Friday, June 9, 2017

End - Fibonacci - 5

In one sense the market did exactly what we expected today. The Dow went exactly to that 0.618 x net (1 through 3) level we have been showing you in previous posts. During live chat, I commented, "that I would be remiss if I didn't tell you that there are five closes at that 0.618 level, and the market knows it is there.". I even placed a tentative top at that level, which when the S&P 500 Index fell through it's invalidation level (that we also clearly showed you), meant, it was, in fact, most likely the top.

Here is the Dow's chart at the close of trading today. Everyone is going to hear stories now about the supposed flash crash on the FANG stocks. Gee, why did that happen exactly at the Dow level we've been pointing out for days? And, while just barely maintaining the divergence with the Elliott Wave Oscillator on the chart, below?

DJIA 15-Minute Chart with wave 5 at 0.618 times net (1 through 3)

Secondarily, the DOW also did something we were expecting, and that is a likely truncation at the top. But, the overnight futures did something on the British elections we were not sure how to interpret, so we started off the day, with questions about the diagonal count. At this point in time, a diagonal count has been ruled out for the S&P500 Index, because, today the S&P had an outside key reversal day down in the cash index and in the daily ES futures, as did the NQ futures. But, again, the cash S&P crossed below the wave 4, low.

Therefore, it is likely that the top is in for the Dow, too, but, as good Elliott analysts, we must allow that if the Dow want to clean up the count a bit, it could make another marginal new high - as an alternate - and form a nicer looking expanding diagonal wave upward from the wave 4 indicated. It could do this but certainly doesn't have to, and this option is not available in the S&P500. No, it is somewhat more likely the Dow has a diagonal down, and may only make a "deep retrace" of that diagonal before continuing lower. But, again, we'll be flexible as things clear up.

Further, with this fifth wave wrapped up or nearly wrapped up, we again indicate this is likely a (b) wave upward in the Dow, and a strong (c) wave down should follow. If you think we're kidding, here is what the NQ futures did by the close of trading today. Notice, that the slow stochastic has become un-embedded, and price is now trading below the 18-day SMA.

NQ Daily Futures at the Close - And Cross of Slow Stochastic Lower

 Well, that's it for today. Have a good start to the weekend.
TraderJoe








10 comments:

  1. Thanks Joe. Is there an alternative count if we see the wave 5 exceeded in the near future. In my experience, finding a top has been a noble quest.

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    1. For the Dow only - expanded diagonal fifth wave. S&P should not make a new high at this time, though I will continue to look for an alternate.

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  2. Nicely done on the DOW Joe. You called it very well. If this is indeed a (b) wave do you have any targets for (c). Looks like it will be a very good long opportunity.

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    1. The (c) wave of an Expanded Flat should go beyond the (a) wave for starters. More later.

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  3. Thanks Joe. On a different topic, I'd like your opinion on Gold. It put in a very ugly weekly candle, which has changed my outlook. Thanks.

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    1. Welcome. I try not to have opinions. GOLD is currently finding resistance at it's declining monthly log trend line from 2011. To become more bullish, it would have to get full candles over that trend line.

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    2. I should have said 'count' rather than 'opinion'.

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    3. Oh that. Dec '16 - Feb '17 clear leading diagonal A wave, that takes three months from 1124 - 1265. Then, since all of the other down legs are currently 'sharp' type corrections, most likely count is (a) down from 1265 to 1195 in Mar '17, three wave (b) wave up to 1295 in Jun '17, and now starting (c) wave down. That would make the B wave down have more time than A.

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    4. Thanks. I was also counting the Dec-Feb rally as a LD, but then I counted from 1265 to 1215 as a running flat. (similar to what happened from the March 2016 high to the May 2016 low.) So, I was expecting the subsequent rally to break out to new highs, as it did in June 2016. The June 2016 rally had a hiccup caused by the Fed meeting, but it never put in a weekly candle like it just did last week. So, now I'm looking at the possibility that the LD from the Dec 2015 low only just now ended at last week's high.

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    5. No, the overall contracting LD is likely incorrect. See, the much further explanation in Saturday's post.

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