Wednesday, April 5, 2017

Outside Reversal Day Down

If you were watching the market today, you may have seen the higher prices earlier in the morning, and until just after the Fed released it's meeting minutes at 2 PM EDT. Then, prices reversed on that and potentially on two stories regarding the President and 1) Steve Bannon, or 2) Syria. So, we had a correct prediction for the beginning part of the day, but when we began counting fourth waves, the corrections just got too deep - all of which was noted in the live chat room in real time.

This leaves the daily ES E-mini S&P futures below the 18-day SMA, with the daily slow stochastic curled lower, as in the following chart.

ES E-mini S&P500 Futures and Outside Reversal Day Down

What's nice is an outside reversal day gives us a "key marker". As  the result of today's move, this favors the expanding leading diagonal downward scenario as shown on the next four-hour chart.


ES E-Mini S&P500 Futures 4-hour Expanding Leading Diagonal

Price stopped at the 78.6% upward Fibonacci retracement level, and it was noted when that happened in live chat, that this would be the best alternate for counting in the downward direction. The wave lengths are correct, and the EWO signature is "expanding" as well, and this fits the current structure. But still, all diagonal are potentials, and this one must make a lower low, and one in which minute ((v)) is longer in price than wave minute ((iii)).

For all those that have questions, yes, there are still possible upward alternate counts. One would be an expanded flat for a minuet (b) wave within a minute ((iii)) wave of an upward ending diagonal to 2401. The problem is there is absolutely no way to verify same until 2375 is exceeded to the upside before the low of 2317.75 is exceeded to the down side. So, upward counts become the alternate, and we will not speak of them until or unless 2375 is bested on the high side. This goes along with Ira Epstein's counsel that only if the high of an outside day down is exceeded in the next two trading sessions does it constitute a trap for the bears.

Because the momentum is currently pointing down, it is up to the market to prove the case for higher prices. Once again, with prices near the highest levels in history, extreme patience and flexibility are needed as the market tries to decide how to top.

Have a very good evening!
TraderJoe

4 comments:

  1. Thanks Joe. As you know, I've been counting downward since the March 1st high, and today's action has only reinforced that count. I know you take issue with me counting it as a 1-2-i-ii, but with today's action, it can now also be counted as a 1-(running)2. COMP and NDX can be counted as finishing a diagonal at today's high. RUT looks more like a wave A down, followed by a running contracting B wave triangle that finished at today's high. Whether it's A-B-C or 1-2-3, I expect all indexes to finally accelerate down in unison now, and fulfill what I wrote a few days ago that we would see 2200 before we see 2400.

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    1. As I have said before, I have no problem with downward counts / alternates as I am neutral in my viewpoint. My problem was with your lack of 'evidence' for your count. So far, you haven't offered any, so it goes in the category of "lucky guess" until you have shown some. I have cited ways we could have topped (aka weekend video) at least for now. But, nothing is for certain until it is.

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  2. TJ, It appears the /ES may have completed the 5 waves down as predicted on the short term chart above. Is that a wave 1, a wave A of a bigger correction, or a wave c to complete a wave ii, which will be followed by a wave iii to the upside.

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  3. Sorry, I see I made a mistake. I thought last nights /ES lows broke lower than what really occurred.

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