Saturday, October 29, 2016

Saturday in the Park

To begin this update, four intraday charts must be shown that were provided in live chat. The first chart shows the wave (3) bottom being made with the marginal new low, as predicted from the Before the Bell post yesterday.

Figure 1 : SP500 15-Minute Wave (3) of Leading Contracting Diagonal

The next chart shows the wave (4) top being made at the 61.8% retrace level from the wave (3) low.

Figure 2 : SP500 15-Minute Wave (4) Top at the 61.8% Retrace Level

We even called that wave c an "ending diagonal" in it's entirety at the time, which meant that it's origin - the wave b low - should soon be exceeded lower.

The third chart below then shows the predicted wave (5) bottom, again with a marginal new low.

Figure 3 : SP500 15-Minute Wave (5) Bottom

So, with five-waves in a perfect diagonal formation, which we called the A wave, we were then expecting a B wave, up, and a C wave down. Here is what the chart looked like at the end of the day.

Figure 4: SP500 15-Minute Completed A-B-C

At the end of the day it was now possible to say an A-B-C pattern lower had completed for minute wave (d) of the larger daily triangle. And each wave was counted wave-for-wave in real time. The larger daily triangle is shown below on the SP500 2-day chart.

Figure 5 : Two-Day S&P 500 Count with Barrier Triangle for Minor B

Price has again come down to touch the lower triangle barrier in wave minute (d) of the Minor wave B triangle, probably to thrust out of the triangle within the next few days. Now from Figure 4, you can see that we have labeled an ALT: B still in progress. So, it is possible for price to come down in another C wave to bang on the lower triangle barrier again, but it is not required. So, let's look at the triangle in more detail.

Here is the whole triangle shown using the method of placing 120 - 160 candles on the chart. If one does so, one finds that the two-hour time frame is the correct time frame for that analysis.

Figure 6 : SP500 2-Hourly Chart of Triangle

First you can see how precisely the downward wave - counted out above - strikes the lower triangle barrier without closing below it - and that is an essential component of a barrier triangle.

Second, you can see that all of the waves, and major sub-waves, so far, wrap around the EMA-34 for form and balance.

Third, you can see that the Elliott Wave Oscillator (EWO) along the bottom forms a narrowing and constrictive pattern, a veritable triangle itself, which is indicative of the sideways price triangle.

And fourth, it leads to a prediction which we are going to test. The prediction is that, when it is ready, the minute (e) wave of the triangle will cross up and over the EMA-34, again, for form and balance in a triangle. Let's see if that comes to pass in the upcoming days, just as the prediction for a Leading Diagonal A wave did.

Again, we have never tested this hypothesis before on this time scale, so we remain open-minded and flexible as we endeavor to understand the waves in detail. The invalidation levels for the continued triangle count are 1) above wave (c), and, 2) below wave (b). Please keep in mind that the overall prediction of a barrier triangle is that only a relatively short thrust out of the triangle downward is likely. That is because the market has already expended tremendous energy banging again the lower barrier already and not getting anywhere substantial.

Hope this helps, and that we remain as patient with wave counting as we do with the political process!


  1. Thank you TJ! When you say a relatively short thrust out of the triangle is likely, do you mean that the Wave C final low could be very short, say somewhere in the 2090s, for instance, which is within 1% of the triangle barrier?