Wednesday, February 8, 2017

Even Steven, Stephen

Near-even odds resulted in ... ?? ..well ... a very tight range today for the SP500. Although the NQ futures topped the high again late in the afternoon, after opening lower, then rallying, the S&P500 stayed inside of a 78.6% retracement of it's downward waves.

And where are we now? As of today, still even-steven. Below is a special presentation of the 5-minute cash S&P chart as was published during the live chat room today, starting at the prior high over on the left at the (0) mark.

SP500 5-Minute Chart from Yesterday's High

In real time, I counted only three waves down (a), (b) and (c), with (c) finishing today. I actually counted the contracting Leading Diagonal downward to (a) on a one-minute chart in real-time and to the minute! Importantly, today's low missed the 2283.97 overlap level we have cited in recent posts. (Do you think someone is listening? Lol!).

Then, as best I can tell, we have only an (a), (b) and (c), upward from the low to end just shy of the 78.6% Fibonacci retracement level. However, because of downward overlaps, we clearly stated in the live chat room today that the upward wave can be counted as a diagonal wave. Is it an ending diagonal (c) wave? It very well could be. It has already overlapped waves iii and i downward. But it needs to prove itself by retracing to below the start of the diagonal - below today's (b) wave - in less time than it took to build. If it doesn't prove itself, each segment of the last (c) has to be seen as an ugly sequence of i, ii, (i), (ii), -i, -ii upward. Very messy in that latter case.

So, for a downward count, an (a), (b), (c) down to this morning, and an (a), (b), (c) up to this afternoon could be the start of a much larger diagonal downward. The 78.6% retrace would be characteristic of retrace waves in a diagonal.

And, in yet a still alive upward count, three-waves down and three-waves up could be part of a triangle. A 78.6% retrace can also be found inside of a triangle. So, the odds remain nearly even. Favoring the downside is an Elliott Wave Oscillator which is showing divergence at this afternoon's high, and a DJIA which barely managed a 38.2% retrace while the S&P500 retraced nearly 78.6%. What's up with that?

Favoring the upside is the NQ has still made a higher high, and the 5-minute chart above again shows another potential inverted head & shoulders pattern like we showed in previous days on the DJIA 30-minute chart. I trust this one quite a bit less.

If downward overlap of 2283.97 occurs tomorrow, then the triangle is off the table and we'll start looking for a diagonal to the downside. 

Once things clear up just a bit, we'll provide a better idea of where we are in the larger picture. I don't mean to confuse or obfuscate here by showing you a very short term chart. To the contrary, my aim is to show you just what Elliott Wave analysis really looks like in near real time. Yes, I have some opinions of the market, but they are an entirely separate matter from objective wave counting - and the two shall not cross paths -- if I can help it.

Have a very nice night. And thanks for your support.


  1. Many Thanks! I'd assume there's lots of frustrated traders out there cursing the market for not breaking decisively one way or the other.