Saturday, April 1, 2017

Zero-Based Budgeting

So I was literally 'playing around' using the Investing.com charting tools, and I asked myself the question, "If I had to review the daily chart from the Election low, and look at the various factors involved, from the perspective of The Eight Fold Path method, what might I find now that was not apparent before?" And I mean really, really take a fresh look. As a result the chart below was developed.

SP500 Daily Chart

The first thing I noticed was that all the daily candles after November are above the EMA-34 until the candles in March of this year. Using The Eight Fold Path Method, that has always tended to indicate "only one wave up". And so, I started to figure, "how could that be?" More on that later, but you can see some wave labeling that resulted from that thought.

The second thing I noticed was that this March pull-back to the EMA-34, "looks like" the largest pull back we have had, so far. And I asked, "how can that be? why now?". And, "just where are those deep second wave pull-backs?"

Thirdly, this dip resulted in the first traversing of the Elliott Wave Oscillator (EWO) below the zero line.

The fourth thing I wondered about was, "If the wave to the March 1 high is really a third wave, then why is it on a divergence of the EWO? The very hallmark of a third wave is a higher EWO.

And Fibonacci Fifth, none of us really had problems counting "five waves" to the January high, But that's where all the trouble began. So, then I began to wonder whether or not there was a Fibonacci relationship between the January, 2017 wave up, and  the March, 2017 wave up. And if you look at the numbers in blue, you can see in the above daily chart that (c) = 0.618 x (a) almost to the point!

All of this seemed too amazing to pass up, so building this chart from the "bottom up" has actually brought me back to the much larger potential diagonal count I published in my prior YouTube video. I showed the count using the Dow, and that count remains the same. Now, let's update it on the S&P500 Index, below, using the three-day time frame.

SP500 3-Day Chart Primary 5 Ending Diagonal

First, it should be clear from the wave labeling, I am not now expecting the Primary 5 wave to follow The Eight Fold Path Method. So far, it hasn't.

To be brief, it looks to me like we have finished minute ((i)) and minute ((ii)) of the Minor C wave of Intermediate (1), of Primary 5. Marginal new highs should finish minute ((iii)), and minute ((v)) perhaps in April. This can agree with a target of 21,374 on the Dow. But furthermore, explaining the up wave as "all of minute ((i))", agrees with the observation from the daily chart where the EMA-34 tends to indicate "one wave up". Maybe the mystery is solved!

Then an Intermediate (2) wave of five Intermediate waves up to Primary 5 would likely at least come down to the lower trend channel boundary and / or break it, before an up trend resumes. This means the topping process can still be grinding and labored, but it would provide the time needed to develop the technical divergences which are now only just starting to show up.

If Thursday's "Five Waves Up" wave was indeed an "A" wave, it may well be minuet (a) of the minute ((iii)) up wave, and the downward wave is minuet (b). I think the market may be doing it's darnedest to fool the majority of Elliott Wave counters.

Anyway, that is what a review of the daily chart indicates. It is not a change in perspective from the weekend video. It is an elaboration on it for the S&P500 index.

Cheers! And Have a Great Weekend.
TraderJoe

18 comments:

  1. TJ where you have A - if that is 1 and then 3 could be in works...with first of 3 completing where you have X and then we completed third of 3 few days back and now fourth of 3 in process,i think the other parameters ie EMA-34 and EWO (so far) also fit in that count ie EWO maybe heading towards 0 for the fourth

    ReplyDelete
    Replies
    1. Jack .. such a thing is 'possible', but the EWO never made a higher high for 3.

      Delete
    2. i think (i dont have the tool readily available) if you change your interval (ie go to 4 day ) to bring in line that this may be 3rd of 3rd from 1900s - you may get a higher high for EWO so far....

      Delete
    3. The candle ruler that was included on the three-day chart shows that this chart has only 118 candles on it - less than the 120 recommended. A four day chart would have even fewer.

      Delete
    4. yes my point was with a 4 day chart this would place the assummed 3 wave around 90th candle (4th wave and 5th wave to complete the balance of candles)...this may then put EWO of third wave at highest point so far but lets see

      Delete
    5. I am still confused on the oil count from last low..it would be great if you can share your view thanks

      Delete
  2. Thank you Trader Joe for your insightful analysis. Quick question, did you compress the time frame for convenience or do you think this whole move up for 5 could complete by Summer?

    ReplyDelete
    Replies
    1. No effort was made to intentionally compress the time frame (except to visually fit the numbers on the chart). I'm thinking only wave Intermediate (1) might be done by May'ish, Intermediate (2) over the summer, and Intermediate (3) and (5) in the fall. But the timeline is less important to me than the actual wave formation.

      Delete
  3. While I completely agree an ABC from 1810 is possible, why can't the market be in minute 4 (most likely as a flat) of minor C from 1992. Minute 3 would have highest reading on EWO and minute 2 dipped below 0 with a greater than 50% retrace.

    ReplyDelete
    Replies
    1. Because the EWO on the three-day chart at A is the highest reading on the chart at 107; highest reading since is 101. A true third wave should have a higher EWO, and the high of the EWO in an impulse is reserved for iii of 3, not 3.

      Delete
  4. Joe, Many thanks for the amazing insight. I've learned a great deal from you. I wanted to ask you if you have an alternate long term count for the Dow and SP500 if this is not a final Primary Wave 5 up. Or are the odds of this being some sort of Larger bullish scenario highly unlikely. Not sure if this is shown in your chat room or not. Thanks for any input

    ReplyDelete
    Replies
    1. In order to have any larger count, or 'more' bullish one for sure, one must have a five waves up. Five waves up are not in evidence yet. So, the question is premature.

      Delete
  5. Joe,
    Going back to your previous post. I like the 5 min charts very much. One can learn and reinforce the EW principles better because they are coming up more frequently due to the shorter time frame. If we were voting I would vote to keep them. Just my two cents. LOL

    ReplyDelete
    Replies
    1. I second that Tom. Not sure if you got a lot of flack from some viewers or readers for posting the 5 min or if it's a personal decision. Either way thanks for the posts Joe

      Delete