Tuesday, October 18, 2016

Still No Changes

Below is the SP500 30-minute chart, which is still counting the contracting diagonal, lower, to below 2111 in the next few days.

SP500 Counting Down to a Diagonal Still

On 10/14 & 10/17 is the contracting diagonal (a) wave we referred to in yesterday's post. Measuring the (a) wave, within it you'll find that wave .v is shorter than wave .iii; wave .iii is shorter than wave .i; wave .iv is shorter than wave .ii, and wave .iv overlaps wave .i. Again, the wave follows all of the rules and guidelines for a diagonal.

Netflix earnings provided the 'pop', and the rest of the day was spent grinding (lower, I think). We have labeled the up wave as the (b) wave because, so far, it has gone nowhere, and didn't break the wave (ii), high. As a matter of fact, today looks like the deep retrace of yesterday's (a) wave diagonal, ending in the territory of it's prior wave .ii.

Late in the afternoon, we got confirmation of a lower high from the RSI (shown as the second circle), and no subsequent cross upwards as of yet.

So, tomorrow's gap direction becomes critical. If we gap down, a lower low than minute (i) would be minute (iii) of a potential diagonal. If we gap up significantly enough to cross wave minute (ii), a diagonal would formally invalidate, and we'd have to look for an alternate. Given the waves we have now, an alternate is not clear, yet.


  1. Hi Joe! I'm so thrilled to be able to follow your thoughts almost on a daily basis now...Thanks Joe! Is the top in?... might be. I do see a 5 wave up structure able to be counted for the last 5 of 5 since 666 low. With US in Defcon 3... makes me wonder how the next bottom of market will be reached. Something is telling me that the market probably will be closed and the Big Short will happen while not being able to trade it. For me it's much overdue to get out. All the best and thanks for all you have taught me over the years. I will fear the worst and HOPE for the best but it seems like only those who seek confrontation - is speaking now and trying to shout louder. Let me leave you with this quote to remind us all - what always is and will be necessary for man: "The only thing necessary for the triumph of evil is for good men to do nothing." - Edmund Burke All the best!!!