Wednesday, March 29, 2017

Short Term - The Eight Fold Path Method

So, for a large part I'm going to show you the SP500 5-min cash chart from the live chat room today and just let you look it over with a few exceptions. Right now The Eight Fold Path Method says to look for a first "five waves up", and so that is what I am doing. This "first five waves up" to 5, if it completes properly, would either be a minute ((i)) wave, or a minute ((a)) wave on intermediate term charts.

SP500 5-Minute Cash Chart to Minute ((i)) or Minute ((a))

Wave 1 of this chart was counted as a contracting leading diagonal, and it was a "good call". There was a short wave 2, and then a significant wave 3 occurred on a steeper angle - the trend line of which was not broken. Wave (iii) of ((iii)) of 3 occurs on the maximum of the Elliott Wave Oscillator, and wave ((v)) of 3 occurs on a divergence and on either the 100% x 1 wave or 127% x 1 wave depending on exactly which peak of 1 is used for the measurement. In either case, it is exactly on a Fibonacci relationship, exactly as The Eight Fold Path Method suggests.

Today I called for a triangle wave 4 which ended precisely on schedule - to the five minute bar. Since then the high of ((b)) wave was broken to the upside, and the first wave of 5 labeled as ((i)) is a contracting leading diagonal. Here's one part of the count that I really want to cover.

Since wave 1 is a contracting diagonal, then wave 5 should not be a diagonal in it's entirety. This is a wave guideline, not a rule. It derives from the principle of alternation. I have already counted wave ((i)) within wave 5 as a contracting leading diagonal. This is OK. It is still just a sub-wave of 5, not all of wave 5. The day may have ended with wave ((ii)) of 5 complete or near complete. If so, there should be a gap up for tomorrow as wave ((iii)) of 5.

Part of the rationale for suggesting a gap up for tomorrow is that wave 5 would be quite short relative to the other waves in the sequence if it were to end here (let alone constitute a truncation).

Further, if for some reason there should not be a gap up tomorrow, then based on where the prior fourth waves are located, I have clearly delineated a Market Reversal Warning at 2348 - 50. This is because there is an ever-so-slight probability of a truncation at the high - since the Dow did not make a new high either. Let's see if we get that gap up. If so, and wave 5 completes properly, then we would expect at least three-waves down in the form of ((b)) wave, or a ((ii)) wave since that is the usual expectation after five-waves up.

In this example wave ((iii)) is a lower degree than ((iii)) and both are lower degree than ((iii)). If we complete a "first five-waves-up" tomorrow I will update the intermediate term charts then. The daily trend is still up until proven differently.

Have a great night!
TraderJoe

12 comments:

  1. Your wave 2 retraced like '4 pts'. What happened to the deep retrace for wave following a diagonal in wave 1 position?

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    1. Hello. Have you even read the Elliott Wave Principle by Frost & Prechter? If you look on pages 87 & 88, where the rules and guidelines for diagonals are given, there is neither a rule nor a guideline regarding the deep retrace. While it is described and 'discussed' in the "text" as being a good likelihood for a Wave 1, it is NOT a rule. It might help you to remember this book was developed when the wave structure was a whole Cycle degree less in 1974 - before the year 2000. In other words, we are "way up" in the wave structure now. And the retraces are getting shallower & shallower. That retrace covered 38% depending on where you measure wave 1 and wave 2 from. The very reason I called for a triangle today was to resolve the sloppiness of that bottom. Maybe ((i)) is actually 1, and all the rest is 2, over to where blue 2 is. Maybe it is the Leading Diagonal. But, the Leading Diagonal was sure 'predictive' of what was to follow.

      I know you want to criticize things, but it looks to me like you have a lot more to learn first - just like I mentioned in my weekend video. There are too many people who know 'too little' about Elliott Wave and wind up mis-applying it. Again, for a five minute chart, we are 'only' trying to determine if we get "five waves up" or not.

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    2. the futures had about a 10 point correction for 2

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    3. You are correct, it's not a rule. I realize I come across as criticizing, but it wasn't too long ago you said shallow retraces more often than not are b waves. More times than not, wave 2 will retrace at least 50%. In the end, the gap up will not happen so let's see what happens

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    4. There's you're deep retrace within 5, ((ii)) was almost a 90% retrace of the Leading Diagonal ((i)). And now price is higher than ((i)) @ 10:02 AM. Another leading diagonal called properly in real time.

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    5. Yes, but I believe there was a key overlap within 5 now at least by your count.

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  2. Thx for the update....any thoughts on the RUT

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    1. Welcome. The 'only' bullish count I see refers to the daily chart. 28 December would have to be a third wave, and everything since would be part of either a running flat fourth wave or a running contracting triangle fourth wave (not over yet), provided the RUT can regain the EMA-34, which it has not yet.

      But, as I noted, there is a good possibility the RUT made an hourly Contracting Diagonal lower. That contracting diagonal lower either ENDS the running flat fourth wave as it's C wave, or it is simply part of the running triangle. If the latter, it would end the (c) wave of the running triangle and we are in (d), up, now.

      The bearish count is that the contracting diagonal lower is a first wave or an ((a)) wave down of a much larger downward count. It is a very sloppy part of wave theory that you have to wait until leading diagonals are 'proven' by not violating their origins before you can make conclusions about them.

      But that is the nature of the beast. Beyond that .. ie for a shorter term wave call, I don't intend to cover every index at all times here. You should have a go at it.

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    2. Hi Joe,
      Have been having some health issues so not following as closely as usual. Am just a little confused re the gap up. I don't think you are saying that a gap up would end 5 and although not shown, there would still need to be a circle 4 and circle 5. Are you suggesting a gap just because it would demonstrate 3rd wave power? Is it acceptable to have a flattish open and then a rise for circle 3?

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    3. Often third waves have a gap in them. Then a fourth and a fifth wave. Get well quickly.

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  3. Thanks Joe for your post!

    Price action practically nailed the 1.618% extension and reversed. A nice six point drop so far so I'm taking profits on some and lowering stop at break even point. Sure helps to pay the bills. You have no idea how much your work is appreciated by the small guys like myself. I know your time is valuable and so is mine, having to take care of two disabled parents is tough, so I take advantage of your posts whenever I can.

    Thanks again!

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