Thursday, February 16, 2017

Either Way Minute Wave ((iii)), Now Possibly Minute Wave ((iv))

Some of you have asked what happens if the EWO should invalidate the count provided yesterday on the cash market, and how best to preserve the rule promulgated by Glenn Neely, of Mastering Elliott Wave fame, that no portion of a third wave should fall below the zero-to-two trend line. That count is in the chart below, using the ES futures (12 hr chart), only, so there can be no 'hidden waves', gaps, or other tricks to play with.

To avoid confusion you may wish to review yesterday's cash count to see how it is different before studying the chart below. To accept the chart below, one needs to seriously be on board with the concept of alternation. Second and fourth waves, according to Neely, should vary in amount of price, structure (i.e. sharp versus sideways), and / or complexity. The way Neely sees it, if any one varies, that is sufficient, but often times the waves alternate in two or all three characteristics.

ES E-Mini S&P 12-Hr Futures

So, starting at the left side of the chart on the night of the election, we see a first candle up, wave (i), and it has a red body, down, so that red body down is wave (ii), the next candle up is wave (iii), and then there is a long - relatively - running triangle which crosses it's 'e' wave back over the top of wave (iii), and it is wave (iv), and then the break out of the triangle is minuet (v), of the minute ((i)) wave in blue. This sequence, interestingly follows the rules for an extended first wave, as five is shorter than three, which is shorter than one.

Then, this would be the hard-to-swallow-part. All of minute ((ii)), in blue, is a sideways (w), (x), (y) flat that crosses down over wave minute ((i)) to be corrective to it. Next we have minute ((iii)), up, and no part of the zero-to-minute ((ii)) trend line is broken by minute ((iii)). Then there is a very short zigzag for minute ((iv)) that alternates in the extreme with the long minute ((ii)), and finally minute ((v)), up, of Minor 1. And interestingly, this sequence, too, follows the rules for an extended first wave, as five is shorter than three, which is shorter than one.

Then, as incredulous as it might seem, all of the sideways movement from 12-Dec to 02-Feb would be a sideways Minor wave 2. Since, wave 2 must cross back down over wave 1 to be corrective to it, and since a wave 2 can never be a triangle in it's entirety, then that means the structure of wave 2 is a flat-x-triangle or ((w))-((x))-((y)) where ((y)) is the triangle. This is the only valid structure I can find, and it was suggested in part by a reader here, mblcta, although the implementation was faulty.

And, by this count on futures, or yesterday's count on cash, we are in a minute ((iii)) wave, then, and possibly started a minute ((iv))th wave today.

Now the futures count would put the wave count in Minor 3, with the chance for the EWO to go higher. But one of the concerns with this count is the extremely shallow retrace of Minor 2. At it's deepest portion there would be only a 23.6% retrace on the cash market, and only about a 20% retrace in the futures. Once again, that is supposed to mean that wave 1 is the extended wave in the sequence.

For this reason, and with deference to the weekly ES chart, where we are finding some resistance at the upper edge of the weekly trend channel, I am again showing a wedge shape to the impulse (not a diagonal: a wedge-shaped impulse) as Minor 3 should be shorter than Minor 1. Also, with Minor 2 so long in time and sideways in the futures, then one would look for relatively short and quick fourth waves. Since this count does result in no part of Minor 3 being below the zero-to-Minor 2 trend line, I will monitor this count for a while and see how it does.

Thanks & with kudos to mblcta for the suggestion. This time around, it would work,


  1. Thanks again Joe for all your postings!

    1. Welcome Mark. Hang in and thanks for saying. It's an 'ornery' market.

  2. Hi Joe...been reading all your posts and appreciate all your work. It's getting scary out there so I'm glad you're keeping us on track!