Monday, January 23, 2017

Some New Lower Lows

If you've been following the stock market over the last few days, you know that we have had a series of lower high days, and today was another one of them. I said in Friday's blog post, though, that we needed to start seeing lower low days to begin to have some confidence in a down count.

Today we got a low that was below both Friday's low, and Thursday's low last week. Even though the point loss at the end of the day was modest, below is the intra-day count I mentioned on Friday's post. With the lower lows, I give the count a 70:30 probability of  making a new lower low under wave 4  sooner than a higher high over wave 5.

SP500 - 4 HR - Potential Down Count to Minor A of Intermediate Wave (4)

From wave 5, the downward count reads as follows: An expanding leading diagonal for minute wave (i) of A, followed by double zigzag minute wave (ii). The y wave of minute (ii) has a truncation that was called in real time, and minute wave (ii) is longer in time than minute wave (i) for good proportions. Minute wave (iii) is in development with the first sub-wave of it downward today - hence the new lows.

If so, a gap opening downward would be expected in the next couple of days to indicate the third sub-wave of minute (iii), lower.

This view is published for several reasons. First is that a truncation in a second wave ending structure would be a somewhat bearish development for the near term if it holds. Next, both the 4-HR slow stochastics and Elliott Wave Oscillator are still heading lower after a divergence; so, too, is the MACD Histogram, which today renewed it's decline. Third, the EMA-13 on this chart has curled lower. And, lastly, the Russell 2000 has overlapped the prices from Dec 28th at the end of 2016 already.

The other 30% of the probability goes to a longer triangle wave 4, but such a triangle does not have good proportions at this time, and that is the simple reason why it is not the top count.

Cheers!
TraderJoe

3 comments:

  1. to me, the wave 5 EWO is too weak and the wave itself does not have a wave 5 "personality". It should do more at this climactic area....

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