Tuesday, February 6, 2018

Volatile Enough Yet?

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

The futures were sharply lower in the overnight on follow-through selling from overseas markets after the large down day yesterday. The overnight downturn was sufficient for the ES futures to make a bit more than a 38% retrace on a minor 3rd wave, and to solidly challenge the lower channel line. That is shown in this chart that was posted this morning.

ES E-Mini S&P500 Index Future Exceeds 38%

The retrace is still in the acceptable category for a fourth wave (particularly if it turns into a relatively short triangle). But, there is still no confirmation a downward move is over, and two other alternates can equally apply. Again, they are the extended fifth wave that we posted yesterday (meaning the bull market would be over). And an ending contracting diagonal where the waves 1,2,3 are A,B,C of Intermediate (1) of a contracting diagonal, and this down move is part or all of an Intermediate (2) wave downward.

The Elliott Wave Oscillator (EWO) on a daily chart of the cash S&P500 and the daily ES is now at 2.2 and -1 respectively, within +10 to -40% of zero, but on the wrong time frame. So, given the length in time of a minor wave 3, then more time may be needed for the EWO to develop across the weekly time scale.

Again, stay patient and flexible as The Fourth Wave Conundrum draws the market to a countable wave. And have a very good start to your evening.



  1. Joe, you have always said that 4th waves take time so this can’t be the end of the4th could it?

    1. Samuel. I don't know what you mean by "this". Yes, as I said again above. In comparison to the length of time of the third wave there would be nothing wrong with a fourth wave that takes more time.


  2. EW compared the 1929 Dow throw-over to the late 2017 Dow throw-over. According to the EW 1929 chart, it looks like the initial gap down in Sep 1929 was left open until 1952? Do you have an opinion on throw-over s? It seems like an important reversal pattern?

    1. I've only ever personally experienced a throw-over on shorter term time scales. They are important. That's my opinion. But what good is an opinion? It says nothing about when the up wave will end for sure.