Monday, September 11, 2017

Some new all-time highs, Some not

Market Outlook: Still in Minor 4
Market Indexes: ES Futures, SPY new all time highs; SP500, and DJIA not.
Today's Candle: Higher High, Higher Low, Higher Close

Today's hurricane relief rally produced some new all-time highs as listed above. The ES S&P500 Index futures made a new high - just by one tick; the cash market did not. This tends to limit the number of possibilities going forward. First, let's look at the four-hourly chart of the ES futures.

ES Four-Hour Futures

On the above chart, you can see the marginal new high. The primary purpose of the day's action was to close the gap from September 1st - shown by black circle on the chart. This was accomplished by opening the gap up this morning shown by the red circle on the chart. As we stated earlier, gaps on the futures tend to close more quickly than those on cash. So, now, we have no gaps above in the futures market, and only gaps in the downward direction on the futures chart.

Because of overlaps and the lengths of the waves in the futures at the current time - as well as real time counts from the chat room - we can only claim that the upward wave counts as a triple zigzag, upward. Keep in mind  that once a triple zigzag ends, it is always terminal in one sense or another.

Now, the three-waves down shown as (A), (B), (C) on the above chart can very likely be the minute ((a)) wave of a barrier triangle. This would make sense, since the major indexes did not make new highs today. That would make the triple zigzag upward as the minute ((b)) wave of the same triangle. So, we will post that count on the S&P500 Index Cash Hourly chart, below.

S&P500 Cash - Hourly - Minute ((a)) and Minute ((b)) of Barrier Triangle

In barrier triangles, the ((b)) wave should not make a daily close above the 0 mark. As long as that doesn't happen, then we are still in the barrier triangle. The ((c)), ((d)) and ((e)) waves are shown only for direction, not length of the waves necessarily. The eventual outcome of a barrier triangle is usually a brief, sub-standard length thrust out of the triangle. This is because the market expends it's energy banging up against that upper barrier.

Given the FLAT wave minor 2, the barrier triangle is the only likely alternating count with it. That's why it is the most preferred scenario at this point in time.

As an alternate, it is possible to get a zigzag-x-flat, with the minute wave ((a)) as the zigzag, and today's up move as the "x" wave. But, in that case, it would be best if the cash index did not make the new high.

Only in the case of closing new highs in cash would we conclude that the waves of the triple zigzag are the five overlapping waves of an expanding diagonal fifth wave that ends Minor 3, and that the downward wave lengths were not long enough for Minor 4. (If this later scenario was correct, then there might be downward overlap problems with it that we will look into again tomorrow, but it is the reason this is our least preferred scenario.)

In any event, the count is so sloppy we know we have been in The Fourth Wave Conundrum of one degree or another. On the very short term five-minute chart, one additional up wave in this series seems likely, as the Elliott Wave Oscillator (EWO) on this time scale is sitting right on zero. Such as wave might make a false breakout and fail temporarily. I say temporarily because even a barrier triangle allows for new highs in the cash market.

Well, regardless of where you are, I hope this helps.
Have a good start to your evening.


  1. Thanks Joe. Have you considered the possibility that from 8/8 to 9/8 is a contracting triangle, and today was the thrust out of that triangle?

    1. Yea, but it has horrible proportions in the SP500 - lowering it's probability. It has fair proportions in the Dow. And, it doesn't go long enough in time, or deep enough in depth to be Minor 4.

    2. I wouldn't expect it to be Minor 4. It would still be part of Minor 3. Similar to what you have described in the expanding diagonal 5th scenario.

    3. Pretty sure there are overlap issues in that scenario.

  2. Do you know where I can find long/short commercial specs? I'm curious what the positions look like right now.

    1. Only on a weekly basis. See, The Commitment of Traders is a study that can be added to a weekly chart.

  3. TJ I appriecate what you do but how many times are you going to call a top and be wrong? You kept saying new highs on Tony's blog while he was calling a top and you ended up being right while Tony was wrong. Now it's like a complete role reversal. What's going on? Is their a new level of manipulation in the stock market that EW had never previous studied?

    1. Vive,
      The failure in EW is because it is statically too inconsistent to aid in trading. This is why big money doesn't use it.
      I like TJ's input the best, but it has definitely not performed well at all this year.