Tuesday, November 15, 2016

I Here You Knockin'

Well. Presumably Elliott Wave International has the resources to publish interim bulletins on any day that they wish. In Saturday's post, we took exception to Prechter's call of possible "top tick!" in the Dow. As you know, by now, Monday made a higher all time high, and today made a higher closing high. So, why not publish the "top tick" call Monday or today?!

Here is a 15-minute chart of the Dow Jones Industrial Average. There is a bit of an ominous structure at the end of the wave up from the election low.

DJIA Cash - 15 Minute - Potential Ending Contracting Diagonal

So, the Dow has indeed been going almost straight up since the election, and the wave may be making the statement of "too far, too fast" in the form of a diagonal. We will have to see. For this count to be correct, according to the text book methods of regular Elliott Wave, it means that the Dow must reverse course temporarily before it reaches 19,008.

At the present time, we have wave (v) shorter than wave (iii), wave (iii) shorter than wave (i), wave (iv) shorter than wave (ii), and all zigzag sequences. Wave (v) must remain shorter than wave (iii) in order for a valid diagonal to be claimed.

IF the ending diagonal proves itself, and this is all of a no-pull-back Minor A wave up, then the B wave down of Intermediate (3) must travel below the low of wave iv (circle iv) in order to honor the very meaning of an ending diagonal. When a true ending contracting diagonal minute wave v (circle v) forms, then price must retrace back below the low of the start of the diagonal at minute wave iv (circle iv).

During much of the time that the Dow has been tracing out the diagonal, the S&P 500 has been tracing out a triangle. This adds confidence to such a wave count because a triangle usually proceeds the very last wave in a sequence, and the S&P500 is very close to exceeding it's minute wave iii, also. Minute wave iv was a triangle in the S&P, and today would be much of minute wave v.

After the A wave concludes, price could retrace 38 - 78% or more in a B wave of Intermediate (3). So, watch this level closely : 19,008 in the Dow.

If that level is exceeded in the next two days, it means the Dow has not formed a valid diagonal, and a larger up wave - possibly that of an impulse count - is forming. This is simply what we mean by the fact that the patterns must form properly in every detail. If they don't, it is not a failure of Elliott Wave. No, it is more just a function that a larger wave is forming. Either way, the potential pattern, provides valuable information when the rules are applied - whether it completes properly or not.

Again, we can watch closely - without panicking - and try to follow the rules and guidelines as best we can.



  1. But the EWO suggest that (1) can be circle 5 and (4) may be circle 4... and so

    1. Yes, 'possible', but two items counter-indicate that. First, there are not 120 candles on this chart (see The Eight-Fold Path method), and second we have counted (i) as a three-wave sequence upward. Not only did I do so, but one of the participants in the live chat said before I did.

    2. Well, since then, it seems that the 5th continues. In terminals, ewo is not so clear.

  2. Publishing a comment sent by email (unaltered) >>

    Hi Joe

    First of all, thanks for your blog and educational efforts.

    Second, I cannot post comments directly in your blog because I don’t and won’t take on a google account. I have disqus and twitter accounts that most places accommodate.

    I am in agreement with those who claim the AGW hypothesis is a hoax. Follow the money involving carbon taxes. Climate change is real, ongoing, and has myriad cycles. No question. Peter Temple’s blog (World Cycles Institute) covers this most every week, especially in recent weeks. That are a half dozen celestial cycles that are involved, some shifting over tens of thousands of years. Not hard to find a chart going back just a few thousand years indicating that it has OFTEN been warmer than its been in recent decades, and certainly warmer well before industrialization. Local climate MAY well be affected by manmade activities – heat islands, deforestation, etc.. The global cycles are another matter.

    Also look into the work being done on Solar Cycles 24, 25 and 26. We are on the cusp now of MUCH colder temperatures, again, probably for the rest of our lives and most of this millenium. Just like I experienced in the late 1970s when I was fortunate enough to live in Wisconsin through -72 wind chill (no car) and two years of 50 day stretches continuously below freezing 24x7. Manmade cycles CANNOT touch what nature brings on its own. Probably the biggest culprit, if CO2 is your poison, are volcanoes. And science is finding thousands of them undersea that weren’t known of before. But higher CO2 levels are likely a result, not a cause of warming.

    One consideration I would not dismiss is the observation that scientists get their support primarily from government grants, which often are dictated by AN AGENDA. Dissension is not funded. I know this from economics as well. Only Keynesians need apply. But … from time to time, you find a RETIRED scientist out there, and their tune changes. Surprising, huh? Please don’t overlook this reality.

    So when this market finally tops …. into a large messy 4 eh? Just lovely. One that bookends 2010-11 I gather.