Thursday, July 27, 2017

Why Focus on Risk ?

Market Outlook: S&P500, ES, NQ, and RUT likely have topped in Minor 3. DJIA might not have.
Market Indexes: S&P500, DOW, ES and NQ made marginal higher highs. Not RUT.

Today we got a completed count in the ES E-Mini S&P500 Futures Count that we showed from the election low in the weekend video. As required, minute wave ((v)) remained shorter than minute wave ((iii)), since minute wave ((iii)) was shorter than minute ((i)). The internal minuet waves also had the same relationship. Here is the chart as of the settle.

ES E-Mini S&P500 Index 4 Hr - Completion Count

In one four-hour bar, 39 - 40 preceding four-hour bars were exceeded lower. As of the settle, the bar had not been fully retraced. Because the prior wave (iv) was exceeded lower, and wave (i) was overlapped in the downward direction, it is possible to call a turn here, with the minor 3 wave at the top. The wedge got about as bad as a wedge could get.

Here is the weekly chart of the E-Mini S&P500 Index, showing the likely Minor wave 3 high.

Weekly E-Mini S&P500 Index

Notice there is a nice resistance line from the bottoms before the Feb 2016 bottom of Intermediate (4), and those were in August and September 2015. Also note how volume has fallen off, as well.

The upward wave in the E-Mini is a "trending impulse with an extended first wave", it did not form a diagonal. (We don't know the final form of the Dow, yet.) The reason we mention that is that it provides considerable flexibility in the style of downward count. It can be a zigzag or a triangle, and it could also start out with a diagonal.

We've had only a relatively small wave down, given the size of other ones. It could be an A wave or a 1 wave. Since the upward retrace is slightly more than 61.8%, it may lean more towards an A wave down than a second wave down. Time will tell.

Facebook and Amazon have all been "sold on the news" (not trading or investment advice) because of either outright earnings misses or maturation of the businesses.

Have a very good start to your evening.


  1. Regarding the weekly chart. Wave 2 appears as WXY with an expanded flat for W, a 3 for X, and a zig zag for Y. The overall shape of the WXY appears to be that of a running flat. So, what formation would one be looking at for wave 4 to provide the proper alternation?

    1. Did you watch the weekend video? If not, the link is here (copy and paste to your browser, as needed.)

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  2. Thx. You have wave 4 in sept time zone but that is more of a placeholder or do you think it could be that soon?

  3. Market is holding strong. We should climb higher on low volume for another month.