Saturday, March 10, 2018

Because Now You Can See It

This is now the right time to post about a potential count I mentioned earlier - the diagonal for the end of a Primary 5th Wave.

While others are extolling how this bull market will go on for years to come, the chart below may tell a different story.

NQ Futures - Weekly - Potential Ending Contracting Diagonal

It seems like years ago I proposed that a Primary 5th Wave could end as a diagonal, or as impulse, and I really didn't care which. But, it does seem like the importance of a Primary 5th wave in ending a Cycle size and / or a SuperCycle size wave might merit a diagonal in a "too far, too fast" move.

With the NQ futures higher high this week, I think you might be able to finally visualize how such a wave might form. The tortuous flat bottom from late February 2016 to November 2016 can simply be Minor A and Minor B of a long stretched-out zigzag for wave Intermediate (1).

And the grinding wave higher from November 2016 to late January 2018 is the C wave - which ends on a high of the Elliott Wave Oscillator. If so, then the 38% retrace wave to Intermediate wave (2) is a sharp zigzag as required in a diagonal wave. If an upward zigzag completes properly for Intermediate (3), then another sharp wave down could potentially occur for Intermediate wave (4), after which should be another zigzag wave higher for Intermediate wave (5) to end the primary wave.

Although in Friday's post I indicated again the diagonal possibility, the wave labeling above takes precedence over that on the daily chart. I had some time to think about this after the heat of battle on Friday, and really like the fact that the Elliott Wave Oscillator is now diverging on a higher wave. So, that is likely Intermediate Wave (3) - which does not seem quite finished yet.

If a count like this occurs, it may be coincident with a "sell May, go away" type of market. Again, this is not for certain. Diagonals are waves that must prove themselves in every aspect. I also really like the fact that in the S&P500, the C wave of (1) would be literally a point shy of C = 2.618 x A, as I have noted before and written about in this blog. And I like the fact that few other Elliott Wave sites are looking for a count like this one.

Perhaps the S&P will follow-through with higher highs like the NQ. Or, perhaps, the S&P500 only forms a triangle while the NQ forms a diagonal.

I do hope you have a truly good weekend - and now have something else let roll around in the back of your mind!



  1. ...and the DOW is seriously lagging both NQ and S&P

  2. Joe, would there be any time requirements. This 1st wave of the diagonal has lasted a long time. Wave 2 quite short. For a sell in May, which I understand is only a posssible way to end it means the rest of the waves for Nasdaq will be so much shorter in time than wave 1. Thanks Sam

    1. Contracting diagonals 'usually' contract in time as well as in price. But, if for some reason the SP500 should triangle while the NQ makes a diagonal then I 'suspect' wave (4) might delay for a while.

  3. ET, The daily AO has crossed over the 0 line in the ES. In regards to the "Fourth Wave Conundrum" what should we look for? Momentum diverged once crossed over 0 line, Friday 13 ema crossed 34 ema however the lips of the alligator are still intertwined, over bought stochastic and near the upper Bollinger band. Now the weekly AO has turned up and never lost positive momentum I guess to say the weekly is showing divergences.

    1. Hi Bill. For a diagonal I'd look for lower EWO highs as the market made new higher highs - for a divergence. If a triangle occurs instead of a diagonal, then the EWO might still make it back to the zero line.

  4. Salut joe
    C'est compliqué en ce moment
    Moi je pensais que la phase 4 descende un peu plus bas que ce qui a été fait