Friday, February 17, 2017

Some New Lows, Some New Highs

The Dow cash, and the ES E-Mini S&P500 futures, along with the NQ futures made new lows today. The S&P cash did not make new lows today. The Dow and the S&P then rallied but did not make new all time highs. The NQ futures did rally to new all time highs, so now it becomes a question of which index you want to count and follow.

Pretty much regardless of which one you pick, the correction does not look quite over yet, because, particularly in the Dow, S&P and ES, price has not interacted yet with an internal lower channel line.  As just one example, the DJIA 30-minute chart currently has about 120 - 160 candles for the wave of interest at present (with 145 on this chart), as according to The Eight Fold Path Methodology.

DJIA Half-Hour With 145 Candles

The chart shows the clear gap - with the red circle - for wave (iii) of minute ((iii)), and it's located on a peak of the Elliott Wave Wave Oscillator, with wave (v) of minute ((iii)) on a divergence and just beyond a 1.618 extension of wave ((i)).

It also nicely shows that the Elliott Wave Oscillator has come back to within the required +10% to -40% as would indicate the minute ((iv))th wave (black circle on the indicator). The only thing that hasn't occurred is price touching the lower channel line.

With today's lower low, its clear the Dow made three waves down to the (a) wave, and likely three waves up to the minuet (b) wave which may not be finished yet. It could, of course, exceed the high in a flat wave. Then, the (c) wave down would be expected to touch the trend line in some manner. In the S&P500, this (b) wave has already met the 90% requirement of the retrace on the (a) wave. And, of course the NQ has already made the new high.

In this count, a flat or triangle wave ((iv)) would provide excellent alternation for the sharp minute ((ii)) wave. The importance of this trend line touch can not be understated. What happens if it doesn't touch? Well, let's say there were some big news announcement this weekend, like a new tax plan (we don't know there will be - just providing an example), and the futures spike 15 or 20 points Sunday night. Then, in that case, there would acceleration away from the trend line, and a larger third wave. Just keep in mind, at this time, the weekly ES trend line is providing some resistance here, as expected, so the fourth wave currently seems more likely.

Some new highs, and some new lows. So, let's see how it goes!

Have a nice weekend.


  1. Caldaro said today

    "All potential long term bearish counts have been eliminated."

    Bear in mind he called the end of the Bull market and the beginning of a major bear a year and a half ago and then back tracked.

    Maybe this too is the bell being rung at the top

    1. Like TJ said, assuming this is P5 a major top is at least 6 months away and probably more. Since the NYAD continues to make new ATH, a divergence will take many months to form. I know TJ will disagree, but the longer the NYAD continues to make new ATH's, the more it favors TC's count. It does not look like 5 waves from 667-2135, but the NYAD does not lie.

    2. And remember, there would be nothing wrong with Primary V = 0.618 times the net traveled in waves P1 through P3. That is just the secondary wave five target at all degrees of trend. The market would have to demonstrate it. I just remain open to it, as regular EW requires. But, in my 'opinion' that would be stretching 'time' a bit far for a Fibonacci eight years.

    3. Caldaro is looking pretty good right now. This market has very few down days so far this year. It's showing one of its strongest moves in the past few months. There is a ton of cash on the sidelines and I think we go a lot higher for a lot longer if we close the month near all time highs.

  2. For caldaro, in the long term one is at the beginning of the primary III
    For todd gordon, in the long term one is almost at the end of the primaryIII soon soon IV
    For joa klein we are at the end of primaryV

    who is right???

    1. You should ask them, on their sites to provide their methodology - for free. I have posted mine in the upper right hand corner, "The Eight Fold Path". Therefore, it is objective. Caldaro says, "all bear market counts have been eliminated." Funny, I said, "Primary V only" almost a year ago and Caldaro and many, many others chose to disagree. He is "just now" admitting a bull market, only? Why would anyone listen?

  3. A wave 5 in the making.
    Wave 5 is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is lower in wave five than in wave three, and many momentum indicators start to show divergences. It often takes form of ending diagonal structure.

    Elliott Wave Personality and Characteristics

  4. At the start of wave 5 average investor was bearish and so was Elliot Wave analyst Caldaro. Now the average investor has turned bullish and so has he.
    Now every man and his dog is bullish.

    Net inflows into long only equity mutual funds has finally turned positive this month. This was the reason probably for the wedge and channel high momentum upside breakout.

    Retail investors who are the FOMOs(Fear of Missing Out) are in now at the top!!!

  5. TJ,
    Reviewing your year end video I noticed that you used what I think is an arithmetic scale on crude and have the market moving sideways longer to reach the higher downtrend line. On a logarithmic scale I have crude already reaching and slightly exceeding the higher downtrend line on a monthly chart. Could you briefly explain when and why to use arithmetic scale over log or vice versa if applicable? Would this have something to do with the completion of EW patterns as well as maturity of the EWO? Thank you.

    1. Elliott indicated both scales are applicable, and to use whichever worked best. In general, most use linear for intraday, daily and weekly. For weekly, quarterly, monthly and larger, log is the most applicable. I suppose weekly is where the most overlap is. So, both are applicable mostly on the weekly. There is no magic, but one would expect resistance at weekly log and linear trend channels.

  6. The NDX is different from S&P.It has no November overlap. Would you count it as 1-2-i-ii-.