Thursday, February 9, 2017

Minute ((iii)) of Minor 5 of Intermediate (3)

With the lack of overlapping 2283.97, downward, in the cash market, and subsequent overnight upward movement in the futures market, the price extension is enough that we must now seriously consider the best count as minute ((iii) of Minor 5 of Intermediate (3), as shown on this daily chart, below. (Remember: read ((iii)) as minute-iii or as symbol circle iii).

Figure 1. SP500 4-Hr Minute ((iii)) of Minor 5

And, when I said yesterday that "three waves down, and three waves up could still be part of a triangle count that would break upward, it was in reference to this following ES E-mini Hourly S&P chart on which I could count an Expanding Triangle which is correct in every detail. Notice how the waves A, B, C, D, & E expand in time as well as in points, and wave (4) does not overlap wave (1). The upward diagonal we counted at the end of the day was not fully retraced, and therefore had to be a leading diagonal. Crafty 'ole market.

Figure 2. ES Expanding Triangle (4)th Wave that does not overlap it's wave (1)

So, now that likely leaves the ? wave (question-mark wave) as a lone wave, and the Fibonacci ruler shows that as of early this morning the extension is greater than 1.618 x that wave. So, we 'should' consider that ? as a larger degree first wave, and everything after it as a third wave until that is disproved. You might want to draw your own channel around the larger wave set - as a guide only.

But something else happened today that is particularly note worthy. If you remember from previous blog posts (see Jan 19 - LINK) for an overall diagonal count upward for the daily or weekly S&P500, there were only 5 points to spare for an Intermediate Wave (4) to overlap down on an Intermediate Wave (2) and still have (4) remain shorter than (2) - as required for a contracting diagonal. With the +17 point up move today, that possibility is now gone. And, again, I said I had no preference for whether this move finishes as an impulse or as a diagonal. It is finishing as an impulse - just as we had already determined for the DJIA. Period.

So now when I look over the weekly chart of the ES E-Mini S&P Futures, the count that would best form an impulse looking count would be the one below - as published earlier this afternoon in the live chat room.

Figure 3. ES E-Mini S&P Futures Weekly Impulse Count

So, it is likely we are finishing the Intermediate (3)rd wave up, as discussed above, and are in the Minor 5th wave. Cash prices are getting quite gap prone at this time, and price should experience some significant upward resistance at the upper edge of the weekly parallel Elliot trend channel.

Then, if an Intermediate (4)th wave is to form, and if it is to precede the last wave in the sequence, then it could very well be a triangle; and it may be a triangle that tries to avoid overlapping the X wave upward, of Intermediate (2). While not a rule that wave (4) can not overlap the top of wave (2), it is a very strong guideline to look for in true impulse waves. Also, since Intermediate (2) is a FLAT wave, then Intermediate (4) as a triangle would provide excellent alternation before the final (5)th wave up, provided that the minor B wave of such a triangle does not make a higher high than the high of Intermediate (3) when we get there.

With regard to Figure 1, I know a lot of people will now say "there are the first three waves of a diagonal for Minor 5". And while technically it is a plausible alternate count for the SP500 only, at this point, there are two problems with it. The first problem it is that as an upward wave ((iii)) of a diagonal, it is shorter than a wave ((i)) by only 0.10 points. So, it has a high risk of invalidation here. But more importantly such a count invalidated in the DJIA today because wave ((iii)) is longer than ((i)). So, stay loose and flexible here and keep in mind with a diagonal Minor 5, prices might not reach the upper weekly trend channel line, too.

Lastly, you may remember how I said that the S&P500 15-minute diagonal posted on the 01/27/2017 Mid-Day Update : Time Has Run Out, could not have been an ending diagonal because it was not fully retraced in less than the amount of time that took to form it? Well, today, here is your proof - as that level was exceeded higher.

From an invalidation standpoint, using the futures, overlapping the ? mark wave at 2285, downward, without having made new highs first would pose a serious problem for an impulse minute ((iii)) count, and we'll get into that topic only if and / or when it happens.

So, that's all for today. Don't get too frustrated. Tops are tough. And, if the air is kind of thin up here, always remember, "there are other markets!"

Hope this helps.



  1. Thanks Joe. I still see an ED from the November low.
    2278 on 12/13
    2234 on 12/30
    2301 on 1/26
    2267 on 1/31
    and we're in the final phase now.

    1. So I looked this over in quite some detail. And, in-and-of itself, the waves are 'currently' the right length (And since it would still be in progress, there is no guarantee they will stay the right length).

      But what would it be an ending diagonal OF? I mean this up leg from Nov '16 to present is "longer" than the prior one. So having a diagonal here makes no sense unless you can show where it does. You are welcome to, but I think you may be disappointed. All it could be, as a diagonal in itself, is the C wave, of (1) of a much, much, much larger diagonal where Apr '16, is A, and Nov '16 is B. That means your proposed diagonal would drag on for years more. I'll go with the much, much simpler weekly count above, for now.

    2. In regards to length, it invalidates above 2334.58.
      In regards to how it works in the larger picture, it would have to be part of a corrective wave from 1810. I understand how and why you reject that idea, but it is worth nothing that Neely is still married to that idea. Essentially, he's calling this 12 month rally a wave D of an expanding triangle that began with the initial decline in August 2015.

    3. oops..."worth nothing" should be "worth noting."

      ...or maybe not! haha

    4. One last comment: In regards to your weekly count above, you have a running wave 2. In my experience, a running wave 2 always indicates significant inherent built up energy in the direction of the impulse. (in this case upwards.) Therefore, what always occurs after a running wave 2 is a massive and explosive wave 3. Yet, your wave 3 qualifies as a dud. That doesn't seems correct to me.

    5. Keep in mind the $NYAD is still at fresh new all-time highs, and not diverging at all at the moment.

    6. Wave D of an expanding triangle, huh? If, as you say, it starts with the "initial decline" in Aug 2015; then if that is the A wave, I'd be curious where the B wave is because there was no higher high in the SP500 that year - as 'required' for an expanding triangle. I could see the C wave down to Feb 2016.

      And also the count doesn't work at all on the Dow which did not bust it's August lows.

    7. Neely has an unconventional way of counting waves. Rarely do his wave structures end at the highest high or lowest low. In 2015, he has the previous up wave ending on 8/18/15, at 2103.47. That's where he has the expanding triangle beginning, therefore, the B wave did exceed that level at 2116 a few months later. As far as I can tell, he looks at SPX in a vacuum, and never considers the Dow.

      Bottom line for me is that "if" the wave from 1810 ends between where we are now and 2400, then I'm going to call it a corrective wave. Otherwise, I will assume that we are only in the embryonic stages of wave 3, which began at the November lows, and has a very long way to go.

    8. Interesting, because that's not what he teaches in his book. In his book, he says that if a up wave retraces 78.6% or more of the prior up wave, before a down wave begins that takes "less time" that the up wave to build, then it is part of the prior up wave. Can't have it both ways. Sorry, but now we have EWI and Neely not counting as they teach. (EWI in Gold count with longer wave 3 in 'supposed' contracting diagonal.)