Sunday, September 11, 2016

Never on Sunday

We wanted to provide you with one special update of the reasons why we think it is very difficult to tell if we are still in the A wave of the zigzag down to Intermediate (2), or if the A wave has already completed, and we are now in the C wave of Intermediate (2).

Since 23 Aug, the ES E-mini futures have made higher highs and lower lows at locations where cash has not. This is one of the reasons why we cited in earlier posts that a "truncation top" may have occurred. It did.

Below is a 4-hr chart of the ES E-mini S&P futures, because of the choppiness, and using this chart, we have looked for every possible leading diagonal or triangle that now makes sense, and none of them do. We can only find a valid ending diagonal triangle in one location. See below.

That being the case, we label the chart in this manner.

4-Hr ES E-mini S&P Futures
We can only say that because of the strong down turn on Friday that the best counts are 1,2,3 and or a, b, c; and that is precisely because, having studied the lengths of all the waves, there now has to be a FLAT wave in the middle of the pattern, followed by an ending diagonal (c) wave of either b or 2.

This again makes prediction difficult, so looking to Fibonacci levels, and / or prior support may help give some clues later on. We just want to be very "up front" - when we don't know, we simply don't know, and it is another reason why risk in the market has just increased dramatically.

The down wave is strongly out of a base channel from 1 to 2,  or a to b, and the EWO is at a low with no divergence, so an impulse for a larger A wave can form if it likes to eventually make a deeper correction or the 'c' wave can continue on to end the correction lower. This is a clear example of why the three-day upwardly contracting will be difficult to predict in its entirety.

The only suggestion I have at this point is to watch the discrepancies between the futures and cash, and make sure that the counts can work on both. The counts on the above chart do work on both!

11 comments:

  1. Tj,
    When you say "we" in your posts, how many others help you with your analysis? Anyone we would know?

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    Replies
    1. Sometimes, 'we' discuss things in the live chat room.

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  2. Hi Joe,

    Thank you very much to share with us. I have a question, do you think today's low 2119 is the bottom?

    Thanks in advance.

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    Replies
    1. Cash didn't even hit a 23.6% Fib, let alone 38.2%.

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    2. It nearly hit 38.2% retrace of 1991-2188. This could be 'third of third' like I mentioned earlier as I would expect shallow retrace.

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  3. Hi Joe,

    I noticed that ES hit 2100 overnight. So that could be the bottom?

    ReplyDelete
    Replies
    1. Cash didn't even hit a 23.6% Fib, let alone 38.2%.

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    2. With a strong close, the 1-2-I-ii gains a lot of traction.

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  4. joe... feels like the downtrend is done? whats your call?

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    Replies
    1. The market stopped at the 61.8% upward retrace of the down move. There are many ways a C wave could end ... as it has .. or as a longer, lower diagonal if it needs more time.

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  5. Being possibly in wave 2 of diagonal it would seem that it should take a while to develop considering the time sequence of 2 being longer than 3 etc. otherwise things could end quickly.

    ReplyDelete