Sunday, September 30, 2018

Monthly Prices May Be Wedging

When we look at the longer term monthly chart in the cash S&P500 Index, we see that prices may be wedging over the upper channel line in a "throw-over" pattern.

S&P500 Cash Index - Monthly - Prices Wedging

The five Intermediate Degree waves of my long-standing count (1) through (5) are clearly visible. The degrees of all the lesser waves fit perfectly, and there are no degree conflicts. Price is now over the channel, and at some point in the near future will likely test the upper channel boundary again. I called the top in 2015 - when almost none were expecting it. I called the W-X-Y for Intermediate (4) shortly after it occurred. And - most recently - as most of you know - I called the triangle for Minor wave 4, shown in the next chart: the weekly chart.

S&P500 Cash Index - Weekly - Triangle Minor 4


I personally wrote to a major Elliott Wave service, and informed them of my views before the current recent highs, and explained to them why I thought their count would be incorrect. I did receive replies documenting my submissions, and my count was again proven correct and theirs was incorrect. Let me make it clear, I have nothing against this service. They taught me much of what I learned - just not all. And I still wish to help them.

I did the same for three different popular Elliott Wave web-sites, with similar results.

Now it comes to Crude Oil. Some sites omit a projection on Crude Oil; others have an absolutely ridiculous count that makes no sense in the Elliott wave-world. Therefore, I will take a stab at a count in Crude Oil, using the tried-and-true familiar, rule-based Elliott Wave patterns.

Crude Oil Futures - Monthly - Ending Diagonal Scenario

In 2009, there was a Primary [A] wave down, which is likely part of a zigzag pattern, so there should be a Primary [A], [B], [C] in total. Then, after Primary [A], down, there were three clear Intermediate waves up to a Primary [B] wave in 2011. Next, there was a Minor A wave down in five waves in later 2011, and three waves up to the Minor B wave in mid-2013. This was followed by a clear five wave Minute degree wave as wave Minor C, likely of the Intermediate wave (1) of a diagonal for the five-wave Primary [C] wave.

So far, we appear to be working on a three-wave Minor A-B-C to the Intermediate Wave (2) which should find resistance at the down-trending line from Minor B to Minute (ii). This upward wave has already overlapped the downward Minor A wave of Intermediate (1) at the $75 level.

Then, an Intermediate Wave (3) should occur as another three-wave zigzag and make a marginal new low before two more Intermediate waves (4) and (5) complete the sequence to Primary [C].

Only if the upper dotted trend line is significantly breached, would we consider that Primary [B] was a much, much longer-in-time flat wave, and then, it would have to break through $120. This latter scenario of a FLAT for [B] is a much less conservative scenario. And, I favor the conservative scenario for three reasons: 1) oil can't go much below $0, 2) it would not make much sense to have oil increasing and the stock market declining, and 3) there should be an ending pattern - such as a diagonal - if oil is going to make it's final move lower.

Well, there you go. I haven't seen this count published anywhere else. I haven't discussed it with any one. You are seeing it as a first from me. Let's see how it goes. The only thing I can say is that the degree labels are crystal clear, and all Elliott Wave rules are followed precisely.

Have a good weekend.
TraderJoe


Friday, September 28, 2018

Coiling

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

While nothing occurred today to in any way detract from the potential diagonal shown in the last few days, the market's upward momentum has been awful: down right terrible. Instead of opening with a proposed gap up, the market as measured by the S&P500 cash index opened with a small gap lower. It did not make a new low over Wednesday's FED day low, preserving the potential five-wave up scenario. In fact, price did not even fill the gap upward entirely. But neither did price make a new daily high. In the end, prices were narrowly mixed.

Here is a chart of the half-hour S&P500 Cash Index. We don't wish to confuse you - just show you the coiling price pattern.

S&P500 Cash Index - Half Hourly - Coil Forming


Price needs to get over the green "up" fractal (shown by ^ ) to establish an up trending wave, and needs to get below the down fractal (shown by v ) to establish a down trending wave. Clearly this formation can be a triangle, which can have an exit downward. But it can just as well be it's alternate pattern of a i, ii, up.

In my experience, it is best to let the breakout or break down determine the wave count; and not one's opinion.

Have a very good start to your evening and to your weekend.
TraderJoe



Thursday, September 27, 2018

Still On Track

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

As of the end of today's session, the potential diagonal is still on track. Yesterday, the market as measured by the cash S&P500 Index closed at 2,906. With higher futures overnight, the market opened higher and traded up to 2,927 (+21 points) in five clear waves by about 1 PM ET. At that point, the market turned, and made an almost exact 62% retracement down to the 2912 level by about 3:30 PM ET. After that, the market rose a bit and closed at 2,914. Very interesting to see that near exact 62% retracement.

S&P500 Cash Index - 2 Hour Chart - Potential Diagonal Still on Track

IF there is a gap up and follow-through tomorrow (and that is not for certain, but it is probable), then it would establish the last b wave high as the the first target. Let's take it step by step and see how it goes. 

Have a good start to your evening.
TraderJoe

Wednesday, September 26, 2018

Fed Day Reversal

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

Yesterday we had suggested two things, depending on how whippy the FED day actually was. First, we suggested that the b wave, up, might not be over. It wasn't. It made a marginal higher high. Second, we suggested that there would likely be a c wave down to possibly hit the diagonal trend line. There was. It did. I had suggested that 2900 - 2905 would be a target range. After the FED news conference started prices got down to 2903, before closing the day at 2,906.

S&P500 Cash Index - 2 Hour Chart - Potential Diagonal

Prices could have lower to move, but it is not required. In no case, however, can wave (4) become longer than wave (2) and still maintain the potential diagonal pattern. Should that occur, we'll deal with the consequences then. With today being an outside day down the diagonal has it's work cut out for it until today's b wave high is exceeded higher.

In any event, the utmost caution in wave counting is called for. Once again, my stance is neutral, cautious and only trying to count the waves to a potential top. Including today's movement, "most" of the upward waves are in the market as it tries to hobble into the month of October. The risk of incorrect counting of waves grows. If we are nearing a market top, a truncation can occur, or a new story can come out of the blue that will change things in a hurry.

Have a very good start to your evening.
TraderJoe

Tuesday, September 25, 2018

Quiet Pre-Fed Day

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

It was a fairly light day of trading again with only about 3.3 billion shares traded on the NYSE. This is the type of volume we were seeing during the U.S. Labor Day holiday weeks. But here it represents caution ahead of the FOMC meeting results tomorrow. The DOW and the S&P had modestly lower closes. Smaller stocks were higher. Stocks had opened modestly positive, and traded somewhat higher (+5) until just after the open. Then, they turned lower but the S&P did not make a new daily low, while the Dow did. In the end, the S&P500 closed down about -4 points.

Yesterday, we showed the possibility of a diagonal wave at the market high. Today, the parameters needed to continue that count were maintained. Here is a two-hourly chart of the S&P500 intraday.


S&P500 Cash Chart - 2 Hour - Potential Diagonal

So far, the pattern has the classic wedge shape and the expected divergence in the MACD indicator. It would be nice to see a lower low within wave (4) for the c wave of (4) - perhaps even a little throw-under the lower wedge line which comes in around 2900 - 2905. There are still lots of ways this pattern could evolve yet - depending on the whippy behavior from the FED meeting. For example, the b wave within (4) may not be done yet, and could become a flat or a triangle. But, ultimately, wave (4) should be able to be counted as a zigzag.

If wave (4) gets "too deep" it would invalidate a diagonal. It may not become longer than wave (2), and it may not trade below the low of wave (2) for this pattern to hold. If the pattern does not hold, the next best guess would be a triangle of some type. But, we'll comment more on that only if needed.

Have a good start to your evening.
TraderJoe

Monday, September 24, 2018

On Overlap Watch

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

On Friday, we showed how - by measurement - it was possible to consider a minute wave (iii) of Minor 5 that was 1.618 x minute (i). Prices as measured by the S&P500 cash index closed on Friday at 2,930. With the futures prices lower over night on political news, the cash market opened with a gap lower of -8 points at 2,922. By about 10:30 am ET prices had traded another -9 points lower to 2,913: the low of the day. That down wave was low enough to overlap a prior all-time high and puts us on "overlap watch" for a potential triangle or diagonal.

S&P500 Cash Index - Daily - Downward Overlap

As per the chart above, the potential diagonal for a minuet vth wave of minute (iii) is sketched in as a dotted magenta line. In that case it is also possible to see minuet iv as just a running flat wave, and not a triangle. Usually, as I have commented before, diagonals do not immediately follow triangles - because they are cousin patterns.

Again, diagonals are patterns which must be proven, and as I have said before, the risk of incorrect wave counting has now gone up. We're doing the best we can. But, the Elliott Wave Oscillator remains green and rising, although it may be beginning to diverge.

Have a good start to your evening and to your week.
TraderJoe

Friday, September 21, 2018

Measurement

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

Cutting away the wheat from the chaff for a moment, there is an important measurement to share in the cash S&P500 Index. Looking at the stripped down chart below (but still continuing with the long standing count out of the Minor 4 triangle), we can now find that, if we are open-minded, then it is possible for a minute wave (iii) to now be 1.618 times the length of a minute wave (i).

S&P500 Cash Index - Daily - At Minute (iii) = 161.8% x  Minute (i)

This is a very, very important measurement. It means, with the Elliott Wave Oscillator green and rising, that we may not have entered the minute wave (iv) yet, on this index. That may be ahead.

The measurement is both objective and indisputable as shown. I doubt others will show it to you. It also means we may continue with the channel as originally drawn, and, as below.

S&P500 Cash Index - Daily - Channel Overlay

We are in the neighborhood where minute (iii) can be ending. Has it definitely ended yet? Will there be a turn-around Tuesday next week? Those are all good questions.

For now, have a very good start to your evening and your weekend.
TraderJoe

Thursday, September 20, 2018

Dow Jones Industrials Proves the Case

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

Although a tad sooner than expected, the Dow Jones Industrial Average made it's new all-time-high today. But,  it was expected none-the-less. Further, it appears as if the Dow made the Expanding Diagonal we specifically called for in our prior post that we highlighted for you twice.


DJIA Cash - Daily - New All-Time High

We did not break the rules in counting this wave you see above. Some did. The count from Minor 3 to Minor 4, as we explained is most probably minute ((w)), ((x)), ((y)) - the double zigzag.

The Expanding Diagonal counts as minute ((i)), ((ii)), ((iii)), ((iv)), and ((v)), where minute ((v)) is longer than minute ((iii)), minute ((iii)) is longer than minute ((i)), minute ((iv)) is longer than minute ((ii)), minute ((iv)) overlaps minute ((i)), and minute ((iv)) does not travel below the low of minute ((ii)). Each of the waves is a three-wave zigzag. These are the exact requirements of an Expanding Diagonal.

The significance of the count was to fill the gap at the December / January prior all-time-high. That is now done. All the gaps are obviously currently below the market.

The count is most likely in the minuet (c) wave up of minute ((v)), and it does not look quite completed yet. One would next want to watch for an outside reversal day, down, to indicate that the trend has changed. That is not in evidence, yet.

The S&P500 is likely in minute ((v)), as well, following where we placed the alternate red label on that chart.

Have a very good start to your evening.
TraderJoe

Wednesday, September 19, 2018

Jury Still Out

Short post today. The Jury is still out on whether this is still the .b  wave or wave (v). However, the fade at the end of the day still allows for the .b wave scenario to play out.

Have a good start to your evening.
TraderJoe

Tuesday, September 18, 2018

From Bad to Worse

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

Yesterday, I thought we had started the .c wave down. While that scenario appeared to be correct, even into the after-hours, with the ES E-Mini futures down -12 points, there was a turn-around, beginning at about 6 PM, that led to a gap higher open. Further, the S&P500 Cash Index made a new marginal high above what was formerly labeled the .b wave. As a result this very short term count was proven wrong, and so was I.

While the S&P500 did not make a new all-time high, the DOW made a new recovery high for the move. Further, the potential diagonal we showed in the hourly count was not proven out, because it was not fully retraced in less time than in took to build it. As a result, the very short term count has gotten very murky. Can we still be in a .b wave? Yes, until or unless the cash S&P500 goes over the prior all-time high. Is it possible we are still in minute (iii)? Right now that seems less likely due to the downward overlap I described in prior posts, but I'll have to look at that possibility more closely.


S&P500 Cash Index - Daily

For right now, I am showing the .b wave count again, until or unless it invalidates. As I said while entering the .b wave, they can be very intractable and difficult to count, and that may be what we have here. For the day, the cash S&P500 was up about +16 points, earning back - at the close - about what it lost at yesterday's close.

The Elliott Wave Oscillator is still green. rising, and above the zero line. Taking out yesterday's low would be needed to enter into a .c wave lower.

Have a good start to your evening.
TraderJoe

Monday, September 17, 2018

Gap and Lower Low Day

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)

On Friday, we had written about the possibility of a contracting ending diagonal wave at the prior wave .b high, and we said than if Friday's low of the day was exceeded, it would likely mean the short term trend had reversed. Those conditions occurred today. Further, as selling accelerated into the close, pending news on tariffs, a gap was closed from last Thursday, shown as the last back circle on the daily S&P chart, below.



S&P500 Cash Index - Daily - Lower Low Day


The Elliott Wave Oscillator was still green and increasing, though it will likely go red, start declining and approach the zero line before the minute wave (iv) is over.

For those curious of the intraday chart, here is what things looked like. The cash market closed down about -16 points.

S&P500 Cash Index - Half-Hour Chart - Lower Lows and Lower Highs

One interesting note is that aside from filling the Thursday gap, prices extended down to make a 1.618 extension on wave -i already, and they certainly could go lower over time. The down movement is still quite choppy though, pending the news announcements.

Have a very good start to your evening, and to your week.
TraderJoe

 

Friday, September 14, 2018

DOW Makes another new Recovery High

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

In another narrow, and low volume day, the cash S&P500 Index made a new marginal higher high for the .b wave, but not a new higher high overall. Then, when news about the Paul Manafort deal was released the market quickly headed lower, made a new daily low, and recovered to just about unchanged, but slightly higher on the day. Here is the daily chart for reference.


S&P500 Cash Index - Narrow Range - Doji

The .b wave has been intractable, as was suggested. There are a couple of ways to count it. We may have had an ending contracting diagonal at today's high - or it might have just been the smaller degree -b wave of an internal flat wave iv which means another high can not be ruled out. The lower low today could have been the -c wave of that flat internal fourth wave. Of note, today the .b wave became longer in time (in hours) than the .a wave, providing much better time proportionality.

If we had a diagonal, it hasn't met it's target by exceeding the start of the diagonal in much less time than the diagonal took to build. The diagonal likely started at the 2,880 level. Here is an explanatory chart below.


S&P500 Cash Index - Half Hourly - Potential Diagonal

Right now, such a .b wave counts best as a double zigzag. Try it as w-x-y (a,b,c,x,a,b,c) and see why because of the overlapping wave and which wave has the large gap in it - shown in red circle. The count would be invalid if the .b wave exceeds the prior high of August 30.

Trading below today's low would likely mean the short term trend has turned.

Have a very good start to your evening and to your weekend.
TraderJoe

Thursday, September 13, 2018

DOW New Recovery High

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

The Dow Jones Industrial Average made a new recovery high today. In doing so it filled the down gap left open from the decline on February 2, 2018 from February 1 at the 26,187 level. This affected neither our count on the Dow (see the second chart in this previous post HERE) or the count on the S&P500.

Stocks, as measured by the S&P500 Index, however, did not make a new high. They had closed yesterday at 2,889, and gapped up to 2,897 (+8 points) on the open. They traded higher to 2,907 until approximately 10 AM. At that point, the .b wave hit the 78.6% Fibonacci retracement level of the .a down wave. Prices stalled there, and traded down to the 2,896 level (down about -11 points) until about 11:30 am ET. Prices then spiked higher into the noon hour, but could not make a new high. Prices then went range-bound  for much of the afternoon, trading between 2,900 and 2,906 making an apparent regular contracting triangle for most of the afternoon. As of the end of the cash session, there was a rally attempt, but neither the Dow nor the S&P could make a further high. It could be the triangle has not finished yet.

S&P500 Cash Index - Daily - 78.6% Retrace of .a by .b


  
So, far, the .b wave has a fairly typical 78.6% retrace on it's .a wave, and a few more points are possible. However, price action was very, very choppy today, and the potential triangle could indicate "last wave in the series dead ahead" (not trading or investment advice). For those interested, by comparison the $RUT futures have only a 50% retrace on their down wave.

While price closed one gap today - see the black circle below (iii) - it opened another gap to do it. See the latest red circle. Stock exchange volume continued as moderately light with only 3.2 billion shares traded on the NYSE.

The Elliott Wave Oscillator turned green, as it rose today. Price is over the mid-line of the channel which is somewhat positive for prices.

Have a good start to your evening.
TraderJoe


Wednesday, September 12, 2018

Still More B Wave

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

In likely more of a continuing .b wave, stocks were lower, then higher, then closed about unchanged. It would not be good to read too much more into it that that at the moment. Here is the daily chart of the S&P500 cash index for reference again.

S&P500 Cash Index - Daily - Doji Day

The Elliott Wave Oscillator continued as red, declining, and above zero. Internally, the .b wave can have the beginnings of an hourly triangle, but it would have more work to do to prove out such a triangle, and it does not have to. So far, the wave continues to find both resistance and support at the mid-line of the channel we have shown above, with four closes very near to it now.

The .b wave can go on for quite a while, if it wants to - perhaps even up to the next FOMC meeting. But again. There are no requirements (other than a three-wave sequence). It is most likely that minute (iv) would have a notable "three wave" look to it, and that is not the case yet.

Have a very good start to your evening and stay as safe as possible.
TraderJoe



Tuesday, September 11, 2018

More B Wave

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

In typical "B" wave fashion, and for no apparent reason, the stock market made a lower low day, then a higher high day, but had difficulty following through at the end of the day.

The market, as measured by the S&P500 cash index, closed yesterday at 2,877. It opened on a six point gap down to  2,871 and then traded lower to 2,867, or roughly 10 points lower. After the first half-hour, prices started a spirited rally, and climbed to 2,892 (+25 points from the low) by noon. At that point some sideways to lower trading set in, and cash closed at roughly 2,888, or four points from the high of the day. Here is the daily chart of the cash S&P500 Index for reference.

S&P500 Cash Index - Daily - Outside Day Up

Again, it is unclear what form the .b wave may take. As a 'simple' zigzag it could be over today, but that seems too short in time. As a triangle it could take more time. However, given that wave minute (ii) is a flat wave, it would not be expected for the .b wave of minute (iv) to travel over the high of the pattern, as that would represent poor alternation in the count.  Therefore, I am showing an alternate minute (iv) location in the event the high is again exceeded. (There is absolutely no evidence for that yet, but I promised to keep you apprised of the best alternate when I see it.) Price had gotten back to the mid-line of the channel, and then stalled there.

The Elliott Wave Oscillator is still red, declining and above the zero line. It should be clear from the dotted black circle to the right of the indicator that it would make sense for the EWO to re-approach the zero line sometime within minute (iv), and therefore I am also allowing the possibility that all of wave minute (iv) may develop into a larger more time-consuming triangle, even though that is not a requirement to complete the count.

It would be nice to see some part of minute (iv) strike the lower channel boundary - as a sign of waning momentum. NYSE volume was again very lack-luster at only 2.9 billion shared traded.

Have a very good start to your evening.
TrderJoe

Monday, September 10, 2018

Even Lighter Volume

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 - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)

Absent significant economic news, save for the level of Consumer Credit - which almost doubled over the prior period to $16.6B from $8.5B, markets were significantly slower than even Friday. Volume on the NYSE fell to about 2.7 Bil shares. It could be that worries of an East Coast hurricane kept people away while making  preparations. We hope for the best.

Stocks, as measured by the S&P500 Index, had closed Friday at 2,872. With the overnight futures up as much as +13 points, they gapped about +9 points higher at the open, and traded up to 2,887 (or +15 points) within the first half-hour. This was enough for the S&P500 to break the declining hourly tops we asked you to keep an eye on, and therefore indicate the likely entry into the minuet .b wave of the minute wave (iv). See the chart below. As the day wore on, stocks traded largely sideways-to-lower and closed up a little more than +5 points, while the DOW closed down.


S&P500 Cash Index - Daily - Entrance into .b wave

As a general rule, "B" waves can be very intractable and hard to predict. Because "B" waves can be literally "any three", including zigzag, flat or triangle, provided they do not exceed the start of their "A" wave in a zigzag, it is of dubious use to try to predict how long this one will last. We'll do our best, internally, trying to count it.

The Elliott Wave Oscillator remains red, declining and above the zero line.

Have a very good start to the week, and focus on the true priorities as they arise.
TraderJoe

Friday, September 7, 2018

Back to Light Volume

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

It was yet another light day for trading in U.S. equities, today with only 2.9 billion shares traded. Stock prices were in a bit of trouble from before the open. The Labor Department reported an increase in wage pressures which leans in favor of higher interest rates (even though there were substantial downward revisions to job totals in prior months). 

Stocks, as measured by the S&P500 Index, had closed Thursday at 2,878. They gapped lower by -10 points at the open, dropped four more points to 2,864, making a new daily lower low, and then rallied to +5 points around 11:30 am. About that time, comments hit the news wires that more tariffs were potentially ready for China, and stocks began to slip again. They fell to within two points of the low, and then had a six point rally to close at 2,872, or down roughly 6 points on the day. All-in-all a very whippy day with a downside bias.

Here is the daily chart of the cash S&P500 Index.

S&P500 Cash Index - Daily - Lower Low Day

Downward wave counting within minute (iv) continues. Price has now lost the support of the mid-line of the channel which argues even for a higher probability that the larger degree wave (iv) is now being constructed.

The Elliott Wave Oscillator continues with red histogram bars, is declining and still above the zero line.

Avid readers of this blog might like to try three exercises. First, try drawing a line from the exact high of wave (i) to the exact high of wave (iii). You'll note it is still roughly parallel to the lower boundary of the channel shown. Next, draw a line across the tops of the hourly candles for the last seven days. That line needs to be exceeded upward before additional wave labels are placed. And thirdly, have a look at the Russell 2000 Index futures on the hourly chart. You'll note the diagonal we pointed out yesterday for it's wave v of ((v)) was proved out by prices this morning closing lower than the start of the diagonal - in less time than it took the diagonal to build.

Have a very good start to your evening.
TraderJoe

Thursday, September 6, 2018

Bifurcated Market, Overlap & And More

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)

On Tuesday August 28th I wrote in the blog post, "While the exercise continues to be to attempt to count the waves to a top, my market outlook is shifting from neutral to cautious. I am not bullish. I am neutral and wary of a top. (This is not to be taken as trading or investment advice. It is only a sign that most of the countable waves to a top are in place. Not all of them but many of them.)"

Today illustrates why. While the Dow did not make a new lower low today, and made new highs today - not only over that of yesterday but of the day before - the S&P500 not only made new lows today, but also failed to make a higher high day, or exceed the downward hourly trend line we have been writing about in the last few days.
 

Because of today's downward overlap in the S&P500 cash index, the chart has a revision as follows.

S&P500 Cash - Daily - Minute (iii) Completed

The red daily bars within minuet v have now been designated as sub-minuet waves .ii and .iv within minuet wave v, of wave minute (iii). This means we are likely now in the minute (iv)th wave. And this wave can either be a simple zigzag (sharp) or a triangle to alternate with flat wave for minute (ii). As you know, we don't like to do count revisions, but the overlap in this case requires it, and it seems to fit best with the position of the Elliott Wave Oscillator.

The Elliott Wave Oscillator, is red, declining, but still above zero. The position of the market is decidedly mixed. For example, the Russell 2000 may have topped. Here's why.

On our post of Sunday, August 12th, we outlined the case for a regular contracting triangle in the Russell 2000. You can view the link HERE if you wish. That triangle did complete satisfactorily, including new all time highs. See the chart, below.

Russell 2000 - Daily - Triangle Completed

Besides the triangle completing as we called it, there is even the very distinct possibility of an ending diagonal triangle within wave ((v))! Any trading below the (e) wave of the triangle at 1,660 likely gives a trend change.

While there may be one more up wave in the DOW and the S&P, be very careful here as the wave counting is becoming subject to much more error in the larger indexes.

Have a very good start to your evening.
TraderJoe

 

Wednesday, September 5, 2018

Flaky is As Flaky Does

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

We have been writing about the lower equity volume over the last week, yesterday at about 3.0 billion, up from 2.7 billion, on the NYSE. Today did not burn the barns doors off either at only 3.2 billion shares, but it is coming back a bit.

Prices, as measured by the S&P500 Cash Index, dipped, then rose, then dipped again, and rose again creating another red doji candle which might be another weak hammer candle. But it is not reliable yet, and, as we said yesterday, prices would need to first overcome the hourly descending trend line along the recent tops to start to provide some confidence that the next wave higher was underway. That has not happened yet.

S&P500 Cash Index - Daily - Bounce off Channel Mid-line

Wave .iv has now gotten down to 0.618 x wave .iii - which is a very, very deep fourth wave indeed. It almost overlapped wave .i (but didn't), and it currently bounced off the mid-line of the channel. That is the limit for the wave, as much more travel lower and it would likely overlap.

The deep fourth wave is a symptom of the awful momentum we said we would expect as this Minor 5th wave progresses. It's not letting us down in that department. The Elliott Wave Oscillator is red and declining for the second day in a row, but is still well above the zero line.

Keep your eye on the line down across the most recently five daily bars, and see if it can be exceeded. Until then, flaky is as flaky does. 

Have a good start to your evening.
TraderJoe