Thursday, March 30, 2017

Five Waves Up

Here is the update of the very short term chart, as we counted it in the live chat room this morning up until about 12:40 pm ET.

SP500 5-minute Chart

As you can see a very clear five waves up was made to today's high. Wave ((v)) of 5 ended on a very slight truncation of -0.06, and on a clear divergence with the Elliott Wave Oscillator, but several times through-out the day I had said, "now I don't care if wave five of five truncates", and it did! It wasn't possible to call the truncation that until there was downward overlap of wave ((i)), which did occur, but at least we were on the lookout for it.

As an aside the NQ futures made another new all-time-high today.

So we now have "five waves up" and it sure looks like a larger degree minute ((a)) wave. The truncation sure makes it suspicious, and the retraces are not very deep at all - lucky to see 38%.

Here is what the waves look like from the high on the SP500 2-hour chart. I'll discuss the alternate and invalidation after the chart.

SP500 2-Hour Chart

Price did break the channel on the two-hourly chart with five-waves up. However, the up wave has some of those characteristics of an "A" wave that I mentioned.

So, the two best options are that a 4 ended at 2322 on 27 Mar, and we are either in minute ((a)) up, in what could be a triangle or an ending diagonal wave. Or, that we made a minute ((i)) wave up today, and we are going straight to the high to finish that wave 5, up, in an impulse fashion.

Unfortunately, the invalidation level for both of those scenarios now drops all the way back down to the 2322 low. Only if the 2322 low is exceeded to the downside first (before a new all-time high) would it be possible to put an expanding diagonal downward back on the table. That is because we currently have "five waves up", and that must be respected until we can no longer count that way.

The daily EMA-34 is at 2350, and price finished over that, so the daily trend remains up on the until it does no longer.

After we counted the likely ((v))th wave truncation to end wave 5, today, we got a small-degree three-waves down, and then a rebound in which price only returned to about 92% of the high and failed to make a high over the truncation level or over the prior high. But, it did exceed the key 90% level for the possible (b) wave of a flat correction. So, it wouldn't surprise if tomorrow had some down movement in it, although (b) waves can be quite wily, and this one might not be done. Even though the (b) wave up did appear to finish in the cash market, and a possible (c) wave begin in the downward direction, the after-hours market may have it's own ideas.

Here is just a reminder than tomorrow is the last trading day of the month and the quarter, and so there might be some "window dressing", which tends to create some volatility, and then Monday would be the first day of a new month and a new quarter that has the possibility of the usual inflows from pension funds, 401k's, dividend reinvestment plans, and company bonuses.

Until then, have a very good night.
TraderJoe

3 comments:

  1. Joe, I was watching the 5 min chart real time today didn't see the truncation since 4 and 5 were so small. As you've stated your chart stops at 12:40. Looking at the rest of the day's action I have to wonder if the pattern from circle iii at 11:05 isn't all a circle iv triangle which finished the day somewhere in c or d of the triangle and we may indeed yet have a circle v up which doesn't truncate?

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    Replies
    1. Hi Pt .. not as I see it because wave ((i)) downward was overlapped. Then, there is a 92% up wave, and triangle retraces are typically only 78%.

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  2. Hi Joe,
    Am I correct then that a larger degree 2 or b should be starting soon if lesser degree 5th complete? A bit thrown off by the comment about imminent new highs.

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