Tuesday, July 18, 2017

Dow, NQ and SSEC Update

Market Outlook: Three Indexes (DJIA, SP500, NQ) Wedging; possible tops not long away
Special Alert: China's Shanghai Composite (below) had an ugly candle yesterday.

Here is an update on the Dow Jones Industrial Average converted to the same likely "extended first wave wedge" as in the weekend video (where we used the S&P500 Index for the example).

DJIA - Three-Day Chart Extended First Wave Wedge

We checked thoroughly, and wave minute ((iv)) does not overlap with with minute ((i)). The wedge shape is shown by the dotted blue line. This puts the waves in the same relative position as the S&P500 Index.

Now, if we take a minute to look at the NQ (NASDAQ 100 futures, below). We see any new highs can be taken as potentially being in wave three of an ending diagonal. I have sketched it in for you below.

NQ Futures - Possible Ending Diagonal in Progress

Translating the above idea from the NQ futures, now to the four-hour DOW chart - rather than the three-daily DOW chart, shows a similarly possible arrangement.

DJIA 4-hr Chart : Potential Ending Diagonal

I have chosen to represent the potential diagonal this way, for three reasons. First, so that minuette wave (i) would be the longest wave in time inside the potential diagonal. Second, so that the c wave of minuette (i), actually makes a new closing high over the prior wave minute ((iii)) - to show it's motive character. And, third, to align as best as possible with the NQ futures.

We don't know what the impetus for a turn will be. It might be domestic. It might be overseas. In that vein, I just want to provide a chart of the Shanghai Composite Index. Yesterday's candle was quite a nasty one, as below.

Shanghai Composite Candle was a Warning

While one candle does not make a case, we will also note that the indicators have also rolled over lower, and the 50-day MA is currently trending below the 200-day MA. Not the greatest! (Further from an Elliott Wave perspective, one may consider it to be the move that ended from an ending diagonal that ended on 14 JUL. Try drawing the properly shaped wedge yourself for practice.)

So, tread carefully, and pay close attention - at least on a daily basis to our markets. The wedge shape has to break at some point soon!

Have a very good start to your evening.


  1. Thanks TJ. Do you think the nikkei is wedging also?

    1. Welcome. The weekly $NIKK looks like it. But may not have topped yet.