Wednesday, March 15, 2017

Parallel Remains in Tact

The S&P500 today did make a higher high than the tentative ((A)) wave we posted in the prior chart. This means for now that the upward sloping trend channel remains in tact. (Remember, ((A)) is read as circle-A).

SP500 2-Hr Chart Higher Local High

Yesterday, the down wave again challenged the lower trend channel line, and extended to the point (a near exact 78.6% retracement) that we can give it credence as "either" a ((B)) wave, or a second wave, so both upward counts are currently noted.

If it is ((A)), ((B)), then the structure will be of a diagonal. If it's ((1)), ((2)), then the structure is that of an impulse. As of the moment, I have no preference what-so-ever. However, the Elliott Wave Oscillator (EWO) has both turned green and is now above the zero line which should indicate a fifth wave in this sequence. The NQ futures have already made higher highs, while the Dow is currently lagging the S&P. And we are now at about only 146 candles, well within the 120 - 160 that are typical.

On another note, we previously showed you this example of a 138.2% wave that we labeled b:3, and said the prediction in the Dollar Index was to be below the a:3 wave. As you can see from the chart below, as of the end of the NYSE session today, the Dollar did indeed trade today below that a:3 wave. So, you have seen a prediction made days in advance come true.

US Dollar Index b:3 Wave at 138.2%

Even though the over-all prediction came true, calling this downward wave in real time became a real challenge because several of the downward legs did not follow The Eight Fold Path. For example, the first wave down down from the top (wave i) was an expanding leading diagonal. In fact, yesterday, my "opinion" of what the Fed would do resulted in a turn-around possibility saying that it was possible we had a truncated flat. But, when the Fed suggested only two more rate hikes this year instead of three, the better definition of wave iii, downward occurred. (Interestingly, in the live chat room I suggested that exact possibility later in the day).

Anyway, my purpose here has been served. I simply wanted to demonstrate a true 138.2% b:3 wave, as well as it's consequence. And that is now done. Again, this type of FLAT wave is called an Expanded Flat. It is not called by it's older name the Irregular Flat because there is nothing irregular about it. Expanded flats are one of the most common types of flats. They are seen often and regularly, so using the older name is a misnomer.

But, the lesson still is being absorbed, as long as I've been at this, not to mix opinions - of any type - with wave counts.

Here's hoping you have the best of evenings.


  1. Thanks for the update, Joe. Seems to me that today's rally could have also completed a wave B. I realize that NDX went to new highs, but the DOW has only come back 50%. In addition, RUT made lower lows last Friday and yesterday, so the wave B would be an expanded flat in that index.

    1. Welcome. Just wondering what makes you think the end of a day makes the end of a wave? One of Ira Epstein's gems is that he is a big advocate that when the U.S. market has a fairly substantial move, there is often (not always) a follow-through from when the Asian markets open, as they were not open during our trading day. Today's up wave exceeded 1.272x, and could be only the way to 1.618x. So, I'm not sure what generates the comment as yet.

    2. I was speaking in general terms. Even though SPX, W5000, OEX, IWR, and NDX did not make higher highs today, I should have said "could be completing" rather than "could have completed."

  2. TJ not sure which is more a work of art, your count or the wave; thanks

  3. TJ, there's some who think wave iv ended at 2358. Followed by 1 yesterday and 2 today. Do you see any structure where that could work? I believe the truncation is too large so only possible structure is double three and I thought double three are suppose to move price sideways which this clearly did not.

    1. Likely being a fourth and/or fifth wave in progress, the Fourth Wave Conundrum is now in full force. One can speculate until the cows come home on how this wave will unfold. For example, with only three waves up (so far), how do we absolutely, positively, rule out a triangle for wave iv, where 2355 is (a) of such a triangle, and yesterday's high is (b) of such a triangle. One can not. The up wave made the 78.6% retrace level, which is common for a triangle.

      There are other allowed counts certainly - such as an impulse up or a diagonal up. This is the very 'crux' of The Fourth Wave Conundrum.

      Therefore, one has to be patient & flexible; and not exacting.