Thursday, January 12, 2017

Another Lower Low

As if to ask, "How Low Can You Go??", the Dow and S&P500 both made lower lows today. The downward movement filled the next gap down (shown in black), but it had to open a downward gap to do it (shown in red at this morning's open). Tsk..tsk. So far every single downward gap has been filled upward. And, in a twist, before the S&P could hit the 62% retracement level, the rain stopped, the clouds parted and the sun came out yet again. Here's that 30-minute S&P chart.

SP500 30-Minute - Lower Low

So, the best count right now is that of a triple zigzag downward, and because of the wave 'lengths' it could (but shouldn't) be considered an expanding diagonal downward. There is something wrong with the Expanding Diagonal. Usually the waves in an Expanding Diagonal get longer in time as they drive deeper in price. This one has each progressive wave getting shorter. So, again, we don't think it is a diagonal for that reason. We think it is a triple-zigzag B wave, lower. With a slight new high to follow.

The potential triangle on the Dow busted this morning (which we called in the real time chat room), and the Dow filled it's gap near the origin of the wave. Here's where we think the Dow is at this point in time.

DJIA - 15 Minute B Wave

Notice that an Expanding Leading Diagonal downward definitely can not be counted on the Dow because the middle leg is too short. We think that adds to the reasoning on the S&P 500. But, it is possible the Dow just made an awful ugly flat for a B wave. The two B waves 'would' go together. And possibly we are starting the C wave higher of minute-i of a diagonal for minor 5.

Once again, here is the overall two-daily chart of the S&P500 - showing where I think we are in the count.

SP500 Two-Daily Preferred Impulse

Remember, wave Minor 5 of Intermediate (3) can become longer. It just can not become longer than Minor 3 in this count. And there is no proof, yet, that Minor 5 is definitely over.  Only traveling below Minor 4 would signify that.

But, it goes without saying we are likely "in the topping process". Look at those Dow waves on the fifteen minute chart and how choppy they are. Rest assured the market specialists and algorithms do not want us on board when they do - eventually - take the market down. That's what the "topping process" in the market is all about!

In terms of invalidation, the upward scenario for the Dow would be over if the low of the A wave is exceeded lower. Same with the S&P (but it is much further away).

Cheers and enjoy the charts!


  1. thanks again, Joe! Much appreciated

  2. Joe,
    Regarding the channel on the 2 day chart. In prior posts (most recently on 12-17) you were having thoughts that primary 5 would be a wedge shaped impulse. The channel above differs from that view. Is that because we are lacking enough data points for a true channel or has your view of the wedge impulse changed.

    1. Hi .. PT .. still my view we are in the wedge. The channel is shown so you can see that we are nowhere near the upper border of a channel. Draw a secondary line across the (1), X and 3 tops for now, and 5 when it is identified.

  3. For those followers who might be interested.
    I wanted to see the character of the strong rise off of today's lows.
    So I computed the proper number of bars to apply the Eightfold Path which turned out to be a 2 min. chart. Every time I do this I'm just astounded at the accuracy and info revealed. All of the criteria were met and were plain as day. Sure enough the EWO peaked at 3 of 3 and although wave 3 appears to have extended it still finished with a neg divergence. Both wave 2 and 4 slipped below the 34 EMA and wave 4 went negative on the EWO. Wave 5 finished with a further neg divergence on the EWO. It appears the impulse was completed or nearly so a few minutes before the close. I'm looking for a retracement with some sort of fib relationship and another impulse up. If you want some fun I would reccommend you try it for yourself. This ia a powerful tool

    1. Nice to hear. I did a similar exercise in live chat today.