Friday, August 18, 2017

Lower Low, Lower Close Day

Market Outlook: Now in Minor 4
Market Indexes: Major U.S. Equity Futures closed slightly lower

Today, overall, was a "lower low, lower close" day, as shown by the SP500 Daily chart below. The major purpose of today from a technical stand point was likely to close the gap left open at the 2525 level from 12 Jul, shown in the black circle.


S&P500 Index - Daily Chart

As long as price keeps making lower low and / or lower close days, it is best to assume the trend direction is still down. While an upward correction of the down trend could start anytime, look at how many gaps there are open on the chart between 18 May and 29 Jun. They are at risk of filling.

A couple of other things to note. The EMA-13 (green line) is at risk of a bearish cross under the EMA-34 (blue line) in the next couple of days, and the MACD histogram (similar in some ways to the Elliott Oscillator) is making new lows, while the MACD line has crossed below zero for the first time in more than three months.

Keep life simple, for now. I am. It's time to start the weekend, and then to prepare for the solar event of the season!

Have a good start to your evening.
TraderJoe

Thursday, August 17, 2017

One Gap Open, Three Closed

Market Outlook: Confirmation Obtained that Minor 4 is Underway
Market Indexes: U.S. Equity Indexes Closed Lower

Let's get right to the cash chart of the S&P500 Index - Hourly, as it was discussed in the real time chat room today.

SP500 Cash Index - Hourly

When the gap lower opening crossed below the b wave of (ii), it was possible to begin counting a third wave down, shown as .iii on the chart because a contracting triangle (dotted lines sketched in yesterday) was absolutely ruled out at that point. We counted a flat for wave .ii, and a sharp for wave .iv which shows excellent alternation in this down count. Wave .v is now the extended wave in the sequence, and we do not know that it is over yet, as there has not been a good enough retracement wave yet.

Looking at the oscillator shown at the bottom of the chart, you can see that it has made a lower low than August 11, after making the divergence at yesterday's high. At this point, it only confirms the lower daily price low in the index, but it does also offer confirmation that this down wave is a third wave of some type.

When price began to fill the gap from August 14, then we added the beginnings of a channel, and continued to trade below the mid-line of the channel all day. But, price did not travel outside of the channel today. Therefore, to be completely objective at this time, we can only suggest the count is either (i), (ii), (iii) or, as the alternate, (a), (b), (c) lower.

There is no reason to conclude price movement lower is over, but we must remember, we are now in Minor 4. And, this wave should be a SHARP or a TRIANGLE. But, a SHARP can be a zigzag or a multiple zigzag, lower. So, if we are making the impulse downward, then then down wave should likely become at least a 1.27 multiple, and trade outside of the channel, lower.

But, if a multiple zigzag will be made, then price will have a bounce off the channel, and try to get to the other side. So, let's review The Eight Fold Path Method chart we showed you in our weekend post of The Right Stuff.

SP500 Cash - Three Day Chart - Bearish Engulfing Pattern

So, as you look at the chart, you can see that there is plenty of room to make one of several patterns before getting to the lower channel boundary. So, just remember this is a Minor 4th wave, until or unless proven differently. In one manner or another, price should try to attack the lower channel boundary, somewhere around 2250 - 2330.

But, because it is a wave four, one should remain flexible and patient because we will likely also face The Fourth Wave Conundrum as the market tries to fake us out in which pattern it is most likely trying to make. If it does make a triangle, a triangle can come in contracting, barrier, running and expanding types. And, if Minor 4 makes just a simple zigzag, the market can try to make an ending diagonal wave 5. The smartest people now are "open-minded" and "curious". They seek clues as to which pattern is being made.

They are not despondent that a wave 4 & 5 pattern can have lots of unpredictability to them. For, in my Elliott Wave experience, given where we are now, that is the very nature of the beast!

Be careful, and have a very good start to your evening!
TraderJoe

Wednesday, August 16, 2017

Two Gaps Open, Two Closed

Market Outlook: 98% Probability that Minor 3 has topped
Market Indexes: Marginally higher

Because the futures were higher overnight, the cash S&P, which had closed at 2465 gapped up at the open to 2468, and traded as high as 2475. This closed  the gap from Aug 10, but just missed closing the gap from Aug 9th.

The FED minutes were released but prices had already begun selling off on the news that corporate CEO's were abandoning the President's Business Round Table. The President then shut it down. Prices traded lower on the hourly divergence with oscillator shown to fill the opening gap and down to 2464, before drifting higher again into the close, closing at 2468. As the chart below shows, prices traded on either side of the 61.8% Fibonacci retracement level, and closed below it, forming a doji candle at that level on the daily chart.

In doing so, that now leaves two open gaps on the chart in this immediate vicinity (shown in red).


SP500 Hourly - Doji Day

The advance decline line was slightly higher today, although new 52-week lows exceeded new highs but still on very light volume. We will additionally note that the $VIX has now put it's moving averages into bullish alignment again, with the 10-day higher than the 20-day, and both of those higher than the 50-day.

There isn't much else to say about today, except that we can see scenarios that point lower, and one that might point to the 78.6% retracement level (hint: we have sketched it in with dotted lines) or higher.

All-in-all, the market must now provide enough length to a wave to allow more accurate assessment. We remain patient in the summer doldrums. We hope you do too.

Have a good start to your evening.
TraderJoe

Tuesday, August 15, 2017

Three Open Gaps

Market Outlook: 98% Probability that Minor 3 has topped
Market Indexes: DJIA up; SP500, NAS, RUT lower

Below is a chart of the S&P500 Index hourly, It is one I have shown before, but updated as much as possible through today's movements.

SP500 Cash Hourly - 61.8%

The thing that will stand out to most people is that three different times the cash market tried to assault the 61.8% Fibonacci level, and, as of yet, hasn't quite done it. From the standpoint of a downward count, if the 61.8% level is not exceeded higher, then I'd conclude the Aug 11 low is minute (i) of A, lower, and the rise over the last two days is minute (ii). So, it's worth watching the overnight to some extent tonight to see how it goes.

Other than being outside of the up channel - alone just a warning signal - there is nothing critical on the chart in the downward direction yet. The 38.2% Fibonacci retracement level has not been exceeded lower, and so we can't rule out another fourth wave of an upward count just yet. Still it is possible to count only three waves upward as a, b, c of a minute (ii) wave, with only a very tiny truncation in the fifth wave of c.

If prices were to head higher - say to the 78.6% Fibonacci retracement level above - then it would be possible to count the Aug 11 low as A of the decline, and we would now be in the B wave up. Either way, nothing says the downward movement is over.

It is interesting that there are three open gaps on the hourly chart. Further, today declines outnumbered advancing issues again, new 52 week lows outnumbered highs again, down volume exceeded up volume again, and the day both opened and closed with hourly outside reversal candles, lower. So the price action is interesting, but not conclusive yet.

Well, that's it for today. Have a good start to your evening.
TraderJoe





Saturday, August 12, 2017

The Right Stuff

The featured post in our blog is entitled The Eight Fold Path Method for Counting an Impulse. We have posted it in public view for all to see. This same methodology that led us to conclude we were in the fourth wave in February 2016, seen in the lower left hand side of this chart - and not get ultra-bearish - as some websites were leading their readers over-the-edge with bearish calls, can again be seen here in the chart below. And, it's prediction is similar.


SP500 Three-Day Chart using The Eight Fold Path Method

Here again. Remember, the first step in the method is to pick the time frame that provides between 120 - 160 candles on the chart for the wave of interest. So, in this case, that is the "three-day" chart. The ruler and its flag, shows that this time frame now provides 126 candles on the chart - right in the ballpark for our analysis. I need to emphasize this point because some people only adamantly want to analyze the daily chart, or they only want to analyze the weekly chart. Those selections are fraught with problems. They do not recognize that the market is fractal with regard to time, as well as with regard to price.

Now, some people don't even have the software that allows them to do this. But, yes, there is free software, as above, that can do it for you. Oh well. You can lead a horse to water, as they say...

Next, we plot the Elliott Wave Oscillator, and note where it's high point is. The high point will always be in a third wave of some type when you are counting an impulse - just as it is here. In this case, the high point is on wave minute (i) of Minor 3 because within Minor 3, the first wave is the extended wave in the sequence. You can clearly see, that this is where the "kick-off" momentum is, and where there are the most vertical bars. And, further, as we indicated in prior posts and videos, there is no retrace within Minor 3 that is greater than 38.2% - and this is a hallmark of an extended first wave.

But still, the high point of the EWO is within Minor 3, and overall, we know that Minor 3 is the extended wave in the sequence, as it is now longer than Minor 1. So we denote the extended minute first wave within Minor 3 as x (i), meaning it is the extended first wave. And since Minor 3 is the extended wave, it is denoted as x 3. When the first minute wave is the extended wave, then, by definition, wave minute (iii) and minute (v) must be shorter than minute (i), and they are. And, specifically, minute (v), not labeled at the end of Minor 3, must be shorter than minute (iii), and it is.

Next we expect the fifth wave, (v), within Minor 3 to be on a divergence with the EWO, and clearly it is. So, now we would fully expect a wave to form in the downward direction such that EWO will come back to within +10% to -40% of the highest reading within the third wave. Given that this is a three day chart, it may require a few weeks to do that.

The next step in the process is to draw a line from wave 1 to wave 3, and then indicate the channel by drawing the line parallel to it from the second wave, Minor 2. As we expressed in the last few weeks, it is essential to draw this channel so that no part of a line drawn from (4) to 2, cuts off any part of a third wave. This is a guideline from Glen Neely's work in Mastering Elliott Wave, and we want to fully credit him with it. If you dig in to the details, you can see that the minute (ii) location is also the only location that allows this guideline to be met within all of Minor 3.

The purpose of the fourth wave lower, Minor 4, is to attack the lower channel, and to provide some alternation with the second wave in the sequence, Minor 2. So, to get down to that channel, wave Minor 4 may either be a zigzag, a zigzag that starts a triangle, or a multiple zigzag. This is because wave 2 was a "running flat" wave, and a "running flat" predicts a strong up move after it - which it did. And only a sharp or a triangle can alternate with a flat.

Within certain limits, I can have no preference for how wave Minor 4 occurs. This is part of what I have termed The Fourth Wave Conundrum. Fourth waves are inherently unpredictable, except perhaps as regard to depth of the correction, and or alternation. But, that's about it.

In terms of depth of the correction, 38% - 50% of wave Minor 3 is most common. And that provides a range of about 2250 - 2300. Again, if wave 4 forms as a simple zigzag, then wave 5 might expect to be an ending diagonal. And if wave Minor 4 forms as a triangle, then Minor 5 might be one that is a simple quick thrust out of such a triangle. We'll have to wait and see how that occurs. While it will be interesting, it may be frustrating for traders who try to play the choppy waves  that might develop. Remember the very purpose of a fourth wave is to get people to surrender some of their hard won profits from wave Minor 3. And that is probably happening to some already.

I always try to provide an alternate when I see one, and I have already done that several times, but again, there is no evidence for the alternate at this time. The alternate, to refresh people's minds is that 1,2,3 is really only A,B,C of Intermediate (1) of a much larger fifth wave diagonal. The first evidence that such an alternative would be activated is that the 4th wave became larger than 50% x Minor 3, and / or that the Elliott Wave Oscillator (or EWO) went below the level of -40% of the highest point of wave 3. Again, neither of those are in evidence.

So, with that in mind, we remain on The Eight Fold Path, and wish you and yours a wonderful weekend.
TraderJoe




Friday, August 11, 2017

Dead Cat Bounce

Not much to write about today except a 3+ point "dead cat bounce" in the S&P500 Index, so far. Looking at today's structure in live chat, there is no clear "ending pattern" such as a diagonal or triangle (fully formed) at the lows, yet. So, lower lows are possible.

The weekly candle was confirmed to be a "key reversal candle", and probable many people wanted to lighten-up before the weekend. Volume today, on the slim up move, was lighter than on yesterday's down move. Also, declining volume beat out advancing volume, even though there were slightly more advancing issues than declining issues. But, there were more new 52-week lows than there were new highs.

Today's chart is of the daily E-Mini S&P500 Futures. The Bollinger Bands are widening to the down side, and this is the second settlement of the close outside of the lower band.

ES E-Mini S&P500 Future - Daily - Bollinger Bands Widening

We note the 18-day SMA or "line in the sand" is beginning to curl lower, and if it were random chance (which it's not) each day has about a 5% probability of closing outside of the band. So, as each day progresses - as a very rough approximation - you can knock off 1% from that. So, with two days outside of the band, 5% - 2% = only 3% chance for Monday of closing outside of the band.

That's if it was by random chance. But, we know the stock market does not have a typical "normal" distribution like a Bell Curve. In fact, the stock market is known to have a "fat-tailed" distribution. That means that larger price changes happen a little more often that they should otherwise.

That is, in the nut shell, part of the mathematical reason that Elliott Wave counting works. Those larger sized price changes make for big third waves, and big C waves.

So, be careful of the casual mathematics used to describe the chances of being inside or outside of the band. Right now, there is no sign the bands are curling in, and it is possible the 100-day SMA, the dotted green line, will become a price objective since the lower band has not provided support yet. Until then ...

Have a good start to your weekend.
TraderJoe

Thursday, August 10, 2017

Key Reversal Week?

Market Outlook: 98% Confidence that Minor 3 has topped
Market Indexes: U.S. (except utilities), and European Indexes lower

I said I would update my confidence level in a market reversal from 90% once the S&P500 Index overlapped the 2450 level. That occurred today, and more. For the day, the S&P500 closed at 2438, and actually closed for the first time since July below the 50-day Simple Moving Average. That's not a particularly bullish sign, and today decliners beat out advancing issues by a whopping 406 to 2,626 or roughly 1 : 6.5, with anything over 1 : 4 usually indicating impulsive waves.

There is a day to go yet in the week, but if prices either continue lower or rebound only modestly, then we may have a "key reversal week", lower. See an update of the weekly chart of the ES E-Mini S&500 Index Future log chart, below, that we have showed you before.

ES E-Mini S&P500 Future - Weekly - Possible Key Reversal Week

A key reversal week would be one where we traded to highest all time high, over the high of the previous bar, then traded below the low of the previous bar, and finally closed lower. That could happen. It hasn't yet. We'll be patient.

In the event it does, with some backing and filling, it would be possible for Minor wave 4 to travel down to the lower boundary of the Elliott parallel trend channel you see here. Yes! This channel can be later adjusted so it better fits waves 1 & 3. But for now, it is serving it's purpose.

Once again, wave Minor 4 should take the shape of a sharp (zigzag or multiple), or a triangle, because wave Minor 2 is a Flat wave. So far, it looks correct.

For those of you interested in following the daily chart of the S&P, you might note that there is an upcoming gap in the daily chart - which could fill, and you might also note where the 200-day moving average is in the event we begin printing full daily candles below the 50-day.

SP500 Daily Chart - Trading Below the 50-Day MA

Yes, price has been here before. So some might think it would find support. But opposite of that view is that price got more impulsive today, not less. Volume is now picking up a bit, again, which tends to confirm a downside move. Further, all of the major indexes are in gear to the downside, the Russell 2000 is now at or just shy of it's 200-day moving average, and the key indicators have not rolled up yet. The RSI, above, is still pointing lower, after much divergence, and so is the daily MACD (not shown).

Well. That's it for today. Keep your head about you - even as TV commentators and other web-sites continue to be staunchly bullish. We've been here before. There will be a time for significant up waves, but now does not appear to be that time. Remember: nothing here is to be taken as trading or investment advice - we are counting Elliott Waves for educational purposes only - and refer to bullish or bearish as the prevailing sentiment character of a wave. It is not an investment posture or a recommendation of any type.

Have a good start to your evening!
TraderJoe




Wednesday, August 9, 2017

Objectively Inconclusive Day

Market Outlook: 90% Probability that Minor wave 3 has topped
Market Indexes: DOW, SP500, NDX, RUT lower, $Trans Higher

From a wave counting perspective, today was objectively inconclusive. While it was clearly a lower lower low, lower high day, it can not be said for sure that there was a five-wave down sequence. In counting the SP500 5-minute chart, there is one way to count a "five" and another way to count a "three only". Certainly, the 5-minute chart did not follow The Eight Fold Path Methodology, and that is a bit of a warning.

The daily chart of the ES E-Mini S&P500 Index futures can clearly demonstrate this.

ES E-Mini S&P500 Futures - Daily - Yin Yang Candles

Prices opened in the over-night below the 18-day "line in the sand", traveled to the lower Bollinger Band and then rebounded from it. In this view, the down move "looks" like only a three-wave move and so we don't take exception to that view. The candles look like "equal-and-opposite" candles or yin-yang candles.

But, while there clearly is a lower local low (lower than yesterday and several of the inside day candles preceding it), it follows a locally higher high, and so the chart's swing line indicator moves to neutral, while the bias is up because price is over the 18-day day SMA.

But is should be clear that the Bollinger Bands are still narrowing, and, yet, momentum in the form of the daily slow stochastic is down. And, just like Ira does not recommend selling against a lower daily band, neither does he recommend buying against an upper daily band if price should get there. (This is not trading or investment advice - just a paraphrase of Ira Epstein's Guidelines).

So, the picture is clearly mixed, bears can point to the fact that neither the DOW or S&P cash market made a 61.8% retrace yet. While bulls can point to the fact that the daily slow stochastic is no longer over-bought, and price, for now, is over the "line in the sand". Still down volume exceeded up volume, declines exceeded advances, and new lows exceeded new highs.

Therefore, with likely three-waves down, it is still possible an upward diagonal or larger triangle is forming. That is the 10% which is left over from yesterday's 90% confidence in a Minor 3 top. And, of course, on the downside, three waves down could form either A) 1, and part of a flat, or B) part of diagonal downward, with a "deep retrace" yet to come.

Two things were very clear today: 1) the DOW made a lower low at 14:40, while the S&P500 did not. Did the DOW make five waves down, and the S&P500, not? And 2) this chart of the Russell 2000 looks decidedly different from the ES or SP500 daily charts.

Russell 2000 Daily - New Swing Low

The Russell 2000 just made a new lower local swing low - below 1400 - and a fifth daily close below the 50-day SMA. This would appear to be where the deterioration is coming from. So far, our call on the Russell is off by only 2-days and 0.03. That's pretty close, no matter how you cut it.

So, again, remain flexible and open. There are times when down trends (as in the ES) start with the narrowing of the Bollinger Bands, and some sideways movement, first.

As always, have a very good start to your evening.
TraderJoe



Tuesday, August 8, 2017

Thrust out of Triangle And Outside Reversal Day Likely Completes Pattern

Market Outlook: 90% Probability that Minor 3 Top has Occurred
Market Indexes: All major U.S. Indexes lower

Far in advance of today, in the weekend video, I showed this count of the ES E-Mini S&P500 Index futures. Since publishing it, my stance has been cautious. Here is that chart.


Es E-Mini S&P Futures - 2 Day Chart - From Weekend Video

No one I know of on the web has shown you such a detailed picture of price movement with a clear and documented reference from a published Elliott Wave analyst right along side it. As far as we can tell, the wedge in this configuration just clearly ran out of time.

Further, in previous clear blog posts I suggested we were in a triangle, and that the triangle had likely completed. Today's new high was likely the thrust out of the triangle. During the live chat room, the triangle was modified to show a barrier triangle - and one quick five-wave thrust out of it.

That modification is shown below on the hourly S&P Chart.

SP500 Cash - Hourly - Barrier Triangle

Trading below the (e) wave of the triangle, and below all of yesterday's price action likely indicates the reversal. Today was a throw-over the wedge, then reversal, and the reversal is of significant concern.

You'll note that I stated there is a 90% chance that the wave count for Minor 3 is completed right here. I will up that to 98% once the E-Mini S&P500 Futures overlap wave wave (iii) at the 2450 level. I am actively looking for other alternates. I see one. I has to do with the fact that Neely shows that the wedge trend lines do not have to be connected to the origin or zero point. But, I will not be discussing that one until / unless higher highs are made.

Today's losses supposedly occurred on saber-rattling between North Korea, and the U.S. If only it were sabers!  Stay safe. Be good, and be flexible for the time being. We hope to be able to show some price confirmations, soon!

Have a good start to the evening!
TraderJoe

Monday, August 7, 2017

Triangle Appears Completed

Market Outlook: Topping, but breakout of triangle so far.
Market Indexes: DJIA, SPX, ES, NQ, RUT, NDX: Higher

On the lowest volume in years (see the ZeroHedge article at this LINK) the S&P500 Index broke out of it's potential triangle - that we have been counting out for you here - and exceeded the ((D)) wave higher. Here is the SP500 Cash Half-Hourly Chart.

SP500 Cash - Half Hour - Now Above Wave ((D))

We have been watching and noting various volume levels in these markets for years, and this is the lowest ES E-Mini S&P500 Futures volume since 2001! So, at nearly half the average volume, even for a light summer day, it can not be explained by casual observations like "summer vacations", or, "summer doldrums". There is a phenomenon going on here, and we think it is worthwhile to try to understand it.

More than likely, it is more explained by the perception of "risk", and the desire to be prudent as the key Fibonacci levels are being reached.

Having exceeded the ((D)) wave, and the 78.6% upward Fibonacci ratio, it would be entirely possible to label this wave as a fifth wave truncation - which would put the Dow and S&P back in alignment. Such an assignment would make even more sense if the ((E)) wave of the triangle was exceeded lower, but it hasn't been yet. So, we will wait to see if the five waves up we counted is all of a fifth wave or just the first wave of a fifth wave.

Either way, risk is increasing, and the daily Bollinger Bands are narrowing in on price. So, we should note that even though we were able to label a triangle days ahead of today's break above the ((D)) wave, there are still things the market could do to make like difficult. For example, as an alternate, price could travel to between 90 - 100% of the prior all time high and make just a ((B)) wave before turning lower in an elongated ((C)) wave.

We need to take wave labeling a day at a time right now. But, we don't like what we are seeing in the markets from the viewpoints of 1) volume, 2) impulsiveness, and 3) sentiment. That is just what it seems like - but it's based on objective facts and statistics. As just one example, even though market indexes were uniformly higher today, down volume on the NYSE exceeded up volume, and the number of advancing issues trailed the number of declining issues. These are example of the types of divergences we expect to see as significant market highs approach.

Stay tuned and have a good start to your Monday evening.
TraderJoe

Saturday, August 5, 2017

What's Wrong with the Dow?

People keep asking, "what wrong with the Dow?". They compare the Dow Jones Industrial Average to the S&P500 which has not made higher all time highs in seven days, or to the Russell 2000 which has made several lower daily lows, and they can't believe what they are seeing. How can the DOW be skyrocketing - while other indexes only gain a point, or even decline?! Somehow they forget they are dealing with an index of only 30 stocks, compared to the S&P500 which has (sic) 500 stocks or the Russell which has 2000 stocks. So, the influence of one or two stocks, like Boeing or Apple, on an index is a lot greater in a 30-stock average than it is in a 500 stock average or a 2,000 stock average.

But no. Logic aside, many beginning Elliott Wave counters insist something is wrong, somewhere. But the facts are the two charts below will show there is nothing wrong with the Dow. Regardless of which of the two wave scenarios you chose to subscribe to, impulse or diagonal, the DOW is still just traveling along in it's own little channel - as if nothing happened - and, as yet, has to hit it's 1.618 Fibonacci extension level from the election low.

Dow Jones Industrial Average - Weekly - Impulse Interpretation

A lot of wave counters do not wish to subscribe to this interpretation with Minor wave 2 on the Election low. But again, we have showed in our YouTube video how, since the Election Low, due to the lack of pull-backs greater than 38.2%, the first wave up, minute ((i)) is most probably the extended wave in the sequence. That means that minute wave ((iii)) is shorter than minute ((i)), and minute ((v)) should therefore remain shorter than minute wave ((iii)). So far, it is.

But, please look the to the right of the chart. In this interpretation the DOW has not made it's 1.618 Fibonacci extension yet. So, is there something wrong with the Dow? Or is  there something wrong with wave counters who want to ignore the Dow's lonely Orphan Wave at the February 2016 low when compared to the S&P500? We have included this wave in the Dow's fourth wave triangle. What are you doing with it? [Hint: yes, it is possible to see it as wave minute ((i)), and the August 2016 high as the top of Minor Wave 1, with a long drawn-out fourth wave ((iv)) down to the June 2016 low. This would still mean the election low is Minor 2, and even higher highs are possible for the Dow. Just redraw the Fibonacci ruler from those points. But, we warn there is one downside to that count in that Minor 1 would not be on the left-most edge of the parallel channel.]

Is there something wrong with the Dow, or is there something wrong with wave counters who want to count 1, 2, to Jun 2016, and then ((i)), ((ii)) to the election low - even though we have showed them that such a count "cuts off" a part of the wave 3 rise - counter to some of the guidance provided by Glen Neely in Mastering Elliott Wave?

You see, experienced wave counters know that near an all time market high the advance decline line, and several market indexes will diverge from each other - sometimes for months. This would be a totally expected development - not something to cause one consternation and grief.

In the above chart, wave Minor 4 would be expected to be zigzag or triangle structure, to alternate with the FLAT wave Minor 2. So far, it hasn't started yet in the DOW. Then, perhaps, wave minor 5 will either truncate or form an ending contracting diagonal to recognize one of the largest tops in the wave cycle since the 1932 low.

All of this is possible. But, then too, since we have absolutely no preference, we must also allow that the following count - which would only start wave (1) of a diagonal in the Dow is still practical. The downside to it is that it would seem to take much more time to complete. But, it might represent something like the U.S. Federal Reserve vehemently fighting a decline in stock prices.

Dow Jones Industrial Average - Weekly - Diagonal Interpretation

Remember, in a diagonal each of the waves must be a clear three-wave zigzag, and so minor A, minor B, and minor C are to Intermediate wave (1) of the first of five legs to a diagonal Primary wave ((5)). The advantage to a count like this is that much more severe divergences could develop over the longer time cycle. But, besides the fact that such a count - should it occur - would likely require more time to complete, there is no evidence for it yet in the way of overlapping waves, so it remains the alternate at this point in time.

And, now you can clearly see why since the low of the S&P500 in February, 2016 we have repeated that we have no preference of impulse or diagonal: and that is precisely because of our dictum in The Eight Fold Path Methodology that A,B,C is the same as 1,2,3 until it is not (that is until 1,2,3 is disproved or otherwise invalidated by overlap or an other disallowed measurement). Both methods of counting allow for either a "3rd wave wonder to behold", or an "unrelenting C wave that has few pull significant pull-backs."

But, here is an item of significance, while in the impulse count, wave minor 4 could be a zigzag OR a triangle, in the diagonal count wave (2) must only be a zigzag. Wave (2) could be a zigzag where the B wave of the zigzag is a triangle, but it must not be a stand-alone triangle in it's entirety. If only a large triangle appears in the Minor 4 location, then we know, we are likely dealing with the impulse count. But, if only a zigzag appears for Minor 4 or wave (2), then we will not be able to tell - by shape - which form the ending wave will take. We may be able to tell by depth, but not by shape alone.

But, once again, we do not want to put the cart in front of the horse. Relax, and seriously think things through over the weekend. As best I can tell, there are many more waves to play out yet - some of them lower, and some of them higher. We'll try to keep you abreast of the highlights. Most importantly, try not to to be confused. What we are dealing with here are historic cross-currents of sentiment. While, the market may be historically choppy in such a situation, as for example with a historically low $VIX, and an S&P500 that hasn't made more than a 1% move in quite a while, that should not be a confusing situation for a logical thinker. What if it persists for a while?

Have a good weekend.
TraderJoe

Friday, August 4, 2017

Little Change - 2

Market Outlook: Topping, but possible triangle
Market Indexes: SP500, Dow, RUT, Trans, ES, NQ: Higher

The S&P500 closed yesterday at 2472, and rallied eight points on an opening gap to 2480 on the strength of the employment report. This rally, which closed yesterday's down open gap, was sold within the first 15-minutes. Then prices turned and "nearly" closed the opening gap, within the first half hour. But, the gap remained open by 0.01 throughout the remainder of the trading day (somebody sure has got a sharp pencil!).

It has now been seven days trading in what could be a triangle, which can resolve to the upside.  For the triangle count, the internals would resolve something like this.


SP500 Cash - Half Hour - Plausible Triangle Count

Such a triangle can be resolved into all zigzags and and ending triangle in the ((E)) wave. The only item that seems odd is where ((B)) and ((D)) slightly exceed a 78.6% retracement, then ((C)) only slightly exceeds a 61.8% retracement, so it's proportions are slightly off. If this is a valid triangle, then it would likely resolve to the upside, and it would be one of the few daily triangles we would have had that was not a "running triangle" - with a higher B wave. Running triangles in the upward direction are bullish, and this one would only be "neutral": it would have less power to make higher highs than a running triangle would.

But, the price changes are so small, we are not sure about the triangle, even though it appears valid. Triangles must prove themselves, in this case by making a higher high than the ((D)) wave, at least, and this one has not yet. Also, there are still other ways the ((E)) wave could resolve. For example, Monday could open lower and/ or travel lower, and make the ((E)) wave a double zigzag, lower.

If the triangle does resolve to the upside - again at least over the 78.6% Fibonacci ratio - whether or not a new all-time high is made - then we would likely conclude the overall upward wave there, as it would be more in-synchronization with the Dow Jones.

For now, we must remain neutral until there is a more clear resolution. But remember, even if this is a triangle, triangles usually precede the last wave in the sequence.

What if it's not a triangle? As we stated before, it is possible to have a truncation at the first (B) at 2483 on 27 JUL, and five waves down that day to start a larger movement. The exact downward count would depend on waves made next week, but let's not put the proverbial cart before the horse.

Have a good start to your weekend.
TraderJoe



Thursday, August 3, 2017

Little Change

Market Outlook: Topping, but possible triangle
Market Indexes: SP500, ES, RUT, NDX down, DJIA up

The S&P500 Index closed at 2477 yesterday. The market gapped down at the open, and traded six points lower to 2471. Then, the market traded largely sideways for the afternoon, making one lower low at 2470, then started to rally to 2475 until the announcement by the Wall Street Journal of a Grand Jury being empaneled in the Russia probe. At that point, the index sold off to a perfect 78.6% Fibonacci retrace at 2469. It could make a possible B wave within a triangle.

By the end of the day, the NQ futures which had previously lost their embedded slow stochastic were back at the 18-day SMA (the "line in the sand"), and the ES futures had lost their embedded status by the settle, but need to be watched to see if they gain it back (the next day only).

Daily NQ Futures - Back to 18-day SMA

With today being a low volume "inside day" in the S&P500 and the NQ (but not in the RUT, with a lower low day), both the impulse count downward, shown yesterday, and the triangle remain viable forms. The market is probably waiting on the Payroll Employment Report, tomorrow morning, to better define the direction.

Have a good start to your evening.
TraderJoe

Wednesday, August 2, 2017

Flexibility and The "Hard Right-Hand Side" - 3

Market Outlook: Topping but a possible triangle at several different time scales
Market Indexes: Dow, S&P500, NQ Higher. RUT Lower

The S&P500 closed yesterday at 2476, then gapped higher to 2481 on the overnight to-do about Apple's earnings results. Finally, that 78.6% Fibonacci level was broken to the upside, as shown. But, the 90% level, interestingly, was not hit - which tends to rule out a flat-style wave.

The gap-up was immediately "sold-on-the-news" and an apparent five-wave sequence in good form was counted out on the intraday chart. Based on these considerations, since there was no fourth and fifth wave apparent in the opening spike, it looked like the thrust out of another triangle. The y wave up finished on that spike, and appears to count like that in the chart below, in which it's .b wave was yet another triangle.

SP500 Cash - 15-Minute Continuation

The five waves down broke both the prior (e) wave, and  the (c) wave of the former x wave triangle, filling the gap from two days ago. But this wave had insufficient power to break the low of 27 Jul. Then prices began the upward march toward  the end of the day, ending at the underside of the larger (green) channel that was broken lower today, forming a smaller (turquoise) channel.

The sideways nature of the EMA-34 at this time, and whippy, but narrow point-range action suggests that either yet a LARGER triangle is under formation, or we topped at y. It is too early to say which yet.

For those having trouble envisioning a larger triangle, I will sketch it out below, along with the alternate. The idea behind such a triangle is that it might be a pre-payroll employment report triangle, since this number might affect whether the FED raises interest rates in September, or not. This triangle uses the hourly chart, and, again, is an idea only. Triangles have to form properly in every detail.

SP500 Cash - Hourly - Possible Larger Triangle

The black count is the triangle, the blue count would be a downwardly pointing impulse - which is the usual opposite of a triangle. For this hourly triangle, it would invalidate below 2459, as shown in red.  The purpose behind such a triangle might be to even out the counts on the Dow and the S&P500, to allow them to top more near each other.

And, yes, again for the curious ones, there is even a larger potential triangle on the chart, starting on 18 Jul if you want to try to sketch that one out. (Hint: it results in two less waves at the end).

Well, that's it for today. Stay alert and flexible as the market makes it decisions. Once again, as an Elliott analyst, I don't make the waves. I can't make them happen according to some preordained plan. I can only count the gyrations as best as possible, following the rules, with an eye to the couple of logical possibilities at the time.

Have a good start to your evening.
TraderJoe






Tuesday, August 1, 2017

Flexibility and The "Hard Right-Hand Side" - 2

Market Outlook: Money is apparently rotating to the 'perceived' safety of the Industrials
Market Indexes: DJIA new ATH, SP500, $NDX, $RUT, marginally higher

We said yesterday, that based on today being the first day of the new month, it was possible to see inflows from pension funds, company bonuses, dividend reinvestment plans, 401k's, etc., and that did occur in a small way. The S&P500 closed yesterday at 2470, gapped up at the open to 2479, and then traded lower to come within 1 point of closing the opening gap, then traded sideways to end the day at 2476, up +6.05 points.

In the process, because of the higher high, it looks like one of our triangles was finalized in form. We'll show you that chart from the real time chat room below. It is just a continuation of the one we showed from yesterday, with a slight modification.

SP500 15-Minutes - Higher High Resolved Interior Triangle

So, during the course of the day, it seemed more likely that this long triangle was just the x wave that followed the w wave, and the higher high was the .a wave of the y wave. We are likely waiting on the y wave upward to complete, possibly to hit the 78.6% Fibonacci retracement level - which was again missed today.

The down wave that did not quite fill the gap was the .b wave of y, and now there 'should' be a five wave upward sequence for the .c wave of y. And, yes, such a five wave sequence could turn out to be an ending diagonal if it wants to.

Well, that's it for now. Have a good start to your evening.
TraderJoe




Monday, July 31, 2017

Flexibility and The "Hard Right-Hand Side"

Market Outlook: Dow changed from Diagonal Count to Impulse Count
Market Indexes: SP500, RUT, ES and NQ lower, DJIA higher

Regardless of Elliott Wave counts in the past, traders often say, "It's the Right Hand Side of the Chart that's the Hardest". This is true, and we'd like to clearly demonstrate why some flexibility is needed in Elliott Wave Counting, especially near a top.

First, this chart is in reference to the down move to 2460, on 27 July, shown below in one count in the S&P500 Cash 15-Mminute chart, below. After, the downward move, we can STILL only count three-wave moves upward. Shown as blue.

SP500 Cash - 15 Minute - The Right Hand Side of the Chart

We said, it was entirely possible price was either making a triangle or a double-zigzag. And, with today's small gap up, then gap fill, we did invalidate a smaller B wave triangle, and clearly got the higher high needed for the y wave of a double zigzag upward. But still it did not hit the 78.6% Fibonacci retracement level.

The three-wave structure is clearly shown with the blue .a and .b providing the interior waves. But then, as the day progressed, and prices hugged the unchanged line it seemed like a triangle might be forming - especially given the larger reversal candle as the last bar of the trading day.

Now, we know tomorrow is the first day of a new month, and might have some inflows again from pension funds, company bonuses, dividend reinvestment plans, 401k's, etc., and so now one has to ask, "Is this another triangle for another x" wave, before a final z wave up on the new money, as shown above?

Or, is it a downward pointing triangle after a first wave, lower? Such a downward triangle would count like this:

SP500 Cash - 15 Minute - Downward Triangle Option


Neely tends to indicate that purpose of such a triangle is so that the wave 2 precisely hits it's target at the 61.8% retrace level - which I find to be an extremely interesting and cogent observation. Prechter also allows second waves where the Y wave of the 2nd wave is a triangle.

And the bright ones among you will even realize that since we don't know if downward movement is entirely over, couldn't the whole structure be an upwardly pointing triangle, as some sort of fourth wave?? And, the answer is, why, yes, it could!

It's at time like these that any Elliott analyst who says they are "certain" of the next price movement is probably smoking locally grown products from Colorado. Or, they have exceptionally good market metrics - much better than what we can find.

Yet, while it is often best to stand-aside from a definitive wave count and let it "shake out", that is precisely the actual benefit of Elliott Wave in real-time. You see - each of those potential triangles, whether pointing upward or downward,  has clear points where they must invalidate from an Elliott Wave perspective.

And that is exactly how the count becomes clearer, and leaves fewer and fewer options until there is only one. So, stay tuned, as we go into seasonally one of the more difficult months for the stock indexes.

And have a very good start to your evening.
TraderJoe

Saturday, July 29, 2017

Weekly Gold

Is weekly GOLD triangulating? We have to say up front that, while we don't know for sure, something sure seems odd. First, here is a chart of weekly GOLD with the outlines of a potential triangle. The upper trend line is dotted black to show that this trend line is not yet proven.

Weekly GOLD - Potential Triangle

When you look over this chart, you'll notice that the current wave from December, 2016 so far is taking more time than the minor A wave up. And, the weekly MACD, while barely positive, is still as flat as a pancake. That just doesn't seem like the way a strong C wave up starts. So, we have to ask the question, "are we in a weaker C wave, like that of a triangle?".

The minor B wave down stopped just shy of the 78.6% Fibonacci retracement level, and that is a common turning point for triangle-type retracements. So, the potential dotted black trend line of a triangle is shown where a C wave of a symmetrical triangle would also retrace about 78.6%. Price is not there yet.

Next we correctly counted the (a) wave up of C from the weekly chart, above, on a 4-hr chart of GOLD as a Leading Contracting Diagonal - which meant higher waves were to come, and they did. And we correctly called for a longer (b) wave lower - some or all of which did form.

And now that prices have turned higher again. We thought we'd have a look at the latest 4-hr chart, using The Eight Fold Path Methodology, and Neely style counting. Here is that chart.

GOLD Futures - 4 HR - The Eight Fold Path

There are some things to notice on this chart. First, all of the current price movement is confined to a channel. Second, if we look for ways not to chop off any part of a third wave with a line connecting the start and the second wave, this is about the only way to do it. Third, we note that while there certainly does appear to be a third wave, (iii) at the high point of the Elliott Wave Oscillator (EWO), then the waves that immediately precede it are intensely choppy. So, we think that area is better described as the "fifth" wave of the third wave, v, and not the middle of the third wave. That nice big impulse bar, iii, looks to be the middle of the third wave. Fifth, wave (iv) has a good fourth wave look to it, and alternates well with the second wave (ii). Six, because wave (ii) is more than a 38.2% retrace, we are probably not dealing with the situation where the first wave is the extended wave in the sequence. Seventh, the B wave retrace is only 23.6% which is OK for the shallow retrace of a zigzag - since we are likely not dealing with the extended first wave scenario. This is shown by the fact that the third wave is over 261.8% times the first wave, no matter how you measure it.  And, Fibonacci eighth, notice that while price is diverging from the EWO already, there are only 87 candles on this chart - not the 120 - 160 recommended per The Eight Fold Path Method. And that means this wave is likely not forming a true impulse wave up.

All of this suggests that GOLD may only be in a zigzag higher, and while the upward count is not finished, it may either point to a smaller potential interior triangle on the weekly chart, shown in dotted blue, or the larger overall potential triangle shown in black.

As always, triangles are forms that must prove themselves in every detail. And, the best alternate for the potential triangle is the double combination (W-X-Y) where W = A, and X = B from the current weekly chart. Trading above 1,340 would tend to indicate that the double combination was the more likely scenario. In this case, from the four-hour chart A would be 1, and B would be 2, and with the 23.6% pull-back only, then 1 would likely be the extended wave in the sequence. But, that's why this is the alternate case - because there was an initial deep enough pull-back for wave (ii) to allow the extended third wave (iii).

In either case, the up wave does not appear to be quite finished. What would be more convincing of the double combination than of the triangle would be if there were a large gap up next week, that was not quickly retraced, because it is very tough to find one in the chop on the current chart. So keep your eyes on the look out.

Hope this helps, and have a great rest of the weekend!
TraderJoe

Friday, July 28, 2017

Slow Day

Market Outlook: Highs are likely in for S&P500, ES, NQ, and RUT, not so the DJIA
Market Indexes: RUT: lower low day; SP500, ES, NQ: sideways; DOW higher.

In another slow day of summer trading, the Russell 2000 continued leading to the down side with a lower low day today. The Dow continued to make higher highs as it apparently struggles to finish a contracting diagonal. A chart of that continued diagonal is below. Note that wave (iii) is still shorter than wave (i). Trend lines will be adjusted as needed.

DJIA Cash - 4 Hr Chart - Potential Diagonal

Sometimes, they like to keep these diagonals going on seemingly forever, as money tries to rotate into the perceived safety of large cap defensive names, after leaving some of the smaller and more speculative issues.

The S&P500 made only an inside candle today. Whether yesterday was a first wave down or just an "A" wave down is still up for grabs. We're watching to see whether the market forms one of two upward structures, those being either a double-zigzag, upward, or a triangle. (By the settlement a triangle had not invalidated yet). If a triangle forms, it would definitely more credence to the A wave case. If the double  zigzag forms then, it might lend more credence to a first wave scenario, but still the odds would be about even in that case. Again, favoring the A wave case is also the fact that the retrace has been deeper than 61.8%.

The NQ futures chart, by contrast, has the makings of a flat correction, as the 90% retrace level of the three upward waves was made this morning. Here is that chart.

NQ Hourly Futures - Likely A Flat Correction as 90% Was Reached


Anyway, we note now how remarkably bullish some people are - even given the seasonal nature of declines in the August / September time frame. And, just a reminder, August is only two trading days away, with a solar eclipse in the middle of it!

Well, until then, there is a fun weekend to have ahead. So, here's hoping you get a good start on it.

Perhaps there will be some more over the weekend.
TraderJoe


Thursday, July 27, 2017

Why Focus on Risk ?

Market Outlook: S&P500, ES, NQ, and RUT likely have topped in Minor 3. DJIA might not have.
Market Indexes: S&P500, DOW, ES and NQ made marginal higher highs. Not RUT.

Today we got a completed count in the ES E-Mini S&P500 Futures Count that we showed from the election low in the weekend video. As required, minute wave ((v)) remained shorter than minute wave ((iii)), since minute wave ((iii)) was shorter than minute ((i)). The internal minuet waves also had the same relationship. Here is the chart as of the settle.

ES E-Mini S&P500 Index 4 Hr - Completion Count

In one four-hour bar, 39 - 40 preceding four-hour bars were exceeded lower. As of the settle, the bar had not been fully retraced. Because the prior wave (iv) was exceeded lower, and wave (i) was overlapped in the downward direction, it is possible to call a turn here, with the minor 3 wave at the top. The wedge got about as bad as a wedge could get.

Here is the weekly chart of the E-Mini S&P500 Index, showing the likely Minor wave 3 high.

Weekly E-Mini S&P500 Index

Notice there is a nice resistance line from the bottoms before the Feb 2016 bottom of Intermediate (4), and those were in August and September 2015. Also note how volume has fallen off, as well.

The upward wave in the E-Mini is a "trending impulse with an extended first wave", it did not form a diagonal. (We don't know the final form of the Dow, yet.) The reason we mention that is that it provides considerable flexibility in the style of downward count. It can be a zigzag or a triangle, and it could also start out with a diagonal.

We've had only a relatively small wave down, given the size of other ones. It could be an A wave or a 1 wave. Since the upward retrace is slightly more than 61.8%, it may lean more towards an A wave down than a second wave down. Time will tell.

Facebook and Amazon have all been "sold on the news" (not trading or investment advice) because of either outright earnings misses or maturation of the businesses.

Have a very good start to your evening.
TraderJoe


Wednesday, July 26, 2017

Marginal new Highs on Dollar Weakness

Market Outlook: Marginal new highs still possible for major indexes. Focusing on risk instead.
Market Indexes: Marginal New Highs for DJIA, SP500, ES, NQ, not RUT today

The U.S. Dollar Index took another leg lower on the FED's FOMC statement today and solidly broke it's prior 1.618 Fibonacci extension. The Dollar's (DX) chart is below. While there could be back-and-filling, there is not a level of double Fibonacci confluence until 92.147, and with the slow stochastic still embedded, there is 'currently' nothing bullish on the chart. A key reversal bar would be a start, but is not to be seen.

Daily US Dollar Index (DX) - Double Fibonacci Confluence at 92.147

With the new daily high on the DJIA, the trend lines have changed again - back to the original contracting diagonal we were counting.

DJIA Cash - 4 Hr Chart - Diagonal

The new trend lines would we drawn between waves (ii) and waves (iv), if wave (iv) occurs properly.

Many market commentators today noted the new low on the $VIX. However, just keep in mind the daily $VIX did have a key reversal bar today by the time the cash market closed. The key thing to keep in mind while the market continues to wedge is that most of the increase in prices is due to the Dollar, not due to solid economic growth.

Be good. Be flexible and patient. And have a good start to your evening.
TraderJoe

Monday, July 24, 2017

Trend Lines Matter

Market Outlook: Marginal New Highs Possible in DJIA, SPX, NQ; likely not RUT; risk increases.
Market Indexes:  NQ hit new all-time highs; not so for DJIA, SPX, RUT

Because trend lines matter, and a contracting ending diagonal was not adhering well to it's trend lines in the Dow Jones Industrial Average, today the pattern was converted to a triangle, below, during the live chat room. There is no alternate at this time.

DJIA Cash - 4 Hr - Converted to Triangle Count

It is possible that this triangle will be waiting on the news from the FOMC, and a possible set of inflows from new capital on July 31 / August 1st from retirement funds, 401k's, company bonus plans, dividend reinvestment plans, etc.

Although the NQ did make new all time highs today, my read on it is that - on a four-hour chart - it is just the common (B) wave of an expanded flat for it's fourth wave, as well.

NQ (NASDAQ 100) Futures - 4 HR - Likely (B) Wave of FLAT

There are currently three waves down to (A), and three waves up to (B), and the (B) wave turned around and traded lower just before hitting the 1.382 x (A) Fibonacci ratio. Let's see how this one works out. If it does, in the short run, it will likely come back to exceed the (A) wave low, and could come back to the prior wave (4). We would adjust the channel at that time. Here again: no alternate.

Well, that's it for tonight. Have a very good start to the evening.
TraderJoe



Saturday, July 22, 2017

Don't Get All Sentimental

Our proprietary model of bullish sentiment across a wide range of market participants absolutely soared this week - jumping almost another five full points in one week to the highest level for all of this Primary Vth wave high.

Weekly Bullish Sentiment

The weekly percentage of bullish investors jumped to 61.2% from 56.4 %, which is amazing of itself but it also eclipsed the prior Primary V wave high at 60.9%. For those of us that watch this on a week to week basis, recording a string of eight weeks above 55%, and then seeing this, it is amazing to watch. The biggest jump in sentiment came from the mom & pop investors who "threw in the towel" on the bearish case and whose bullishness jumped seven points in a week! But there was also a rise in bullishness among professional investors and newsletter writers, as well. Pretty remarkable.

Of course, we view such one-sided sentiment as a contrary indicator in the long run, and attribute it to the power of the Minor 3 wave to sway opinion. When added to the wave counts shown  yesterday, and in the weekend video, along with the low trading volumes being experienced it adds to the case for caution in upward wave counting at this time.

But, there is further evidence, as well. Barron's magazine reports that Corporate insider transactions - those company officers and directors who must report transactions - are now skewed 62% to the sell side. (This is the ratio of Insider Sells to Buys). So, someone who knows something is selling at one of the fastest clips in recent history. It is interesting this occurs in conjunction with this sentiment high.

Well, sentiment is good, you say, but it is price action that determines gains or losses in the equity market. Is there any price evidence of concern while the major markets are near their all time highs?

To that end, we'd like to show you this chart of the Russell 2000 Index. It has a price bar not seen anywhere else on this chart - that of a "key reversal day". That is a day when prices first trade up through their all time highs - making a higher high than the previous day, then turn around and trade lower than the low of that previous day, and finally also closing lower than it, as well.

Russell 2000 Index - Key Reversal Day

This candle comes after prices may well have traded up into the triple zigzag we cited as possible in a prior post. The triple zigzag would be the minute ((b)) wave above, indicating that a steep wave ((c)) decline should begin to end the Minor wave 4. Triple zigzags are very rare birds indeed, and we wouldn't call this one except for the uncommon parallel nature of the price movement within. Price just peeked above that upper parallel, in what Elliott analysts call an "over-throw", before being smacked down back inside the channel again. Price movement down outside of the channel should well indicate that minute wave ((c)) is underway.

Well. Have a good weekend.
TraderJoe

Friday, July 21, 2017

So far, So Good

Market Outlook: Marginally higher highs possible, but risk continues to increase.
Market Indexes: R2K new all time high; None of Dow, S&P nor NQ made new ATH's today.

The herky-jerky action continues, but the waves continue to form properly in the ES E-Mini S&P Futures 4-hr Chart, and the Dow Jones Industrial Average.

ES E-Mini S&P Futures 4-hr - Wave c Formed Downward This Morning

The continued loss of momentum is shown by the break of the lower ES wedge line. A new all time high is possible, but not guaranteed. (Truncation is possible). A diagonal is still not indicated in the chart above, as there are no overlaps of concern.

DJIA Cash 4-hr Made it's b Wave Down On Schedule

The Dow fought a brilliant battle at it's up sloping trend line, and managed to close just above it. While point losses are minimal, the shapes of the various waves is what is troubling.

However, don't let it spoil a good start to your weekend!
TraderJoe



Thursday, July 20, 2017

Added New Wedge Line

Market Outlook: Marginal new highs still possible.
Indexes: Dow - no new high today; S&P500 new high, NQ futures new high

Added a new potential wedge line to the ES E-Mini S&P500 Futures 4-Hr Chart, below.

ES E-Mini S&P500 Futures 4-Hr Chart : New Potential Wedge Line Added

There's a good possibility the market will finish a fourth wave lower tomorrow which would be c of (iv) in the above chart.

The Dow's count remains in a "b" wave, as below.

DJIA Cash - 4 Hr Chart - Still in b Wave Lower

Today's S&P500 Cash Index high was less than one full point from the 1.618 Fibonacci extension we showed in the weekend video. As Dirty Harry used to say, "are you feeling lucky, punk?" If you are, it's OK. Just watch things closely.

Have a very good start to your evening.
TraderJoe

Wednesday, July 19, 2017

Still no 38.2% Pull-Back

Market Outlook: Marginally higher highs still possible; risk growing
Markets: ES, SP500, NQ higher all-time highs; not the DOW

Here is an update on the ES E-Mini S&P 500 Futures 4-Hr Chart. The upward movement broke a potential wedge shape, but in addition, still has not made a retrace of 38.2% or more. Therefore, the best count still remains an extended first wave, as below.

ES E-Mini S&P500 Index Futures - Still No 38.2% Pullback

Since we don't have a pullback of more than 38.2%, the best configuration of the count is with the extended first wave again. It might form a wedge, with a shorter wave (iii), but that remains to be seen. There is no evidence for a diagonal at this time, as there is no overlap of any significance.

Tomorrow the Bank of Japan, and some Central Banks in Europe bring their monetary decisions to the fore. Let's see what prices do on those announcements. Regardless, in this scenario, wave (iii) should not become longer than wave x(i), and wave (iv), when it occurs, should be in the sharp or triangle class of waves.

Here is what the Dow looks like today - not having made the new all-time high.

DJIA Cash - 4 Hr - No New All Time High Today

Volume rose a bit today. But not much. Today, the Shanghai Composite completely reversed it's "ugly candle". I'm going to watch that one for an expanding diagonal now - just because the waves are so overlapping.

Have a great start to the evening!
TraderJoe