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.
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| 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
cant you tell if its a ld or ed based on 53535 or 333 333 333 333 333 structure.
ReplyDeleteor ld can also be 333...thks
No. Can't tell because LD can both be 3:3:3:3:3 or 5:3:5:3:5; ED can 'only' be 3:3:3:3:3. This appears to be 3:3:3:3:3.
DeleteElliott Wave principle, pag 87 on-line edition at ewi site tells that in ld only 2 and 4 are zig-zags. You mention that can be both. Is for your own experience, or by other author or other edition of the principle? Thank you.
DeleteNo 6Q. You have mis-understood me some how. Waves 2 & 4 in ANY diagonal are always zigzags.
DeleteIt's just that the zigzag could be A - flat B - and C, or A, "running triangle" B, and C.
But, always, always a zigzag.
In the above discussion, the second and fourth 3's are zigzags.
Looks like the large EDT starting at the beginning of April is still a possibility, with the latest top being the end point and the diagonal that you counted as wave 1 of the downtrend. I think that is the highest probability count when i look at all the other indices. It looks a bit like a double zigzag from yesterday`s low as wave 2. Maybe another trade war comment over night to finally start wave 3 down? ES 2780 looks like a large hurdle, if we take it i switch over to the bullish counts.
ReplyDeleteI agree, except, as Joe will point out, what should have been wave iv of the EDT wasn't a zig-zag. It was an expanded flat. Therefore, instead of an EDT, the rally from the 4/2 low would need to be counted as a triple combo, making the entire rally from 2/9 to 6/13 a wxy, instead of an abc. The end result is the same, though. If yesterday completed a wave 1 expanded LD, then today could have completed wave 2 just a little beyond the .618 retracement level.
DeleteForgive me, I have explained me wrong.
ReplyDeleteWhat I observed is that you said that LD can both be 3:3:3:3:3 or 5:3:5:3:5. But E.W.principle at ewi at ewi site tells that only 2 and 4 are zig-zags. So, I understand that 1, 3 and 5 should be 5 waves.