Wednesday, January 18, 2017

All Together Now ??

From my perspective, the chart that most likely tells the story of where we are is this daily chart of the ES E-mini S&P500 futures. Our basic count is not changed, higher highs are needed to confirm the continuation of Minor 5 of Intermediate (3); lower lows are needed to confirm the initiation of Intermediate (4). Neither has happened so far, though it was close in the Dow today.

ES E-Mini S&P Future - Current Count

From the election night low, we have Minor 1, up, Minor 2, down, Minor 3, up which is shorter than Minor 1. Over the Christmas holiday we got Minor 4, which was described in detail, and we are now, most likely, in the Minor 5th wave. The ES has not made a higher high over wave Minor 3, yet. The cash Dow and S&P have.

Price is still over the 18-day SMA and so still has a "positive bias" as Ira Epstein might phrase it. But the Bollinger Bands are now narrow and moving sideways, prices have been choppy, and wave counting is "testy" at best. As far as I can tell - in both the Dow and S&P, the count that explains it best, it "(a)", up, and "(b)" sideways as part of a very ugly diagonal in formation. That is because we have found one way to consider the Dow and the S&P hourly charts at equivalent locations at this point in time.

First, the Dow ..

Dow Hourly - minuet (a) up, (b) down

Please note this wave count would invalidate with any lower low below 19,718 as shown by the red line.

Now for the S&P - which is a little messier.

S&P Hourly - minuet (a) up, (b) down

In the case of the S&P500, the minuet (b) wave may be taking the form of a terminal triangle. We have sketched in the case where the triangle is completed - just as we did in live chat today. But, I also noted that "triangles can expand one time", and it is possible the up wave at the end of the day today is only the end of the D wave (within the triangle), and it's possible to move the upper trend line of the triangle higher, and that an E wave down will occur tomorrow at the opening.

In either case, any higher high this week would likely be the (c) wave up of minute i (circle i) of a larger diagonal that is playing out and is sketched in, above, on the ES E-mini S&P Daily chart that opens this article.



  1. Joe, I have a terminology question. In this update you use the term "terminal triangle." What's the difference between a "terminal triangle" and an "ending diagonal." Thanks.

    1. A terminal triangle is strictly a sideways pattern, but it ends the sideways movement. It is never seen unless a flat or zigzag (or series of flat or zigzags) has preceded it. A terminal triangle never makes a series of higher highs or higher lows, but always has it's five waves contained in contracting trend lines.

      A diagonal always, always, always slants with or against the trend, never sideways along it. A diagonal always, always, always makes a series of higher highs in a uptrend or lower lows in a down trend.

  2. Thanks Joe. My confusion came from the fact that I was looking at the Dow chart and thinking that you were calling the dotted blue lines a terminal triangle. My bad.

  3. Hi Joe, please may I ask why you don't consider a triangle in the Dow starting from the Dec 20th top. Where you've got wave 4 would then be wave A of the triangle. I agree that if we lose the 19718 then the triangle would also fail.

    Thx very much for your continued insight with detailed explanations.

    1. There is no clear sign of a triangle yet in the DJIA. Usually triangles form 62%, or 78% legs; the last downward leg in the DOW exceeds 78% by a wide margin.

    2. Aah yes. Thanks for that clarification. I didn't know about the 62-78% retracement norms. I was just looking at whether or not the legs were above/below the ones before them.

  4. I don't understand why having used my Google profile it shows up as 'Unknown'. I don't like posting anonymously.


    1. Please check your settings. There may be a "show name as" setting that requires to be filled out. No one else seems to be having any difficulty.

  5. The options that I get are :

    Google Account

    It doesn't matter, I can just as easily sign my name on my comments. I just thought I may be doing something incorrect.

    1. Haha, having said that I forgot to sign.


    2. Once your you've identified using Google Account, you should go to the desktop blogger and open settings and you will see a field where show the alias that you want to use to sign your comments.