Friday, May 26, 2017

Another Eight Fold Path Example

In yesterday's post, we showed you a fifteen minute chart of the S&P500 Index, and stated we could be in a C wave upward since May24th.  In a special for Memorial Day weekend here in the U.S., here is an SP500 5-minute chart showing this wave in detail as published in the live chat room. The wave, so far, is following The Eight Fold Path, as far as it has gone.

SP500 5-Minute Chart : Wave Follows The Eight Fold Path

So with 175 candles on the chart (versus the recommended 120 - 160), wave ((iii)) of 3 is on the peak of the Elliott Wave Oscillator, and wave 3 is on a divergence, as it should be.  A smaller time frame would result in too many candles, a larger time frame would result in too few candles.

Today's down wave at the start of the session did not break the ((a)) wave low, and yesterday, we had called a ((b)) wave high. Today continued the sideways action breaking the various trend channel possibilities several times. This is what "attacking the lower channel boundary is all about".

Given the very slow nature of the trading day, pre-holiday, and all, and the very light volume, it looks like the overall structure for the waves since the wave 3 high is that of a "running triangle". At the end of the session, we watched as the wave ((e)) low was respected, and the ((d)) wave was broken slightly higher. It could be a set-up for a gap-up Tuesday.

This is both good an bad news. When one looks at how far price has pushed into the apex of the triangle, then the triangle can be described as a non-limiting one. This means that, presuming price breaks the ((b)) wave high properly, price can sometimes run beyond the typical triangle targets before turning lower. This triangle currently projects 8 - 10 points (roughly the width of the triangle), so if you start to see more than that, it is due to the extreme price compression into the apex. That's the good news.

The bad news is that triangles usually precede the last wave in the sequence. So, we may be looking at "the last wave up, dead ahead". The market ending the pre-holiday week on a triangle is fitting. Triangles don't have to complete properly. If they do, great. If not, then they can point to a 1-2 in the opposite direction (which would be lower in this case). If all goes well over the weekend, the triangle should likely break to the upside, as expected. If something untoward or unexpected should happen, then the triangle pattern still allows the market the flexibility to allow that to be expressed, as well.

There are a couple of things not to like about the triangle pattern, the lower triangle trend line is at a rather shallow angle. But, heck, I didn't draw it; the market did. And, the ((c)) wave of the triangle is quite steep - but it did not break to a new low. Still, the Elliott Wave Oscillator is well within it's parameters for a fourth wave, staying between +10% to -40% of the peak in wave 3. So, we should expect to see a fifth wave higher!

Have a good start to the long weekend.
TraderJoe


32 comments:

  1. Hi TJ. I'm looking for a little more insight. I'm still trying to figure out how EW is helpful. I am reading this market might "run beyond the typical triangle targets" to the upside or this "might be the last wave up, dead ahead." Is there anything more you can provide? If the market goes up, you can say you are right. But, if it goes down suddenly, you can also claim you saw it coming. I am not finding any helpful hints to help ones trading. I have seen too many short term expectations not come to fruition, especially on this website.
    I am more confident in just following the leaders. What I have learned is when they are struggling, it is time to be cautious. At this time, leaders are not struggling. Many of them hit new highs again today. I am wondering if you are ignoring this strength and if EW has taught you not to look at the individual stocks.

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    1. My expectation is clear. The triangle 'should' result in higher prices. The $NYAD also made a new high.

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    2. Great. Thanks for your reply. Is that to complete wave b or is there an alternative?

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    3. Todd. You don't seem to get the very essence of wave counting. There is 'almost always' an alternative. The market is NOT 'pre-destined'. People can make choices, and the market reflects that. But, the reason alternative counts are alternative is that somewhere, down deep in the bowels of technical analysis, there is usually more supporting evidence for one case than the other. And, the alternative case has the less going for it. It has lower 'odds', not an 'impossibility' of coming about. If you don't understand this concept, I invite you to serious study some quantum mechanics to see why this must be so (things in two places at the same time, non-locality, and no collapse of the wave function until there is an 'observation'.).

      So, in this case, wave iii higher is an alternative. But ask yourself about the "volume signature" in a wave three. Volume picks up in a wave three, doesn't it? Is that what you are seeing now? If it is, go with wave three. If it isn't, go with wave ((b)). Is the A/D line accelerating, or recovering from a roll-over? If it is accelerating, then go with wave three. If not, go with wave ((b)). That is real objectivity in my view: making dispassionate decisions based on the facts as they appear.

      Cheers.

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  2. Todd,

    I've been following this website for many years, and you will not find a better blog when it comes to EW. I find EW most useful for large moves in the stock market. Todd, go ahead and chase the stocks moving higher, but beware that minor wave 4 is likely soon and that could wipeout your short-term profits overnight. Be patient and wait for the correction.

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  3. Tim,
    I am just trying to figure out how you guys are claiming this useful. Back in January, the market was suppose to be near a long term top. Then the analysis proved wrong with further upside and was changed into a wave 3 of some sorts. Traders who feared the top lost an opportunity to gain an additional 300 S&P points. Now we have been in a short term wave B. But it's starting to look like a wave 3. I am betting the count will change. My guess is you see at least 2470 before any break of this months low. When we get to 2470, my guess there will be some sort whatever that was missed.
    If you go back and study the last 6 months of the blog, it has not provided an edge. With that said, MOST PAID AND UNPAID SERVICES HAVE BEEN DEAD WRONG ABOUT THIS MOVE. So, I am not picking on just EW. I am trying to find an edge to help my own trading. I have selected TJ because he seems like one of the smartest of the bunch.
    I have found certain market behaviors need to precede a big move lower. One of those behaviors is to see the leading stocks and leading sectors start to break down. That is not happening right now. Until it does, I don't think it's worth trying to guess when wave 4 is coming.

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    1. I hope it is useful because if you read over all historical counts I called the ending diagonal top in May 2015, the end of Primary III when other blogs were looking for "much higher prices", and I also called the end of the Primary wave IV in February, 2016, when some other notable 'objective' blogs were calling for a large bear market. And, I have never once even hinted, intimated or otherwise suggested since the start of Primary V, that Primary V is over in it's entirety. Not once. I am still counting PV - with all it's twists and turns - until there is a countable complete pattern (one that will hopefully have a triangle or diagonal in it somewhere.)

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    2. Further, Todd, the internet record will show that I went on to some of these blogs to 'plead' with their authors on many dates during these counts to change their view, and they, of course refused. There are many, many blog participants who can verify this activity. It is these blog authors who have now adopted my count, and not the other way around. Almost alone, and separate and distinct from Elliott Wave International, which was calling for a large B wave top at the May 2015, high, I said, "no, I think a Primary V is not only possible but likely because the S&P 500 had surpassed III = 1.618 x I". No one else I know of can claim this record.

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    3. I know you have made some great calls, like the ending diagonal in 2015. But, the last 6 months have not provided an edge. I think it has actually hindered a trader. In regard to OEW, I try not to follow it because it was so drastically wrong in 2015 and half of 2016. But, it appears he has kept his readers in the right direction for almost a year.

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    4. I guess that depends on how you use or interpret what is said here. When a person says Primary V has started and is not over yet, what you do with that is up to you. What I publish here is the count that tries to get us there. I do not publish buy / sell recommendations as I am not a registered investment adviser.

      Therefore, it is unclear what kind of 'edge' you are looking for. It is unquestionable that I recently called a fourth wave and a fourth wave triangle, and it's completion to the upside in time and with significant warning for a significant swing lower. And I have been 'laser focused' on the Dow reaching 90% for the ((b)) wave of a flat for weeks now. It just did that. I really don't know what more you want for free. So tell me.

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    5. C'mon TJ. I realize it's free. I will happily pay you when I understand how this will provide some aid to my own analysis. I'm not seeing it yet. But, I will keep checking out your sight on a regular basis.
      I REALLY APPRECIATE YOU TAKING THE TIME TO RESPOND TO MY COMMENTS. It will be interesting to see how and when this topping process unfolds. I think it certainly has some of the best in the business confused and perhaps a little frustrated.

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    6. It's not about the pay. It's about the fact that you are getting a more understandable wave count that follows the rules, for free, that the other much poorer wave counts out there (EWI, Neowave) for a paid service!

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    7. True. I gave up on EWI several years ago.

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  4. Salut todd
    Selon toi la phase 4 peut baisser combien de temps et jusqu'à ou sur le sp500 ?

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    1. See previous posts, 2261 would be one target for the ((c)) wave, once the ((b)) wave ends.

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  5. Joe, since when can a non-limiting triangle be a stand alone triangle? I have never heard of that before. To my knowledge, a non-limiting triangle only appears as the last portion of a complex correction, and never as a stand alone triangle. Thanks.

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    1. Site your reference by page number please. Otherwise I will not entertain what you may have heard.

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    2. My knowledge of non-limiting triangles comes from Mastering Elliott Wave, which I read 27 years ago, when it first came out. Unfortunately, I can't site the page numbers, as I gave the book to a friend about 20 years ago. Nevertheless, what I am absolutely sure about is the fact that, in that book, Neely goes into great detail specifically contrasting non-limiting triangles to 4th wave triangles and B-wave triangles. I'm sure I don't need to tell you what's in that book. Nevertheless, the reason I started my previous question with "since when..." is because of the possibility that Neely might have updated his view of non-limiting triangles since his book was originally published. However, if he hasn't updated his view, then that means a non-limiting triangle can never be a stand-alone 4th wave or B-wave triangle.

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    3. mblcta .. you have almost an eidetic memory. It's the 'almost' part that killin' ya (j/k). My copy of MEW is always close to my desk. Page 5-28 to 5-30 specifically state that a CONTRACTING non-limiting triangle can be found in the same positions as a limiting triangle. Page 5-33 states it is only the Expanding non-limiting triangle which is found at the end of more complex corrections.

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    4. Wow. I do have a photographic memory and it's never failed me before, but what you have written is completely contrary to what I've had in my brain for 27 years. So, I did a google search and was able to find a pdf version of the book. It turns out that what's been ingrained in my brain about non-limiting triangles can be found starting on Page 11-25 to 11-29. It specifically defines a non-limiting triangle as one "that falls outside the 4th and b-wave realm." Chapter 11 is filled with diagrams of complex corrections which end with non-limiting contracting triangles. They can be found in Chapter 8 and Chapter 12 as well.

      Initially, after reading these passages in Chapter 11, I thought they contradicted what he wrote in the passages you cited in Chapter 5. However, upon further review, he has not contradicted himself at all. At no time in Chapter 5 does he say that a non-limiting contracting triangle can appear as a stand alone 4th wave or b-wave. He only says that the rules regarding the internal formations of limiting and non-limiting are the same, with a couple of subtle differences. That's different than saying that both variations can appear in the same wave position. However, in figure 11-32 on Page 11-29 he shows the *only* time that a non-limiting contracting triangle can be a stand alone triangle, and that is as an X wave in a double (or triple) zigzag. All other times that a non-limiting triangle occurs is at the termination of a larger corrective pattern (or terminal.) Your citation on Page 5-33 does not say that non-limiting contracting triangles don't occur at the end of larger corrective patterns, rather, it says that the *only* time non-limiting *expanding* triangles occur is either at the beginning or the end of larger corrective patterns...in other words, they would never appear as a stand alone X wave in a double zigzag, like a non-limiting contracting triangle can.

      I won't post the pdf link because perhaps it's a copyright violation, but if anyone reading this blog wants to view it, just google "Mastering Elliott Wave" and you'll find it.

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    5. Diagram 11-29 on page 11-27 looks exactly like my count, so far. He is showing no overlap between the "First 3 correction", the next X wave, and the potential non-limited triangle. Therefore, it is also possible count his diagram as, in my count, A, "the preceding impulse", then a,b,c to B, "the First 3 Correction", and then 1, 2, 3 instead of "Intervening X-wave", and now the non-limiting triangle as 4, with no-overlap. Just as his diagram does not overlap, mine does not either. Mystery solved. Same number of waves, slightly different labels. Yet, I am following his "NOTE:" rather precisely in that the whole movement will be compacted down to a ":3", the minute ((b)) wave. Argue as you like. Prechter also stated of "post-thrust triangle waves that greatly exceed their targets", that they still result from triangles and often therefore are the last wave in the sequence, without specifically naming the triangle with too large of a thrust as a non-limiting triangle. Neely really did not do anything except name it, since diagram 11-29 is actually ambiguous in it's labeling, and also say, "well, it can break down as well as up" in many of the arguments you cite. Well, I got criticized for just that - above! Lol.

      It's a good discussion though. One of the better ones.

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    6. I'm glad you pointed out diagram 11-29, because that brings up another point about running corrections that we previously had. The formation in that diagram appears rather frequently in a running 2 position. Obviously, there is no overlap of the prior impulse (wave 1.) Neely says the entire formation is a running 2, and he draws the 0-2 trendline to exhibit that, but you have claimed that all running corrections must come back and overlap the end of the previous impulse. In Neely's count, the thrust out of that non-limiting contracting triangle is a massive wave 3. In your way of counting, the thrust would be a wave 5. I've always gone with Neely's count with this formation.

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    7. Regardless of who you go with, MotiveWave enforces a rule that "no running count" is corrective unless it comes back over the wave it is correcting. If it's a "running B" wave it must come back and cross over A. If it's a "running 2" wave, it must come back to cross over 1. If it's a 'running triangle 4th wave', it's wave 'e' must come back to cross over 3. Regardless of 'who' you believe or follow, the logic of this is inescapable: how do you 'know' a wave is corrective, unless it actually 'corrects' some portion of the wave it's claimed to be corrective to?

      MotiveWave is so strict about it that it will not even let the user draw a wave count without error unless this requirement is met.

      Prechter does address this with 'running triangles' only. There's a couple of points in Neely's original work where I disagree with him. This is one of them. (All of the later work - adding useless patterns such as diametrics, etc. is another. They have not helped Neely one lick.)

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    8. The way I tell if it's corrective or not is how it subdivides. The logic behind a running correction that does not overlap is actually very revealing to what's coming next, because it shows that the inherent pent-up energy in the direction of the upcoming impulse wave is so powerful, that it literally pulls the current corrective wave out of its normal boundaries. Truth be told, though, I've only seen it occur in the exact form shown in diagram 11-29, where the correction ends with a non-limiting triangle that is never able to overlap the previous impulse wave.

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  6. Joe la fin de la primaire V peut durer combien de temps?

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  7. Quel est l objectif de la 4 de la primaire V ??

    Merci joe

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    1. See previous posts, 2261 would be one target for the ((c)) wave of Minor 4, once the ((b)) wave ends. It will not be Minor 4 of Primary 5. It will most likely be Minor 4 of a different Intermediate wave per my year end video on YouTube.

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  8. Salut joe
    Une mise à jour en journalier et hebdomadaire sur le sp500 serait intéressant parce que la ça devient compliqué à suivre pour moi

    Merci beaucoup pour ton travail joe

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  9. Joe says B. Tony says 3. My money's always on the most bullish count.

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