Thursday, April 13, 2017

Count Continues - 3

Just as, once again, many major market and web pundits were screaming "higher, higher" at you, with some making outrageous numerical calls to the upside, and just as outrageous Elliott Wave counts, their words have turned to stunned silence as this web-site took a much more cautious approach, stating for the last few days that if the ES futures level of 2375 was not exceeded, then it was most likely that an expanding diagonal was forming in the downward direction. (Remember to read double parentheses in text as a "circled" wave number on the chart.)

Here is the continuation of our downward count, and the predictions that it makes.

ES E-Mini S&P500 Futures - 4 Hour - Potential Diagonal Downward

So, first, for this diagonal to complete properly, it should make a new low below 2304 in the futures. The current geopolitical environment has started that process, with several lower low and lower high days since we first published this count in the post titled, "Outside Reversal Day Down" back on April 5th. However, wild gyrations within the diagonal are still possible.

The simplest way for the diagonal  to complete is now for each of the minute waves ((i)) through ((iv)) are "three wave" sequences. That could mean that April, 6th through April 10th is an ((A)) wave down and ((B)) wave up, as a flat wave, and the apparent expanding shape we are in now would be ((C)) of minute ((v)) to finish the overall diagonal. The more difficult way is if April 6th through April 10th is only wave (i) and (ii) of an over-all five wave sequence lower. Right now, the former scenario is favored.

Again, similar to the count on the Russell 2000, published previously, and repeated below, and the Dow count from the weekend video on YouTube, we think the potential diagonal downward is because, Intermediate wave (1) upward finished, and we are just starting Intermediate (2) lower, of the Primary 5th wave, overall.

Russell 2000 Cash Index - Likely in Intermediate (2) Lower

And, if the C wave was an ending contracting diagonal, as we called in real time in the chat room, then Intermediate (2) should trade lower than that B wave low, which started the diagonal.

Time will tell. But, the expectations are clear, and each of the waves currently fits properly down to the five-minute level on both the cash S&P500 Index and the futures.

From an invalidation standpoint, we drop that level to above 2365, basis the ES futures, which is now a few ticks above the high of the current ((B)) wave on April 10th.

Have a very good weekend. Let's hope it's enjoyable for all!
TraderJoe

6 comments:

  1. Thanks TJ. If I understand, under either scenario we are in intermediate 2 down. Or if it is an expanding diagonal down there could still be part of wave C and we have one more wave up?

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    1. No evidence for the latter at this time.

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  2. Joe , is the fact that this wave 1 of an ending diagonal took over a yr to develop does that mean that this last primary wave 5 is gonna take years before it ends? Thanks for the tutorials Sam

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    1. Hi Sam. Not necessarily because ending contracting diagonals usually contract in 'time' as well as price.

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  3. So on daily chart for Dow Industrial if one does the 8-fold method from july 2016) to last high (march 2017) -it would seem a 5 wave move (I think all conditions for 8-fold method are met)..so it may suggest that from Feb 2016 to late June 2016 was 1 and 2 then from July 2016 to present high (March 2017) was 3 and now 4th...what do you think. thanks

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    1. Where's the attack of the lower trend channel for the internal (iv)? Did you draw the trend channel on those 168 candles? The conditions have not been met, and while I agree there are five sub-waves contained, it may be better described as being in a "no-retrace C wave" and as part of a diagonal in which Intermediate (1) is the March 1 high. Similar to the Russel, shown.

      It's the A & C waves of zigzags that often show the shallow retraces (hence the term "no-retrace C wave") which are not as characteristic of the motive waves of true impulses - even though "in a sense" they are impulses, but only impulses inside a larger overall correction.

      The Eight Fold Path Method helps by pointing out those differences.

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