Thursday, July 6, 2017

Downside Follow-Through

Yesterday's idea of a triangle b wave in the hourly S&P500 Index worked out exactly as expected today. Price had closed yesterday at 2432.54, and by the open on the daily chart, there was a gap down to 2423. (See red circle). Price made a lower low than yesterday, and continued falling down to 2404.70, before closing at 2410.24, down -22.79 points. Volume picked up a bit today, as well.

Here is  the daily S&P 500 cash chart, updated for today's bar.

SP500 Daily Chart - Lower Low and Lower Close Day

The result was prices made a lower low (LL), and lower close (LC) day than yesterday, and prices made a solid close below the 10-day SMA.

Still a lower low below 2405.70 is needed to confirm a down trend. The odds are it will likely happen. But, we caution, look at how many gaps there are in the wave from May 17th upward! Any or all of those could fill.

We are still counting a c wave downward. Below is the chart from the live chat room on the S&P 500 15-minute chart. We called each of the waves, including the diagonal c wave of wave iv in real time. Be aware, the down wave looks incomplete at this time. While there may be some backing & filling before the low is taken out, it is possible that the fifth wave of this series is 'extending' and that could get a bit brutal.

SP500 15-Minute Chart - Downward Count

Yesterday's hourly triangle is to the left of the chart. Today's downward movement has, importantly, taken out the wave ii of the a wave of (c) of the triangle. And, the level to beat is still the (b) wave of the triangle. Look how beautifully, that ending diagonal c wave of iv formed perfectly in every detail!

It will not be my intention each day to show you counts from the live chat room. However, I feel it is critical at this likely turning point. But further, I want to show you examples of what a good wave count looks like. Why is this one good? Notice that within today's downward wave iv took so much longer in time that wave ii. Knowing that likely relationship gave us patience all day to wait for the b wave of the flat to be exceeded lower. Further, it was clear wave ii was a sharp wave (a zigzag), and that, again, gave us  the expectation of a flat (or triangle) wave iv for alternation.

If your Elliott analyst is not doing these things, then they simply are not following Elliott wave theory properly, and no matter how 'objective' they say they are being, then they simply are not. No way.

We hope we at least may have helped you dodge a bullet today and over the last several days. But that is up to you. We do not provide trading or investment advice, ever. We just count waves. All decisions are your own.

We hope you will tell your friends and family about this blog. If you do, it would be great to leave us a comment and let us know. Otherwise, there is not much point in publishing it.

Well, have a good start to your evening.

TraderJoe

32 comments:

  1. Joe, thanks for passing on what you know. Even after 30+ years of tinkering with Elliott Waves, I still always learn something from your posts. As a retiree, I'm quite concerned about avoiding the possible forth coming large down wave. Thanks again for sharing. Doug

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    1. Welcome Doug, and thanks for commenting.

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  2. Thanks Joe. I am not a trader but read your blog daily often more than once trying to understand. I try to get some what of a big picture for longer term investments so appreciate your long term updates. You have mentioned this could drop to the 2270 area so guessing this downward move could take some time. If this is the c wave would it be 5 waves down?

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    1. Yes. It should eventually be five waves down, perhaps as a diagonal if it is starting with a, triangle b, c. And welcome.

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  3. Joe, I have been following you since the ET days. Your the best Elliot-tician out there....please don't go. You have renewed my faith in elliot wave, and I manage money for a living. Btw, how can we find your live chat?

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    1. Hi. Thanks for the comment. Send me an email at the address given in the blog profile, and I'll provide the directions for chat.

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  4. Joe,
    Thanks for your work and teachings about Elliott Wave. I have been following your work since the beginning and do not comment that much, but do want to let you know that I read every post you make and really appreciate all that you do.

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  5. Joe, I've wanted to thank you several times, but didn't wan't to sign in. Guess it's time. I've been reading your blog for about two months now. I find it very valuable, even though I don't really understand what you are saying about half the time. E.g. I wanted to ask you about the triangle post, whether that meant it would rise sharply at the end, or drop sharply at the end. Today was my answer. :( (I get confused on which direction the triangles were going). Anyway. I read your posts carefully, several times sometimes, trying to learn more, so Thank you! I really hope you keep publishing as I have a lot to learn!

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    1. Thanks for commenting. I tried to show in advance which direction the blue-c was (pointing lower). I will try to be more definitive maybe by using an arrow next time. You help me realize that some times there are either newer readers or some that don't get all the jargon, yet. So thanks for bringing this up.

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  6. clear, concise, easily understood EW analysis...read and reread every post...simply outstanding!

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  7. Hi TJ - nice count, as usual. Thanks for posting

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  8. Many thanks for putting in the effort. I have been following your comments / blog for a while and you help me form my trading strategy.
    ATB
    Ian

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  9. Thank you Joe for all you do, it really is greatly appreciated! Do you think this weekend or next you could review the longer term charts esp as this decline develops and finds its eventual support. Thanks again!

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    1. I plan on doing a video this weekend with the longer term charts. The material is all prepared. Watch for it late on Saturday. It will be posted here.

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  10. Thanks for what you provide in this blog, Joe. While I frequently count things differently than you do, we usually end up in the same place. As I've said many times, you are the only EW blog on the internet that always follows the rules, and you always present your counts with meticulous attention to detail. That sets you apart from everyone else.

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    1. Thanks, and thanks for holding my feet to the fire!

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  11. Joe,

    I have been following your blog for only a few months. But in that short time I have been amazed by your application of Elliott Wave Theory. I started out using EWT back in the 80's, before the advent of widespread algo trading and HFTs, and have recently resumed actively trading the markets after a several decades hiatus. Your insights into the proper use of EWT analysis as a market forecasting tool have helped me greatly in my charting, and especially in my understanding how these new computerized trading systems impact the use of Elliott Wave Theory.

    Thanks,
    Rocky

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  12. Thank you so much for sharing. I read it everyday. And I check several times for new posting everyday.

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    1. Cool .. check later on Saturday evening for a video this weekend!

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    2. I have added the R2K as a "supplemental chart" to the weekend post. Please scroll below the video and closing signature.

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  13. Joe, I check your blog every day. In fact, I bought and studied both books that you have recommended so that I may hopefully help by asking intelligent questions. I have found that you do such an excellent job of applying the rules of Elliott Wave and giving such clear explanations of your analysis that I do not have to ask questions. I have recommended your blog to others and some of these people have chosen to read and learn more about EW just as I have. All I can say is that I appreciate the time you put into your analysis and the fact that you are willing to share it. Thank you very much.

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    1. Welcome Iq .. and watch for a video later this Saturday afternoon!

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  14. Joe, I follow our posts daily and recommended to several friends! Some joined your chat. do you mind telling us where u think R2K stands now...thank you so much for all you do.

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    1. Jor, i appreciate it if you would share us your count for R2K.

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    2. I have added the R2K as a "supplemental chart" to the weekend post. Please scroll below the video and closing signature.

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  15. TJ, have you considered wave 3 ended at 2454 on the $SPX? I was onboard for the 'C of 4' wave, but it's not materializing. I like the middle of wave 3 sporting the highest RSI reading at 2401.

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    1. Weekend video, out in a couple hours will explain more.

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  16. ET, thank you for the video! I took a look at wave 3 on the S&P 500 from the November 2016 low. The daily candles approximate 160 give/take. When I looked at the EWO it peaked near wave (1) on your weekly line chart. Where you have (3) ending near March, the EWO is lower than in wave (1). Under the Eight-fold path the EWO should peak in iii of 3 I believe. Is this not an impulse possibly? Have I misunderstood or misapplied the Eight-fold path method? Thank you!

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