Saturday, June 30, 2018

Patience

There are times, particularly when the market is in a corrective sequence, where an Elliott Wave analyst simply must stand aside and have the patience to wait for the corrective count to clear up a bit. For example, one might have just noted that a zigzag wave completed. But will that zigzag turn into a double zigzag? Or will those first three zigzag waves down lead to three-waves up in a flat wave? Or to a triangle?

This is the very essence of the Fourth Wave Conundrum. With just a small paragraph above, we definitively outline why the Elliott analyst simply can not know the precise wave count at every point in time - as much as some publications and web-sites say they do. We are currently in such a situation.

From the standpoint of The Eight Fold Path Methodology, there are now 123 candles on the weekly chart for the "wave of interest". This is now well within the range of the recommended 120 - 160 candles. And, even within this methodology, there are two good and clear options for upward price progress. The first is the Smaller Triangle scenario.

S&P500 Cash - Weekly - Smaller Triangle

Price can still be seen to be trading in the main channel, after having aggressively attacked the lower trend channel boundary. Minor 4 would be completed, and we would have finished minute ((i)), up, and are working on a flat wave for minute ((ii)). Nothing says minute ((ii)) downward is definitely completed yet. Only a new daily higher high over wave ((b)) would do that. This scenario tends to agree with the Elliott Wave Oscillator (EWO), which is a key tool in The Eight Fold Path Method.

Yet, a different outcome - with maybe only slightly lower probability - is shown on the next chart.

S&P500 Cash - Weekly - The Larger Triangle Scenario

Again, nothing says the minute ((e)) wave lower is completed yet, so we could not say that Minor 4 would be over yet. In fact, for this scenario, it would be best if minute ((e)) extended a bit lower in price again. But this count does not agree as well with the Elliott Wave Oscillator, nor has wave ((e)) come back down to fully test the lower channel line again. And, with the wider triangle now, it seems less likely to get an exit from the triangle near its apex for many, many weeks yet. Those are the factors that result in this second count having the somewhat lower probability. Still, it is plausible.

But, there is one common "bottom line" factor to both price charts: prices should not trade below wave minute ((c)) for the triangles to remain "healthy". Breaking the ((c)) wave low is a "make or break" scenario for the triangle counts. Just like breaking minute wave ((b)) higher means price is likely breaking out of the triangle to the upside, then breaking minute wave ((c)), lower, means a downside break of the pattern would be most likely.

We should note that making a new all-time high in the S&P500 or the Dow are not foregone conclusions or preordained. There are possibilities that allow failures or lower lows. But, there is insufficient, and even contradictory evidence, for the lower case at this time.

Therefore, we remain patient, calm and flexible as we approach the Nation's Birthday celebration. Have a great weekend.
TraderJoe


Friday, June 29, 2018

What's Good for the Goose - 4

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

It's quite difficult to decide what to make of today's virtually "mirror image" candle to yesterday. From the daily chart below, one can primarily only say that price did not make a higher high than Wednesday, and, after a gap up open, it failed at the EMA-34.

The daily chart of the S&P500 cash index is below.

S&P500 Cash Index - Daily - Mirror Image Candle

The second of yesterday's counts has not technically invalidated, but we will have to evaluate the "right look" of the count if a lower low is made. Today's volume was fairly light pre-holiday style. So, it is not wise to put too much into one day's bar.

From a fractal perspective, Wednesday's high is a true "up" fractal: it has two lower-high candles on either side of it. Monday's low is the last valid down fractal (with two higher low candles on either side of it), but it has already been slightly exceeded lower. So, exceeding Wednesday's high would be of some significance. (Yesterday's candle needs another higher low candle to the right to become a valid down fractal.)

The Dow Jones Industrial Average now has a longer wave downward than it's mid-April to beginning of May wave downward. That means it could be a longer (e) wave of the larger triangle at this location. And that remains an alternate for the S&P500, too.

That's it for tonight. Perhaps there will be more on the weekend.
TraderJoe

Thursday, June 28, 2018

What's Good For the Goose - 3

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

Yesterday, we noted how the c wave of the minute (ii) wave could be forming an ending contracting diagonal. If you followed the market today, you noted that today provided the lower low, quick reversal, and 62.% retrace which are the bare minimum requirements of waves ((3)) and ((4)) of such a diagonal. Below is the hourly chart, updated with each wave as called.

S&P500 Cash Index - Hourly - Minimum Possible waves ((3)) and ((4))

So, one more lower low could result in diagonal completion. However, the tendency is too rush these things, and a clear "throw-under" of a diagonal is not in evidence yet. Therefore, the following is the best alternate at this time.


S&P500 Cash Index - Hourly - Slightly longer waves ((3)) and ((4))

The second chart would also have better proportions with those waves preceding wave ((1)), as the (A)'s and (B)'s would be clearly visible. In no case for a contracting diagonal could wave ((3)) become longer than wave ((1)) : it would invalidate the contracting diagonal formation (but not an expanding diagonal formation).

Again, the first Leading Expanding Diagonal (A) wave and upward overlap at wave ((2)) are what necessitate this count in order to follow Elliott Wave Rules and Guidelines at the current time.

Have a good start to your evening.
TraderJoe

Wednesday, June 27, 2018

What's Good for Goose - 2

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

We said yesterday that if and only if the market held a 38% percent retracement on the S&P500 Hourly cash chart, and did so without overlap that we would look for a fourth wave. Neither of those conditions was satisfied at the outset today. Overlap occurred, and a fourth wave must be invalidated. Rules are rules. The cash hourly chart, showing the overlap is below. This happened on the way up, and we had a sneaking suspicion it would happen in the way down. That's why yesterday we said, "What's good for the goose is good for the gander."

S&P500 Cash Index - Hourly - Overlap at .i

Therefore, under the rules of The Eight Fold Path Methodology, and regular Elliott Wave analysis, then .i, .ii, .iii is the same as .a, .b., .c until it is not. So, while we still think we are in a flat wave minute (ii), the count on the c wave down changes slightly to the following.

S&P500 Cash Index - Daily - Minute (ii)

In short, we think the .a, .b., .c are the first three waves of a contracting ending diagonal for the c wave of minute (ii). In order for this count to hold, then wave -iii must remain shorter than wave -i of the diagonal.

It should be clear the light volume and whippy trading require exceptional patience, calm and flexibility. We will adjust as needed to meet the rules and guidelines.

Have a good start to your evening.
TraderJoe
 

Tuesday, June 26, 2018

What's Good for Goose

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed higher; $Trans lower
SPX Candle: Higher High, Higher Low, Higher Close -  Inside Candle
FED Posture: Quantitative Tightening (QT)

There's an old expression, "What's good for the goose is good for the gander". In the last up wave, when we were looking for a potential fourth wave, the market did not hold the 38% Fibonacci level, and that made us suspect more strongly that we were making a flat wave, lower, rather than immediately impulsing up as some other sites suggested.

So, too, we are looking for a fourth wave, this one in the down (excuse the pun) direction, as in this hourly chart of the S&P500 Cash Index.


S&P500 Cash Index - Hourly - 38% Retracement

If the market can hold this 38% retracement level (50% is absolute max), and not overlap wave .i, AND show good alternation with wave .ii, then we may have the makings of a fourth wave .iv coming into place in the lower direction.

For alternation purposes it would be best, since wave .ii is a triple zigzag upward, or in the sharp category of waves, if wave .iv was either a Flat or Triangle - in the sideways category of waves.

You will note that today stopped dead on the 38% retracement level. So all appears well at the moment. A flat or triangle might give the Elliott Wave Oscillator a better excuse (i.e. more time) to reach that +10% to -40% level so often seen in a fourth wave.

Again, the best alternate for this wave is the wave (e) of the much larger triangle we have written about before.

Have a very good start to your evening.
TraderJoe

Monday, June 25, 2018

No Surprise

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

While it was a rapid start to additional down side today, clearly from the post on Friday it was no surprise to us. The S&P500 cash index gapped down at the open, traded down to 2,699, and then rebounded a bit into the on the walking back of some trade comments, and closed at 2,717, down approximately -38 points.

Friday we had pointed to the likelihood of a flat wave being formed. The decline today feels like all or part of wave .iii of c of minute wave (ii). The clear gap is what makes it 'feel' that way - something objective, not something subjective.

With today's down movement, the Dow Jones Industrial Average has already met it's 'minimum' target for a flat wave, crossing below it's prior a wave, down.

Below is the daily chart of the ES E-Mini S&P500 future, showing the break lower of the red down fractal we indicated was a key to this count. The S&P 500 cash chart - you are encouraged to examine one for yourself - now also has the absolute minimum expectation for the flat, as there must be overlap from minute (i) to minute (ii) - even if the minute (ii) turns out to be a 'running flat'. Now, there is such overlap in cash - as we showed in the futures on Friday and show again below.

ES E-Mini S&P500 Future - Daily - Flat More Likely


As far as we can tell, the diagonal is wave .i of c, the break of the upward diagonal trend line is .ii of c, and we are now in wave .iii of c, lower. We called the diagonal perfectly - waiting until all the parameters were met. And we called for the break of the diagonal trend line, and the next wave down.

As you can the see, the daily slow stochastic has not bottomed or turned upward yet. So, more downward movement is likely over the next few days.

The best alternate for this count is that it is still wave (e) of the much larger triangle we discussed earlier, but that would only be suggested first by this down wave becoming longer in price that the wave (e) location which is shown above.

Yes, we must still remain patient, calm and flexible, as we are still in The Fourth Wave Conundrum until we are not.

Have a very good start to your evening.
TraderJoe

 

Friday, June 22, 2018

Flats?

While nothing has changed in the overall count, I noted how after exiting the triangle in the daily chart of the S&P500 Cash Index, that wave minute (ii) could become a longer wave in time, if a FLAT wave were developing.

Here is the daily chart of the ES E-Mini S&P500 Index futures.

ES E-Mini S&P500 Index Futures - Daily - Flat in Progress?

You'll note a couple of things. First, there is downward overlap in the futures. Second, a line drawn from wave (e) to (ii) now has two candles closing below it. That would seem to be in violation of Neely's guideline that no part of wave (iii) should be cut off by that line. Next, wave (ii) as drawn would be remarkably short in time given the number of bars in wave (i). So, the red count a, b, c shows how the flat wave would form. Cash has not overlapped wave (i) yet, but if it does, then wave (ii) may be drawn to the right as shown above. The slow stochastic seems to favor this scenario.

The up & down (red & green) fractal indicators show the fractals of significance.

A similar situation may exist in daily Crude Oil. It would be another flat wave to deepen the correction of wave ii. As a flat, this wave has already met it's 'minimum' target, but it does not look quite finished yet.

CL August Futures - Daily - Flat in Progress?

In this chart, you'll also likely note that wave blue .ii is again a flat wave. It seems like the market is insistent on flats at the moment in order to try to confuse wave counters at every step, to take up more time in the wave sequence, and to cause initial wave targets to be missed. Well, tread carefully. This is one of the reasons the market is in the "summer doldrums" right now.

Have a very good start to your weekend.
TraderJoe

Wednesday, June 20, 2018

GE removed from Dow Jones Industrials

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

After more than 100 years in the Dow Jones Industrial Average, the iconic stock of General Electric will be removed from the DJIA on Tuesday June 26th, to be replaced by drug chain Walgreens.

Meanwhile in the S&P500 Cash Index hourly, price broke the upper diagonal trend line after a gap-up open, closed yesterday's down gap (shown by the black circle), and then, in another choppy session, back-tested the trend line, and stopped there.

S&P500 Cash Index - Hourly - Break of Upper Diagonal Trend Line


Yesterday's low and last week's high remain the critical fractals. The Elliott Wave Oscillator has come back to the neutral point, but is green and rising. The market will have to decide.

Have a very good start to your evening.
TraderJoe

Tuesday, June 19, 2018

A Hit at 38% & Problems Abound

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

We said yesterday that there was a way for the market to head lower to hit the 38% Fibonacci retracement level. Today that level was hit in the hourly chart of the S&P500 Cash Index.

S&P500 Cash Index - Hourly - Hit on 38% Retrace


We had sketched in on yesterday's chart (and noted previously in response to some comments) that a potential diagonal could be forming.

That diagonal completed today in good form, and is shown as waves brown i - v on the above chart. As the diagonal is shown today, it is properly formed in all aspects. Wave v is longer than wave iii (which it wasn't yesterday), wave iii is longer than wave i, wave iv is longer than wave ii, wave iv overlaps wave i, and does not travel beyond the end of wave ii, and they are all zigzag sequences.

This is the S&P500. We note in this index that wave .iv has not yet overlapped wave blue .i. And so this index could still eek out a minuet wave to the upside as an impulse.

But problems abound in other indexes. The Dow, for example, has two levels of downward overlap, while the Russell 2000 almost made a new all-time-high today. Therefore, we must count each index independently - for it's own count - as we suspect we will get some divergence in the indexes.

Another problem is that the hourly EWO (shown above) has gone a bit too deep. It is more than 40% of the peak of the highest wave, traveling almost 100% of the peak reading on the down-side. So, that makes today's low in the S&P500 cash index critical. IF we again travel below today's low, we will accept that wave .iv is not forming properly, and we only have three waves to the upside.

And there are two options for what that means a) either the daily minute-degree triangle is continuing in the longer possible pattern, or b) minute wave (ii) of Minor 5 is further to the right-hand side of the chart, which is a possibility I showed twice before on charts. If either of these is the case, then wave .iii ended where -b is currently shown.

Remember, 1, 2, 3 is the same as A, B, C until it is not.

While it is likely the downward expanding diagonal will break to the upside, we simply will not know if it is a Leading or an Ending Diagonal until we see if 2,792 is exceeded to the upside or not. This is all part of both the larger and smaller Fourth Wave Conundrum - and it happens at every degree of trend. It is what makes trading with Elliott Wave less reliable that some would think.

Have a very good start to your evening.
TraderJoe


 

Monday, June 18, 2018

Closer to 38%

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

We noted in Friday's update that there were, in fact, several ways to count the down trending fourth wave. Further, we said lower lows were possible. They were, and they occurred today.


S&P500 Cash Index - Hourly

As you may know if you followed the intraday price behavior,  there was a gap open lower, and a rebound. And, the gap was not firmly closed on the hourly chart. There is still the possibility of move downward movement to make the 38% mark. But there is also a way to count in which the down move is over. And that description seems to fit the slow, undecided and overlapping nature of the decline.

Have a good start to your evening.
TraderJoe

Saturday, June 16, 2018

For Serious Elliotticians

If you are already, or intend to become, a serious Elliott wave analyst there are some lessons you have either seen already or may wish to learn below. We post the chart below primarily on behalf of the latter.

Objective: to demonstrate where diagonals form after triangles.

This is the daily chart of the July 2018 Crude Oil Futures contract.

CL July 2018 Futures - Daily

The first item to note since we were following this chart is that the peak of momentum, based on the daily Elliott Oscillator, was back in February of this year. That was the peak of wave Minor 3. Then there was a very clear minute degree triangle, labeled above as a - e, which we called out in real time on this blog, and said it would lead to higher highs. It did.

As we watched this triangle form, we noted that the b wave was not higher than wave 3, and, thus, it was a regular symmetrical triangle, and not a "running triangle". With a higher b wave, a "running triangle" would have been a more structure bullish. Without the higher b wave, this one was signalling to beware. Further signs of caution were that none of the new highs were confirmed to have higher momentum by the Elliott Oscillator.

This was, none-the-less, a daily triangle, and it's waves were and are clearly visible on the daily chart. This most usually means that the triangle immediately precedes the last five waves on exit from the triangle. You can then see the five non-overlapping minute waves labeled i - v that make up Minor wave 5.

Clearly, wave v of 5, was a contracting wedge, a tweezers's top, or a structure that serious Elliott analysts call an ending contracting diagonal. Note that all of the waves within the structure can be delineated as three-wave zigzags. Space permits only the labeling of the first zigzag for wave (i).

Once the tiny throw-over of the diagonal completes, then it can clearly be seen that the entire diagonal wave is completely and entirely retraced - back to its starting point in wave iv, in less time than the diagonal took to build. This is a key confirmatory step to noting that an ending contracting diagonal has actually occurred. It did. The diagonal took about fifteen daily bars to build. The down wave exceeded the low of wave iv in five bars.

But, note too, just how the diagonal forms. Wave (i) of the diagonal is not formed until it has exceeded the prior wave minute iii high. And wave (iii) exceeds (i). This is most often the case. Waves (i), (iii), and (v) of a contracting diagonal are motive waves (not corrective waves), even though they are three-wave structures, and so they most often form above their prior peaks. Too often analysts try to put the diagonal inside of prior highs - that should be a red flag that the count might not work out.

Further, note that the diagonal does not immediately follow the triangle. The triangle, and the diagonal are cousins. They are not the same pattern, but they are related. While each has five three-wave sequences, the triangle always travels sideways along the price pattern. It does not slant with the trend as the diagonal does.

But, because they are cousins, it would be rare to see an entire diagonal immediately follow a triangle. That would be poor alternation. It would be two triangle-type patterns in a row. Said differently, if all of the triangle is Minor wave 4, then one would not, by the principle of alternation, expect Minor wave 5 to be entirely a diagonal. And, in this chart you see that it is not.

No, rather, exiting the triangle are the four waves of an impulse pattern at Minute degree (i - iv) and the diagonal comprises Minute v. In other words, if the triangle is a minor wave, this diagonal is a minute wave - fully one degree lower than the triangle. So now, following the triangle is an impulse wave, and only wave v of that impulse wave is a diagonal. This is acceptable alternation because the wave degrees are different.

Paying this type of attention to alternation and the meaning of wave degrees is another way you can distinguish yourself in the category of Elliott analysts who practice this craft from those who don't wish to understand the true nature of wave counting, or those who think they have some much better method, usually for a lot more money. No better method is needed. It's simply here in black and white for people to notice - if they will.

Will you be among those who learn the skill properly; will you invite your friends and relatives to try to learn along also? We hope so.

And we hope you have an excellent weekend.
TraderJoe

P.S. There was a post on Friday, too, if you missed it.



Friday, June 15, 2018

Hourly Update

Here is just a brief update of the chart we presented a couple of days ago. It is the hourly S&P 500 Cash Index.

S&P 500 Cash Index - Hourly

The only salient message on the chart, so far, is that wave blue .iv stopped in the vicinity of the prior fourth wave, brown -iv. There are actually several ways to count this sloppy overlapping wave. In any case with it's higher -b wave, it is a FLAT wave, and it alternates well with blue wave .ii in both shape and time, being much longer in time that wave .ii. And, the downward movement 'could' be over with.

Can the down wave go lower? Yes, there is a way to still continue the down count if a full 38.2% retracement wave is to occur. It doesn't have to.

But, we said the down wave would likely attack the lower channel line, and it has. This puts more of wave blue .iii above the channel, showing where most of the upward momentum is. So far, this up wave has consumed 13 calendar days. A Fibonacci interesting number.

Have a good start to your weekend.
TraderJoe

Wednesday, June 13, 2018

Outside Day Down

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

Near mid-day today, the S&P500 cash market made its highest high for the up move, so far. And then, after the Federal Reserve Press Conference, prices backed off, and made a lower daily low, and lower daily close.

S&P500 Cash Index - Daily  - Outside Day Lower

In doing so, the Elliott Wave Oscillator (EWO) turned in a red daily histogram bar on the chart above. In looking at the wave since the low of minute ((ii)) on May 30, on the hourly chart, below, we see the impulsive structure is still in tact.


S&P500 Hourly - Since low of Minute (ii) on May 30.

There are several factors that make us think that we are still in fourth wave within minuet i. First is the simple fact that there has not been a 38% retracement yet. That level is shown on the chart. Second is since the initial rise on May 30, and decline into May 31 (sub-minuet waves .i and .ii), there is a clear five wave structure shown for you as brown -i to -v, which is likely the sub-minuet wave .iii. Within that wave, there is good alternation with brown -ii as a FLAT, and and brown -iv as a non-overlapping sharp.

Thus, to further the case for alternation, if sub-minuet wave .ii is a sharp, then wave sub-minuet wave .iv should be a flat. And today's marginal higher high, could have fit the bill for the -b wave of such a flat. Today's closing price is already below the -a wave of such a flat, fulfilling the 'minimum' expectation for such a flat wave. It can go lower. 

Roughly following The Eight Fold Path Method, wave -iii of .iii should be on the peak of the EWO, and wave -v of .iii should be on the divergence, as we have it shown.  We also see that wave that part of wave .iii is currently above the upper channel line, showing where the most momentum is. Then, lastly, the EWO is nearing the zero line for what may be the wave .iv signature. It would certainly be possible for price to attack the lower channel line. Of course, any significant overlap of wave .iv with wave .i would invalidate the potential fourth wave, and mean the upward move had already crested.

With the ECB meeting tomorrow, it bears keeping an eye on it.

Have a very good start to your evening.
TraderJoe

Monday, June 11, 2018

Higher High Day

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

Nothing has essentially changed today versus Sunday's post. It was a higher high day in price for many indexes, and the Elliott Wave Oscillator also continued to make a second new higher high - which often indicates that a third wave is in progress. 

S&P500 Cash Index - Daily - Higher High Day

The slow stochastic of the Daily ES E-Mini S&P500 Index futures continues to be embedded - another fairly strong technical sign. Price continues to crawl up the median line of the tentative channel we've sketched in. Again, we are monitoring the 100% x minute (i) level, relative to the end of minuet i of minute (iii). So far, all the parameters are being met.

The FOMC begins a two-day meeting tomorrow, and concludes with an announcement on Wednesday, and a Press Conference by Chair Powell.

Have a good start to your evening.
TraderJoe

 

Sunday, June 10, 2018

Inside Day

The daily S&P500, shown below, had an inside day, while the Dow Jones Industrial Average had a slight higher high. Continuing with the triangle count to Minor 4 from the June 5 post (and earlier)...

S&P500 Cash Index - Daily - Inside Day

We do note, however, that the Elliott Wave Oscillator, is green and rising, and made a higher high for the move since February. This is often, not always, a sign of a third wave in progress.

Further, if the up move in May is labeled as minute (i), then we are showing the 100% x (i) Fibonacci ruler for a reason. While minute (iii) can become longer than minute (i), the first minuet wave i within minute (iii) can not be longer than minute (i) by degree labeling constraints. That is, minuet i would not be a wave of smaller degree if it were larger in points than minute (i). We will have more to say about that as the days progress.

For now, we'll only say that proper degree labeling is a topic few other Elliott analysts visit.

And have a very good rest of the weekend.
TraderJoe

Thursday, June 7, 2018

Two Of Four new ATH

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

Many major U.S. equity indexes made higher daily highs today, and then pulled back. In a major feat of heroics, the NASDAQ 100 futures and NDX made new all-time-highs (ATH), joining the Russell 2000 to make two of the four major indexes that have done so. The Dow Jones Industrial Average, and the S&P500 Index have not. 

The significance of those moves can not be understated: no matter how much the bears wish to claim it, these indexes now simply can not be counted as a 1, down and 2, up, with the new all-time highs. That would violate the simplest of the Elliott Wave rules.


$RUT and $NDX Daily - New All Time Highs


Now, it is possible for the NDX / NQ100 to be in a potential diagonal, but that remains to be seen. If so, we would be in minute ((iii)) of such a diagonal. There is simply nothing wrong with the prior triangle count, and so now our job is to look for upward extensions or downward overlaps in this index.

As long as the Dow and S&P continue making new daily highs, the trend should be viewed as up as the swing line is currently up in the ES E-Mini S&P500 futures, price is over the 18-day SMA, and the 18-day SMA is over the 100-day SMA in a bullish cross. Further, the ES daily slow stochastic embedded today with three days in a row with both the %D, and the %K over the 80 level.

Again, price can pull back at any time to the lower boundary of the up trend channel line shown, yesterday. For now, steady as she goes.

Have a very good start to your evening.
TraderJoe




Wednesday, June 6, 2018

Move Out of Triangle Continues

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

Prices continued higher today. Even the Dow made a slight new higher high over it's May waves. Therefore, it is now possible to sketch in a tentative Elliott Parallel Trend Channel on the right hand side of the chart.


ES E-Mini S&P500 Index Futures - Daily - Tentative Parallel Drawn In

Now that price has cleared the green up-fractal at 2,742 the swing line is up in virtually all indexes. Therefore, damage is not done to the swing line unless the red down fractal at 2,675 is exceeded lower. That's still almost 70 points of risk if the swing line is used as a risk parameter.

Further signs of strength would be if the median line of the channel is exceeded higher, and, then if the (b) wave is exceeded higher. Price is still over the blue EMA-34, and the Elliott Wave Oscillator is currently green and rising. It is possible the futures have latched on to the upper daily Bollinger Band, and, the daily slow stochastic is now in over-bought territory but needs to be followed daily to see if it embeds or not. Clearly, a pull-back to the rising channel is possible at any time.

Have a good start to your evening,
TraderJoe

Tuesday, June 5, 2018

Major Markets - Four Triangles

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

A four-block of major U.S. market futures shows they can all now be counted as triangles on the daily chart, as below. The four (4) markets are the ES E-Mini S&P500 futures, the NQ NASDAQ 100 futures, the Russell 2000 futures and the Dow 30 Index futures.

Four Markets - Daily - Triangles

Each triangle has its (a) wave low in February, its (b) wave high in late Feb or early March, its (c) wave low in  the beginning of April,  its (d) wave high in mid-late April, and its (e) wave low in late April or early May. Since exiting the triangle, all markets have exceeded their (d) wave highs., the Russell 2000 has made a new all time high, and NQ futures are very close to a new all-time high.

It should be clear that each market should be counted separately to it's top. Clearly, the DOW is lagging a bit. Certainly pull-backs to trend lines or second waves that are longer in time might  be expected at any time.

Have a very good start to your evening.
TraderJoe