Thursday, July 13, 2017

Market Deciding How to Finish

Outlook: Short term new highs likely, or truncation possible with lower probability
DOW: New All-time-highs, S&P: No New All-time-high yet.

While nothing has occurred to invalidate the ES 4-Hr Triangle Count that we have been showing, The Eight Fold Path Method as of mid-afternoon now says something different per our discussion in live chat. First, here is that ES 4-Hr chart. It has served it's purpose.

ES E-Mini S&P Futures - 4 Hr Chart

I show this chart for the last time, only so you can see that (c) is not above (a), so technically nothing invalidated. But, we now have the .y wave substantially beyond equality with the .w wave without downward overlap, and within the (c) wave, the blue c wave of (c) would be much longer than the blue a wave of (c).

Since the above is true, and the upper line of the potential triangle is nearly horizontal, we started using The Eight Fold Path Method from the point labeled .x forward on an S&P500 15-minute chart.  We will analyze that chart at the end of this post.

Remember, we were very clear both that the former a wave up was five waves, up, and that the potential triangle had to form properly. It didn't! It doesn't have the "right look". Triangles are usually 78.6% retraces or less; this structure is 90% retraces or more.

Remember from the weekend video, we said it was possible certain indexes could make slightly higher highs. That appears to be what is happening, still within Minor 3. In this case minuet iv of minute (v) probably just became longer in time that minuet ii. As a reminder, here is the weekly chart we showed in weekend video. (The daily chart from wave (iv) will follow it).

SP500 Weekly Chart - Minor 3 Likely Topping

So, let's start from minute (iv) on the above chart, and again use the Neely-style method to plot the daily waves - not the weekly waves - below.

SP500 Daily - Neely Style Count

So, if we examine this chart, we see that wave ii is a FLAT wave, and wave iv is a double-zigzag which not only provides alternation, but also takes more time than wave ii! Now, we can debate for days whether wave iv overlaps wave i on an intraday basis, but it is clear it does not overlap on a daily closing basis! (See Note below).

Next, wave v of (v) is already beyond the 78.6% retracement level per the Fibonacci ruler shown. That is the first level Neely says we could consider a truncation to occur. But, there is no evidence for that, yet, at this time. And so, we should consider this as the vth wave up - whether it truncates or not.

So, as the result of this view, we began counting from wave minuet iv using The Eight Fold Path Method on the S&P500 15-minute chart, below.

Add caption

So, with 133 candles on the chart we are now counting either an impulse upward or perhaps the first three waves of a diagonal. Notice that wave (3) of ((3)) is on the maximum of the Elliott Wave Oscillator, and both wave (4)'s are longer in time than their wave (2)'s. We would now expect a wave ((4)) which is longer in time than it's wave ((2)).

We would expect a fourth wave down, and as long as it doesn't overlap 2432, the prior wave ((1)) location, then we should continue to count an impulse wave. If it should overlap, then we might have to consider ((1)) and ((3)) as only ((A)) and ((C)) of a diagonal wave. But, I need to be clear, a diagonal is not in evidence, yet. As you can see, the internal waves are extraordinarily choppy - yet the Neely style plot tends to smooth out this chop quite a bit - at least on the the daily time frame.

It turned out that yesterday's potential "tweezer's top" was nothing more than the B wave, up, shown. That has been happening a lot lately: the diagonal forms properly with contracting lines, and then is exceeded! And, then, when that was counted, then that B wave was exceeded higher also.

Stay with it! I am considering converting all blog charts to Neely style counts - as it may help provide greater clarity on a daily basis. Thanks for listening.

Note: The Elliott Wave Principle says that overlaps in the fourth wave might occur on an intraday basis only, and in highly leveraged markets. I don't know anything more leveraged than the ES E-Mini S&P500 Index futures, which impact on the S&P500. 

Have a good start to your evening.


  1. Thanks for the cascading charts along with explanations. From here we go down to the lower trend line for wave (4) around 2435 and then possibly make new highs within a few weeks. Then Minor 4 will start a more significant decline. If I understand what you are presenting here.

  2. Salut joe
    Merci pour ton travail fantastique pour les graphiques
    Sur le graphique en journalier la phase 4 va baisser de combien de pourcentage d'après toi?
    Elle est pour bientôt la baisse

  3. Joe,
    If I may ask a general question regarding a contracting triangle. Unable to find the answer in EWP 10 Edition.
    1.Is it acceptable to have a expanding flat abc as wave E. Where b of E travels past D.
    Thank you.

    1. Hi berg. No. Consider just a larger plain flat, or larger (perhaps barrier triangle), or thrust out of triangle has begun. Further, did the expanded flat E wave take out the C wave low? If not, it was probably not an expanded flat, or it was a "2nd" wave flat or a "b" wave flat of a larger structure. Hope this helps.

  4. Hi Joe,

    Thank you.
    C wave Low held. FYI This is in the ASX200 structure starting from the 8th of June.
    Thanks for taking the time to respond.