Wednesday, March 7, 2018

How To Tell - Part 5

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

Last night on the Gary Cohn announcement, the ETF's turned lower before the futures ever opened. Then, the futures gapped lower at the open and traded down to 2,680. As a result the market as measured by the S&P500 cash index, opened lower and traded down to 2,702. A mid-morning rally occurred, and drove the cash index back up to the 2,724 level, but did not fill the gap. Then around 10:45 ET, prices began declining again, hitting the round-number resistance at 2700 twice, and making a marginally lower low. When they couldn't break through 2,700 an afternoon rally began the turned prices all the way positive, filling the opening gap in the process.

One might have thought this would have been accompanied by very heavy volume. But, according to my figures this was one of the lightest volume volume days for the futures at less than 600k contracts, and only 3.3 billion on the NYSE (according to the WSJ).

As the chart below shows, while the S&P500 has not defeated it's declining tops line yet, the Russell futures certainly have. The Russell futures today conjured up the 78.6% retracement level.

S&P500 Cash Daily - Versus - Russell 2000 Futures

The count remains up for grabs per The Fourth Wave Conundrum, the EMA-34 remains essentially flat, and it is beginning to depend on "which" market you'd want to try to count now.

Is revisiting the February highs possible? Sure is. Is revisiting the March lows possible? Sure is. Could triangles form in all markets to equalize the counts? Sure could. Could markets form a structure like an ending diagonal? Sure could.

There are lots of possibilities. Have a good evening.


  1. Joe, I know this might be a stretch, but if we go straight down from here, then you can count a completed triangle from the 2/9 low on the 60 min charts in the DOW and SPX. Yesterday would have completed wave(c), and then (d) and (e) completed today. RUT and NDX woud be standards flats.

  2. Can you add some analysis of the nasdaq and NYSE and what that might tells us in comparison to the sp500 and dow? The nasdaq nearly made a new high after the recent selloff.

    1. I indicated the NQ futures (NDX) might make a 'barrier triangle' instead of a contracting triangle. Not willing to go beyond that at this time.