Friday, June 2, 2017

Key Milestone Passed

We said yesterday, it did not look like the up wave was finished. That was entirely correct. While the futures dropped down initially on the poor employment report, that dip was bought, and new highs resulted. We still don't think the upside is finished.

However, the DOW passed a key milestone today. In this daily chart that we published in the live chart room, you can see that the DOW has now passed the 105% x wave (a) mark, needed, according to the Elliott Wave Principle, to initiate any expanded flat downward. The S&P500, of course, has already passed this mark. Previously, since the DOW was between a 90% - 104% retrace, then it only qualified for a regular flat, not an expanded flat. Here's the DOW's chart.

DJIA Daily - Dow Makes 105% Needed for Expanded Flat

After making this mark, the Dow spent some time finding resistance there. So, now the Dow qualifies in every way for an expanded flat. And, it is interesting that it diverges from it's daily oscillator.

Yesterday, when we were using the fifteen minute chart, we did not have enough candles available to have the benefit of the The Eight Fold Path style analysis. Here is the 10-minute chart of the Dow, which now has enough candles to make some decisions.

The Eight Fold Path Applied to the Intraday Dow

This count becomes quite a bit more objective thanks to the use of the EWO and the RSI. I want to emphasize that this count was not possible until late afternoon, until that wave blue .iv and .v (not shown) of black 3 were made. I could not count another 'five-up' until there was, gulp, another five up.

So, it's clear now - by placing iii of 3 on the maximum of both the EWO and the RSI - that we had an extended fifth wave in wave 3. The S&P500 actually reached a 4.236 x wave 1 Fibonacci extension.

Then, we started a sloppy sideways movement which has not yet retraced even 23.6% of wave 3. This is likely just part of wave 4, and it will likely retrace 23.6%, and possibly even 38.2%. It turns out that 38.2% is right at the location of that blue .ii within the fifth wave extension of wave 3, and that is a common retracement target when the fifth wave extends. We'll see. After wave 4 is confirmed complete (perhaps on Monday or early Tuesday), then a 5th wave up should try to bust the highs to complete this wave.

From an anecdotal sentiment analysis, wave service after wave service is turning more and more bullish - with many placing us in a wave 3 or a wave 5, of some type. Or, they have that as their alternate. Interesting. Many readers are now urging me to "go bullish", and are showing me the "error of my ways". Interesting.

From a wave counting perspective, I want minute wave (b) to be longer in time than minute wave (a). It is. From a corrective wave standpoint, corrections are most effective when they are confusing to count. For most, it is or has been. Interesting! And, from a time standpoint, it would be more usual to have minor wave 4 be longer in time than minor wave 2. Now, it has a chance to be. And, further, it would be super if minor wave 4 was a flat or a triangle to alternate with it's sharp wave 2. Now it has a chance to be that, too!

To say minor wave 4 ended at the down spike in May, is to ignore the time relationships between minor wave 2 and minor wave 4, and also to ignore the recommended alternation. Further, it would also violate all guidelines for a running flat in the Dow, since the Dow never made the 90% retrace level before that wave!

At this point, I would rather not do that. I hope you understand why. I just try to follow the rules and guidelines.

Have a good start to the weekend.
TraderJoe


12 comments:

  1. I don't want you to get bullish on your S&P and Dow counts. I want you to continue exactly the way you are doing it. That way I can properly evaluate if this EW method has merit. Thanks for sharing all of your thoughts and counts.

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  2. Salut joe
    Les marchés deviennent fou ça monte ça monte sans cesse et bat record après record
    Ça va bientôt explosé

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    1. Salut dominique -

      Si cette vague depuis 2009 est d'être nommé primaire cinq, alors il doit avoir le plus grand nombre de personnes dupes, et cheval le long.

      Joe

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  3. I had a target of 2440.32 on the S&P in the beginning of May based on the 1929 rally. There are multiple reasons I'm comparing the 1920s to now, which I will not go into great detail at this point. Today, the S&P hit 2440.23. In 1929, the markets acted just like the first 5 months of this year. Lots of sideways/upward movement. The market rallied 9% from Jan to May of 1929 and then sold off 10% over two weeks. That set up for a 27% rally over the Summer of 1929. Today, we are up 9%. I don't think we move to new highs until we see a major correction soon. We should see a 10% correction over the next two weeks to set us up for the strong rally this Summer. Remember to "Party Like 1929!"

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    1. On December 31, 1928, the DJIA closed at 300.00...on May 6, 1929, the DJIA tagged 331.01 which was the high of the month...on May 28, 1929, the DJIA tagged 291.80...that was the low prior to the blowoff rally into September 3, 1929, which topped at 386.10...

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    2. Interesting post Tim but 10% correction over the next 2 weeks ? If that happens I think you'll make headlines for this post.

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  4. Interesting. What is the starting month and year for your projection?

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    1. Start at 1920 to 1929. In 1920 to 1921 the US had a massive housing and commodity bubble that crashed almost exactly the same as 2008-09. They called 1921 the forgotten depression. Commodities in 1929 never recovered as stocks made new highs throughout the 1920s. DOW crashed 47% in 1920-21 over 17 months. DOW crashed 55% from 2008-09 in 18 months. Markets quickly recovered both in 1920s and 2009 to now. Pull up the chart from 1920 to 1929 and compare to 2008 to now. Commodity charts are almost exactly the same as well from the 1920s and today. Pull up the long bond charts too. Look at the massive high rise and multifamily building boom happening across America in EVERY city large and small! You have to go back to the 1920s to compare such a bubble! Auto sales growth over the last seven years have not been this strong since the 1920s. I've spent thousands of hours researching the parallels. Go back and look at the charts.

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  5. Intéressant tim ta comparaison à 1929
    Donc prochaine chute de 10% puis grosse hausse pour l'été
    Joe j'ai pas compris ce que tu voulais me dire

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  6. Joe how high would the rally need to go to confirm it can't be minor 4?

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    1. Please see the next day's post first, and recall a B wave does not have to end at 1.382. It can, but it doesn't have to.

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