Friday, October 6, 2017

Risk Increases - 4

Market Outlook: In a fourth wave after a third wave
Market Indexes: Mixed
SPX Candle: Lower High, Higher Low, Lower Close : Inside Candle
FED Posture: Quantitative Tightening (QT)

Prices as measured by the S&P500 index gapped down on the weak employment report, and traded down to 2,544. In doing so, prices re-entered the main channel we had showed for the last several days, and likely made an a wave down at this degree to start a fourth wave. In doing so, the Elliott Wave Oscillator on this time frame, and with 126 candles on the chart appears to be headed for fourth wave territory.

Beginning about 12:30 pm, prices started trading back and forth in what looks like a bear flag on the short term chart, and is likely a b wave.

S&P500 Cash - Half-Hourly - EWO Dropping

After reviewing some internals, I slightly modified the fifth wave extension wave yesterday, but not in a significant way. If this 4th wave wants to make a triangle, that would be acceptable. So would a simple sharp that alternates with the flat wave 2. So far, the mid-point gap is proving it's worth as a measuring tool.

On the chart of the NQ futures, the count is clearly reaching the point where the market must decide if the completion of a contracting ending diagonal is dead ahead, or not.

NQ Futures - Daily - Potential Diagonal

For this count to hold as a diagonal, prices should not trade above 6,109.50 before trading below the low of (iv). If prices exceed that level slightly, and then reverse, then there is some potential the structure is a barrier triangle instead of a diagonal, but, for now, this structure has the right look, including the slight throw-over of the upper trend line.

Have a very good start to your evening.


  1. Joe,

    Great work! The markets are at extremes not seen since 1929 and it's pretty sad that some or most traders don't see any risks ahead. I wouldn't have it any other way! The next few months are critical for a possible severe correction. Even with a normal correction, we will see massive margin calls due to the majority of brokerage accounts with a negative credit balances. We are approaching $1 trillion in margin debt if you include shadow margin debt! I expected the rally to last until the end of September based on my 1920s timeline. FYI: October 9th, 2007 marked the top. The Dow climbed 13.5% in 2007 before it topped out. We are up 15% this year on the Dow.

    1. Just a glance at the moving average show this years rally has been much stronger than 2007.

  2. Salut tim ok
    C'est quoi la suite maintenant ? ?

    1. The top might have been set already, but we are close to the end of this bull market. According to history, once the top is in, we will not see new highs for at least 20 to 25 years! 1929 marked the high and it wasn't until 1952 before the markets recovered. Japan topped in 1989, is still 12,000 points below the all-time high. That's the risk investors don't know about. It's going to be painful times ahead! I don't see any logical viewpoint to chase whatever gains are left in the market (if any)? The depression cycle happens every 90 years. 2019 we will already be in a severe depression.

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