Thursday, February 8, 2018

S&P500 Cash Lower Low

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

Although it was the only index to do so, the cash S&P500 Index made a new lower low today. This goes along with yesterday's warning of what if yesterday was "just a minute (iv)th wave up". Apparently, that's what it was. Here is a chart of the S&P500 Index - 30 Minute as it follows the majority of The Eight Fold Path Methodology.

S&P500 Cash Index - Half Hour - And The Eight Fold Path Method

First, there are about 120 candles on the chart (116 so far). Second, wave ((3)) is located on the minimum of the Elliott Wave Oscillator - this is the deviation; usually it is wave iii of 3. Wave ((3)) ends at a Fibonacci extension of 4.236. If some of you have not heard of this extension level, it is the next one after the 2.618 level.

Wave ((4)) comes back up to attack the upper channel, and it does so in a manner to leave the part of wave ((3)) with the most momentum below the channel. The Elliott Wave Oscillator or EWO on Wave ((4)) is also within the limit of +10% to -40% of the wave three peak. And, a potential wave is headed down, made a lower low, and looks to be on a divergence, so far. Wave ((2)) is a two-and-a-half day FLAT, and wave ((4)) is a one-and-a-quarter day SHARP for alternation. You can easily count five waves within wave ((5)), and wave ((5)) may not be over yet.

For confirmation, the EMA-34 crosses through every significant numbered wave. The RSI (14) is also currently on a divergence.

The presence of the impulse wave down would tend to suggest that the EWI-style Fifth Extension Wave Count (as modified by me for wave degree) is the correct view of how the market terminated it's Primary [5]th wave up. It is not conclusive yet, but the evidence is clearly gaining. Since all indexes did not make lower lows today, then more evidence would be that the majority of indexes made lower lows tomorrow to get in synch with the count.

Be very careful and deliberative. Let's all hope the U.S. government can agree on a budget, as the slide at the end of the day likely had to do with expressed disagreements on that topic.

Have a very good start to your evening.


  1. Maybe it doesn’t follow 8 fold path method completely because it’s going to morph into DZZ

    1. Just be aware that while a double zigzag could end a minor wave 4 in it's entirety, a double zigzag (DZZ) can not lead off a Minor 4 triangle. Triangle either always start with a) a single zigzag or b) a FLAT. In any event, it's up to the market to do the count for me by either making a new high or not. So far, the 'easy' ways for that to begin to happen have not happened.

      Keep in mind if you are looking for a DZZ to end wave 4, then it should stay inside of 50% x 3. After that - almost every time - a fourth wave fails.

  2. Joe, both Naz and composite went below previous lows and Russel, Trannies and Dow came close. Could they form a truncation and still EWI be right? Also here’s an interesting Fibonacci number, 89. That’s how many yrs it’s been since the 1929crash. Thanks for your expertise.

    1. Thanks for the correction Sam. I see that the NDX (cash) did break the lows, while the NQ futures did not. It's another straw on the camel's back. Yes, with a 4.236 extension, you would think a truncation would be possible right? But markets don't truncate if they are 'beginning' their advances or declines. That's why I called the 2015 - 2016 decline a double zigzag.

  3. Elliott wave International is stating that the SPX completed an impulse (i) on the 6th of Feb. They state that we seeing the completion of wave i of (iii). what do you think?

  4. Salut joe
    La baisse de la phase 4 peut atteindre 50 % voir 61,8% de fibo ??? D apr├Ęs toi??

  5. Hey Joe....Compared to your earlier January posts, would you say the odds of the bull market being over have increased from say 10% to 75%?