and wave (iii) occurs on a high of the Elliott Wave Oscillator (EWO). The next high occurs on a divergence with the EWO.

Cash prices - right now - are still in a channel, as is typical of a zigzag wave, and price has met a typical zigzag target of ((c)) = ((a)), shown by the second Fibonacci ruler. Volume, as we have noted several times this week, is, well, weak. Further, the pattern of alternation right now is a diagonal for ((a)), and an impulse for ((c)). And that is good form.

So, we must ask, "What part of Elliott Wave theory is not being followed here?". Yes, must concede that if price keeps powering higher so that the up wave reaches 1.618, then an impulse might form. BUT, we must do this on nearly every single zigzag made - every time. It is part of the uncertainty in Elliott Wave theory that allows a market to be a market, and not a preordained pattern. Still, at this point in time, we have what we have.

In particular, we showed weeks ago, the likely Fibonacci confluence area on this chart - shown as it was published back on 28 March.

ES Futures - 1 Week - Prior Price Projections

Futures on Friday got up into the 4,120 zone - or well into the "Zone of Confluence" shown on the chart, this after finding support on the 1.382 Fibonacci level. So again, from a price projection point of view, "What part of Elliott Wave theory is not being followed here?".

Can price go higher? Yes, it is possible. Some zigzags reach 1.27 x ((a)). That would occur at 4,160, and should that level be exceeded higher, then it would suggest a more impulsive wave is at play. That's the interesting thing about Elliott Wave theory. It provides actionable parameters like no other. Further, from a time stand-point, I would even suggest that if a significant retrace is not in play by Wednesday morning, the idea of a zigzag begins to lose more credibility.

People often wonder, what makes me more confident of being in a Primary ((B)) wave, higher, rather than an elusive 5th wave, up, that just won't seem to impulse properly? To answer that question, I will leave you with this last chart of the monthly Dow/GOLD ratio.


As you can see, this chart topped in October of 2018, the wave that in mid-2020 I identified as the top of SuperCycle (III). The next down wave - which I also identified as the Primary ((A)) wave down -  made a low sufficient to undercut the prior 2016 low. The Elliott Wave Oscillator (EWO) measures "too deep" to likely be another fourth wave, and we have since been headed upward in this ratio. I suspect there is more to go, and the EWO has not crossed the zero line yet. It could.

But, a new high in this ratio has not been made yet, although we know it has been in price alone. And, as with any "B" wave, going over the top is a possibility, but not a certainty. So, all-in-all, in terms of "real money", the Dow just does not show impulsive behavior yet. And there are some real social anomalies showing up as well. We know about the virus, and the lack of action by the former administration, blunting overall growth and actually showing a large contraction in GDP.

This has forced the free-money printing which hasn't even resulted in a new high for this measure. But - even with the free money - it has resulted in an insurrection at the seat of government, a period of sustained social protest over racial equality and immigration policy, and the odd phenomenon of offering jobs to workers who will not take them. See this recent article from 30 Mar 2021, an excerpt is below (LINK).

Today, 500,000 manufacturing jobs across the U.S. remain unfilled, open to anyone with the right skills. And wherever possible, manufacturers are also helping upskill workers or provide on-the-job training. 

How the FED and Central Banks will rectify such a situation by printing money and allowing large corporations to incessantly buy-back their own stocks and pay no income taxes in some cases causes one to scratch their head. But, I think it is very reflective of a Primary ((B)) wave, up. It is literally built on the back of printed money and financial engineering - like no other - and it is having a difficult time making economic or social impact,

Have an excellent rest of the weekend.

P.S. The chart below was added on Sunday. It is of my proprietary Bullish Sentiment Index.

Bullish % - Weekly - Nearing Highs
 

I have been keeping this chart up meticulously since 2005 when the data I was looking for first became easily available. The weekly chart above starts with panic lows near the 23 Mar 2020 low, and it tracks the increase in sentiment each week since. There are a couple of weeks missing because with them the chart is too crowded to see the detail, but they in no way detracted from the trend. 

The chart shows that all classes of investors, from professionals to mom-and-pop, are nearing some of the highest levels of bullishness seen. These levels begin to rival the levels at the 2007 top, the 2015 top, and the 2018 top. I am looking for a pull-back around here, at least, and perhaps not yet a major top. The sentiment data would seem to be ripe for that.

An interesting thing happened with CBOE put-call data on Friday. As the market rose, puts became a little more popular. That was interesting, too!

TraderJoe


Thursday, April 8, 2021

NQ Too!

As the chart below shows, today the NQ daily futures also made a minimum of a 90% up wave. See the Fibonacci measurement. As you probably know by now, that 90% level is the 'minimum' required if the up wave is to be the B-3 wave of a Flat, as well as the ES.

NQ Futures - Daily - Up Wave at >90%

 

Meanwhile, the ES futures remain in their 4-hr channel and are approaching equality as the chart below shows. 

ES Futures - 4 Hr - In channel

The up wave is still diverging with even higher price highs on lower highs in the Elliott Wave Oscillator. I have gone back-and-forth a bit on the count of this up wave, and noted, "B-3 waves are sometimes very difficult to pin down". It 'still' could be ((w))-((x))-((y)), but this is OK for now.

Have a good start to the evening.

TraderJoe