Thursday, January 4, 2018

Target Reached and then Some

Market Outlook: Expecting Higher Volatility
Market Indexes: Major U.S. Equity Indexes were higher; DJ Util lower
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

We noted in the weekend video that the next target for Primary [5] was (5) = 0.618 x net [ (1) through (3) ] at 2,717. That target level was met today, and exceeded slightly, as per the monthly chart below.

S&P500 Cash Index - Monthly - Target Attained

Further we will note the presence of three monthly gaps in Intermediate (5). Usually, the "three-gap" sequence is first, an initiation gap, second, a continuation gap, and, third, and finally, an exhaustion gap. So, that pattern might make some sense here. 

So, while this count is now 'plausible', it does not yet display the typical ending ending characteristics of either a large obvious triangle, or an ending diagonal. As I've said in yesterday's post, a contracting ending diagonal could be in progress. That did not change much today, except the relationship between potential c of (i), and a of (i) is now 0.618, and not 0.50 as it was yesterday. See the chart below.

ES E-Mini S&P500 Index Futures - 4 Hr Chart - With c = 0.618 x a

Although prices softened a tad at the tail end of the day, there still is not a high probability sign of a turn. Today's daily candle is still a trend candle, and until lower daily lows begin to be made we must continue to count with the trend upward. Tomorrow is the Employment Report which helps set FED policy, so it might be worthwhile to tune in a few times tomorrow to check on progress.

Because of the strong green histogram on the Elliott Wave Oscillator, the alternate for the above count is an impulse where a = .i, and b = .ii, and c = .iii, and then a potential wave .iv could not overlap a = .i. Let me further clarify, since there is already a wave after it, the Leading Diagonal a wave, (i), (ii), (iii), (iv), (v) can be either of a or .i. I have no preference, and we'll see what the employment report brings tomorrow. 

 Other than that, have a very good start to your evening!


  1. joe,

    within dark small letter "a", on your 4 hour ES chart - your wave [i] is overlapped by your wave [iv]......... how do you account for this overlap?

    thank you so much.

    1. 'a' is called a Leading Diagonal. A diagonal is a five-wave structure where four-to-one overlap is required.

    2. did indeed indicate the "leading diagonal" previously..........too much holiday sugar - it will distort your focus!

  2. The S&P /ES hit the 2.24 extension from the 2009 low. At 2729, then pulled back.

  3. TJ in my opinion, evidence continues to mount we are in some type of 3rd wave from 1810. As much as you want to deny the OEW count, the internals/technicals don’t lie. The momentum is historic so by default it must be a third wave and not a fifth.

    1. I have showed in the weekend video a plausible count where a wave 3 is here at this location. It's the third wave of a Fifth Extension Terminal. So far, all you want to do is have an 'opinion' and Kvetch. You have not shown me any work for consideration. Clearly I am aware of the technicals. But, are you aware of the technicals in the case of a fifth extended wave? Are you sure?

  4. It's a pity you don't have a donate button! I'd definitely donate to this outstanding blog! I guess for now i'll settle for bookmarking and adding your RSS feed to my Google account. I look forward to brand new updates and will talk about this blog with my Facebook group. Chat soon! trading software

    1. Thank you for saying. One way to help is just to spread the word.