Tuesday, August 2, 2016

Possible .. just possible

It is now possible to count five waves up in the S&P500. The chart of  the ES 2-hr is below and shows how the count works in the futures. This was shown during "live chat" today. The last wave in this case is an ending diagonal. Within the diagonal wave 5, wave v is shorter than iii, iii is shorter than i, iv is shorter than ii, and iv overlaps wave i - picture perfect for a diagonal.

Possible to Count "Five Up" in the ES 2-hr Futures

The same count is also possible in S&P500 30-minute cash, with a very slight truncation of the fifth wave (which finished fine in the futures).

Possible Ending Wave in the S&P500 Cash Index

It was also noted today in the daily count that this relationship is exact within points. If 5 up yesterday was C of a diagonal, then C = 0.618 x A, when A = 2111 (Apr top), and B = 1991 (Jun low). That relationship is illustrated below. This is the third most common zigzag relationship, overall. First comes C = A, then comes C = 1.618 x A, then comes C = 0.618 x A. But, when triangles and diagonals are considered, then the most common relationships are the two latter ones.

Daily SP500 Cash with C = 0.618 x A

So, it is 'possible' we have a local top in. An alternate that 'has' to be seriously considered is that today is only part of C down of a 38.2% retracement wave for wave iv of C. In that case then the wave labeled 5 is b, but then the b wave is nearly uncountable, upward.

So, it's 'possible' but the odds are slightly lower for that one, first, because the up wave is getting too far out of channel, second, because we can indeed find a triangle, and, third, because of the divergence with the EWO already seen at the high.

In the event today and tomorrow finish a fourth wave down, then a fifth wave up would likely break the 0.618 relationship of C and A, and the "full-on impulse" count upward would likely take over the count.

But, there is another factor to at least be aware of. I had made part of the case for the Primary Vth wave in the U.S. based on the London FTSE. When, prices were at 6,200 I said they could go higher. This would give U.S. prices the stable environment they needed to make the new all-time high. Some people argued, and said, "no! that's it" - for whatever reason.

Now below you can see London prices have reached fully the 6780 level, as below. I had made my case based on the fact that a "deep retrace" of the Leading Diagonal was possible. What they made their case on, I honestly don't know. Well, in the chart below, here you see the 78.6% retracement of the entire down wave - a full on "deep retrace".

London FTSE Weekly - 78.6% Retracement

And now prices have gotten back to the prior (iv)th wave .. a common target. It is very suspicious indeed that price have turned lower from this level. Very. Yes, prices can stage a dramatic rally, and make a further wave of C, up. So keep your eye on the 6800 level in the FTSE, and if it holds, then a more extended down wave may occur in both markets.


  1. where is your live chat... thanks for the charts

    1. welcome .. send me an email at Elliott_Trader@yahoo.com and I'll provide the details.

  2. Thanks Joe for a very thorough, detailed and intelligent ew analysis and sharing it with us gratis! It will be interesting to watch these next few weeks how this all pans out. Miss your daily comments on TC's blog but I'm grateful to have access to yours!