Saturday, June 10, 2017

Same Conclusion

When one looks across the markets and not just at the Dow, we see it is possible to reach the same conclusion among many of them, now. We know that the NQ futures had been rocketing higher and made an all time high on Friday before reversing. But, as the chart below shows, similar conclusions are possible for the SP500, the DOW and the Russell 2000 - all on the same day.

Major Markets Synchronize Their Highest Prices Ever

What was nice to see was the Russell 2000 also make that highest high because it, too, now qualifies for the (b) wave of an expanded flat fourth wave. It had previously make three waves down in May, and now does not show an impulse up because of the overlapping middle wave.

GOLD as well may be in an interesting position. We had called the Leading Diagonal A wave perfectly in real time on 4-hour charts. The Daily chart is below.

Daily GOLD (GC) - Having Trouble Holding a Channel

Next, we noted at wave (a), the upward move was having trouble peaking above the channel as a third wave should, and, in fact, prices broke below the lower channel boundary at (b), and then tried to "ride" the lower channel boundary upward, and did so, for nearly a month. But, with the new higher high earlier this month, there was no overt sign of strength. Each of the higher highs, in April and June diverged from the Elliott Wave Oscillator (EWO).

And now, after a marginal higher high, price finds itself back to close on the lower channel boundary. We also note at no point in time has price reached a level where a C wave would even equal and A wave in length. See the Fibonacci Ruler to see where the 100% mark is.

Further we note the first down move from Feb '17 to Mar '17 was shorter in time than the A wave. Further, the second down move from Apr '17 to May '17 was not only shorter in time than the A wave, it was shorter in time than the wave we have labeled as the (a) wave up. But this down move is also longer in price than the first down move - ruling out an overall diagonal pattern at this point in the analysis. It is also telling that there is no apparent alternation in these down moves, which should tell the alert analyst, we are not dealing with an overall impulse wave up.

So for ease of example, let's say - and we're not locked in on label degrees yet - we had minor A, up, as the Leading Diagonal in Mar '17. Then we could have had three waves down to minute ((a)) down, i.e. circle-a, down in Mar '17. Then, we could have had three clean waves up to minute ((b)), circle-b, up, in Jun '17, which would now also qualify for a flat wave sequence. The upward move from Mar '17 does have a very obvious three-wave look to it now.

If prices break below the channel and print full candles below the channel, then it could form a minute ((c)) wave lower to make an over all minor B wave, lower. Now, this B wave would be longer in time than the minor A wave, and prepare for the C wave up. If a Minor B wave lower successfully occurs, then we would redraw the channel accordingly.

Why, you might ask, would GOLD prices and equity prices both decline at the same time? Well, there are certain circumstances where forced liquidations in equities cause people to sell some of their gold in order to fund their equity account. It happens. We'll see if that occurs this time, too.

I hope this helps and I hope you have a nice weekend.
TraderJoe

11 comments:

  1. Very insightful and informative ET! Thank you

    ReplyDelete
  2. Excellent work Joe. Always lurk around for insightful information, and never get disappointed. Thank you!

    ReplyDelete
  3. Joe,

    I was curious if you ever analyzed the 1920-1929 DOW chart? Specifically, 1929 that led up to the crash? If we see a significant sell-off over the next week or two, this will be very similar to 1929 markets especially if we rally 20-25% from the sell-off level over the rest of summer and Sept. We are one month behind according to my studies. Nice job on the DOW!

    ReplyDelete
    Replies
    1. Yes. It's in my year end video on YouTube.

      Delete
    2. Thanks. I watched it. I know you might not expect the Dow to crash back down to 700 or 800 points in the video. One thing to consider is that during the last Depression, the Dow in 1932 retraced all the way back to 1886 lows. Some commodities crashed to 70 year lows as well. If the Dow went back to 800, we would only be back to the 1980s..about 40 year lows similar to 40 year lows in 1932. Depending on where the Dow makes a final bottom at 3,000 or 800, it's a devastating loss no matter what. In the next three years, we should hit bottom according to history. The first three to four years are always the most devastating looking back at every previous depression in history. Summer of 2020, should mark the bottom if the depression analog holds true.

      Delete
  4. my gcq7 chart shows a lower high in june by 1.50

    ReplyDelete
    Replies
    1. Yes, I always use the "Daily Nearest" chart which has the most volume that was trading at the time. It shows the higher high on that basis.

      Delete