Tuesday, January 31, 2017

No Assumptions

Here is an update of  the S&P500 3-Hour Chart. From the high, we have fallen off to the 78.6% retracement level, downward.

SP500 3-Hr Chart

So, from the 2301, level price retraced 78.6% (61.8% in the NQ) to the 2267 level. But, so far, wave Minor 4 has not been exceeded lower yet. And, the downward wave has taken more time to complete than the upward wave. So, the downward wave may be considered as corrective to the upward wave, even though it can be counted as a five-wave sequence. The downward wave can also be considered as a complex corrective (w-x-y) lower, based on the very small wave off of the top.

Therefore, unfortunately, we can make no firm statements about the nature of this wave yet. If the high is exceeded, it could be minute iii of Minor 5 that does that. If the high is not exceeded, and wave Minor 4 is, then downward counting may begin.

Today, we had APPL earnings which lifted the NQ futures in the after-hours (but not to a new high, yet). And tomorrow is both the first day of the month - which sometimes sees price gains from the inflows from retirement accounts, dividend reinvestment plans, 401k's, company bonuses, etc. - and it is a Federal Reserve policy day. And Friday is the payroll employment report. So, new highs are very possible, and so is a reversal on one piece of news or another.

As a result, we make no assumptions at the moment, and simply count waves until something looks completed in one direction or the other. We do see that there is an "island top" leaving two open gaps on the above chart, and it is certainly possible that one or both fill.

Best wishes in the chop and whipsaw-type market conditions.


  1. Thanks Joe. One thing is certain, and that is the fact that the wave from 2257 to 2301 is completed. I also think it is certain that the last sub-wave of that move, from 2279 to 2301 was indeed a 5th wave ED, even though it took one day longer to fully retrace than it did to form.

  2. Thanks Joe! Really appreciate your posts.

  3. Greetings Joe, hope you are well.
    There's an old poem that starts with "How do I love thee, let me count the ways". It could be modified for EW to say " Wave 4, how I do measure thee, let me count the ways!

    That pesky circle b wave is still bothering me as it looks more like a 5 wave LD than a 3. I'm thinking there is a possibility that you're circle a may have been all of minor 4 and the subsequent 3 waves up were all of minor 5 and Int 3 is over. I realize we need confirmation by violating 2301 or 2257 as mentioned in the last post. I was wondering what factors make you lean one way or the other?