Friday, April 22, 2016

Close But No Cigar Yet

Although the Dow Jones Industrial Average came within 200 points of it's all time high, price did not exceed the top. As of today, a very good case can be made using the Elliott Wave Oscillator, that a full five-waves higher have been completed, however. With that in mind, and reviewing the daily ES chart below ..

There is ‘some’ evidence to support the case that (assuming the recent top holds) the upward wave is a ‘five count’ to Intermediate (1) of Primary V. The chart of the daily ES is below. It looks almost “too coincidental” that the 38.2% retrace and the 100-day SMA are at the exact same location. So, if price were to retrace and hold the 100-day, then it would support the view of a typical ‘extended first wave’ – which was Intermediate (1). When the first wave in a series is the extended wave, then wave (2) tends to retrace to between 23.6% and 38.2%. It is interesting that 23.6% is the wave (e) of the 4th minor wave triangle.

Further supporting this view, a Primary Vth wave ‘must’ be composed of five ‘Intermediate’ sized waves. This view presents a very ‘crisp’ and ‘clean’ approach to degree labeling which is another supporting factor for the count. If support holds at the 100-day, we will up the probability of this count from 50:50 with a full-on downward count.

Note: since an Intermediate (1) wave has ‘not’ made a new all-time high, and a 38.2% retrace could also just be a “(B)” wave, we must also allow the possibility that the ‘five waves up’ are just to Intermediate (A) of what would be a very ugly diagonal for Primary V.

Cheers and enjoy the chart!