Tuesday, February 28, 2017

NOT The Eight Fold Path

Sometimes, to learn whether a method is useful or not, it is helpful to see it's predictions in action. This is an S&P500 5-Minute chart for the price action on February 24th and 27th (Friday and Monday), which was published in the live chat room yesterday.

SP500 5-Minute Chart : NOT the Eight Fold Path

While some traders might have been tempted to label this up-wave as a five-wave sequence, from the perspective of The Eight Fold Path method, while there can be 'construed' to be five-waves-up, if one tries hard enough, there are three big difficulties with it.

The first is this: It is almost impossible to count the first two waves as anything other than a first wave up, (1) and a sideways second wave (2). And that is regardless of exactly which peak the tentative wave (1) is placed. Next, it is very difficult to position wave (3) as anywhere other than as shown, because if the subsequent peaks were used, then it would make wave (3) a diagonal, and, in an impulse wave, wave (3) is never allowed to be an entire diagonal, itself. So, that clearly would make wave (4) the triangle - which I called out in real time; and most likely "last wave up dead ahead". But, that very triangle is the difficulty for the impulse count. Because the triangle has a higher (b) wave, then it does not provide alternation for the higher (b) wave of wave (2). So, to summarize, the first problem is no alternation.

The second problem is to notice that wave (4) does not come down to attack the lower channel line, as delineated in the method.

Third: Notice the EWO signature is surprisingly close to that required by the method, but not quite. The peak reading of the EWO does not represent a third-of-a-third wave, even though there are the required number of candles on the chart. So, my view yesterday in the live chat room especially given the only marginal highs on the Dow and the S&P was "probably just a B wave".

Today, prices have fallen sufficiently low enough to conclude we do have the C wave of an expanded flat (probably within a larger fourth wave) underway. What form that C wave will take (impulse or diagonal) will be interesting in and of itself. Regardless, another prediction from the methodology is likely coming true.

Hopefully, this type of rigorous, fully disclosed, procedure, can be more useful than "guessing" where letters and numbers go on a Elliott Wave chart.

Have a great day!
TraderJoe


14 comments:

  1. agree, but if today's high is taken out before Lower low, possible wave 5 ED. What's the chances an ED firms and you weren't the first to call it?

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  2. Expanded flat dead and ED looks dead unless it turns into expanding which is extremely unlikely

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    Replies
    1. c wave was of triangle; completed; now into a fifth wave up.

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  3. your work is impressive...thanks for sharing and educating...much appreciated!

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  4. You said in the video that the DOW was forming a diagonal. Did you mean an expanding ED? What then would be your wave 4 target?

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    1. DJIA target price for the ongoing wave (wave v of C) is 21,374.44...then followed by "four more intermediate waves" to complete the final wave (wave 5) in the ongoing bull market...

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    2. What is the meaning of "four more intermediate waves?" only D and E will be left.

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  5. I suppose you mean wave D will overlap wave A?

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  6. Hi, looking at the above chart (2) looks to be a running triangle with the wave 'b' higher than the start of wave 'a'. IF that's the case then the (3) would be the 'c' of the triangle and it DOES look like a THRUST. So that combination would be a 3 waver.

    (4) would then become the 'x' wave and we are currently in the next 'a' wave of a Y wave.

    I would very much appreciate your comments on the above count.

    Many thanks

    Purvez

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    1. Oops I meant:

      the (3) would be the 'C' wave of the thrust out of the triangle.

      Purvez

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  7. TJ, it's time to seriously consider this as P3 as we are seeing overbought readings more extreme than P1. This is impressive!

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  8. It has to be 5 of 3 of extended C Wave, so peak momentum

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    1. Pretty close. See update of chart from video, published on 3/1.

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