Wednesday, January 4, 2017

Pleased as Punch

While it is quite gratifying to see three waves up, right on schedule from the Minor 4th wave low in the S&P500 Index shown in our weekend video, we do need to add one note of caution: while there are three waves up from the low, so far .. and up movement can easily continue to make new highs .. we must caution that whether you look at futures (as below) or intraday cash S&P, the waves currently form a wedge.

Intraday ES E-mini S&P Futures

The green lines show a potential channel count, while the blue-dotted line shows a wedge shape in the current moment.

Further, we have the situation where the third segment is not even as long as the first segment, yet. Now, all of this could right itself with a news report or two. But, until we see that happen, we are going to carry the alternate labels a,b,c which would be part of a diagonal count for the Minor 5th, wave, as well. At this time, we have no preference for which forms - an impulse or a diagonal, although that may change in the upcoming days.

Remember, in an ending diagonal, if that's what occurs, usually wave (i) of the diagonal makes it's high over the prior wave 3 (Minor 3 in this case) to show it's character as a true motive wave. So, even that count would suggest upward movement is not over yet. But ..

Be careful and take care!
TraderJoe

6 comments:

  1. ET, regarding your December 13 post "Elephant Head", I calculate that wave 5 is now longer than wave 3 in futures and cash. Would you agree?

    ReplyDelete
    Replies
    1. Hi John. As best I can tell, wave 5 ended where it did, and we are now in a B wave, which can be a flat, expanded flat, or triangle, or running triangle pattern. So far, we have had three waves down from that 5, followed by three waves up, and five waves down. And the high of the five waves down has not been exceeded yet. The problem with B waves after an A wave diagonal is that they don't have to be very deep.

      Delete
  2. Hi joe
    In daily chart ca gives what?
    I thank you for your professional work

    ReplyDelete
  3. Joe, I was considering yesterday if there was a possibility that this up move was in fact just a B or X wave up of a much longer wave 4 than expected. This morning wave 1 has been overlapped and an impulse eliminated. While the diagonal possibility still exists it has moved below your wedge channel and I'm wondering if my initial thought might be correct and we have another down move to contend with.

    ReplyDelete
    Replies
    1. Following the rules of wave counting, it is harder for the fourth wave to be more complex than it was. w-x-y-x-z is all there is, and it is always terminal. With an almost unchanged close today, a diagonal is very much on track, but needs to make a higher high for wave (i).

      Delete
  4. Any thoughts to share on the US dollar move today? Was the move sufficient to invalidate the upward count shown in the video? Thanks and happy New Year.

    ReplyDelete