Wednesday, October 31, 2018

Treat then Trick

Market Outlook: Retracing Minute wave (i)
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, we said the scenario for how we would make "five waves up" was uncertain. We saw a potential leading diagonal and a gap up scenario. The gap up is what played out. Prices as measured by the S&P500 Cash Index closed yesterday at 2,683. They gapped up to open at 2,706 (a +26 point gap), and continued traveling upward to 2,737. All day long, until near the close, the buy programs provided the 'treat' some were looking for. In the process the waves up yesterday made a 1.618 extension in the futures - a bit too far for a typical (b) wave, and more like a third wave. In cash, the extension was a 1.27 extension. Still good enough. In the process wave ((4)) of the hourly diagonal was exceeded higher, and with it the hourly down trend line.

Then, as if like clock work, at 15:00 ET late day sell programs played their 'trick' and dropped the market down to gap support, back to 2,710 a decline of -27 points from the high.

Again on a one time basis, so you have some confidence, here is today's five minute cash chart for your review. Included are yesterday's waves.


S&P500 Cash Index - 5 Minutes - Channel

Currently, we have four waves up in a channel that follows The Eight Fold Path methodology quite well. We do not know that the fourth wave is done - could still go a bit lower. But, there is good alternation between wave ((2)) as a clear 5-3-5 zigzag - with its lower (B) wave, and wave ((4)) as a 3-3-5 flat, with its higher (B) wave.

Remember, on the wave ((3)) up count, due to degree labeling requirements, no sub-wave within ((3)) may be longer than ((1)), and the sub-waves are so labeled. They fit well, and wave (3) of ((3)) is on the peak of the EWO, and is the wave with the gap in it.

The day's down trend did not begin until a tiny little ending diagonal C wave of the (B) wave overall had it's fifth wave ((v)) fail by just a bit. Awww ..

For this up wave to remain an impulse, then wave ((1)) may not be overlapped. So far, so good. We'll see what tomorrow brings. From the standpoint of "window dressing" they lifted the market early so they could easily sell their losers into the higher prices, and then dropped it to begin to pick up their preferred names . You never know how these things are going to go.

Have a good night and stay out of mischief on a night like tonight - Boo!
TraderJoe

25 comments:

  1. thanks joe
    have you looked at a bearish alt count where its 1 2 1 2 with the small 2 completing an expanding flat today. the lower degree second wave managed to stay smaller in size and time than its higher degree counterpart which I found compelling and worth a comment

    ReplyDelete
  2. What are the terminals of your 1-2-i?

    ReplyDelete
  3. Teach me Joe:
    From circle 3 - why is the count an a down and b up as opposed to 4 down and an ending diagonal up for 5?

    ReplyDelete
    Replies
    1. Not in a parallel trend channel until the close. See The Eight Fold Path Method.

      Delete
    2. Also, no alternation in that count. Two zigzags only. Further, intraday it 'predicted' to the 5-min bar.

      Delete
    3. And because at the end of the day wave ((4)) took more time than wave ((2)).

      Delete
  4. Amazing as always Joe...thanks for the great content

    ReplyDelete
  5. If this turns out to be an impulse, the what comes after?

    ReplyDelete
    Replies
    1. Unknown comments not replied to. Please select a user name and log in.

      Delete
  6. hi joe
    you can display a daily and monthly chart
    Thank you and good day

    ReplyDelete
  7. DOW cash is the first to confirm "five up" with a higher high wave at 11:30 ET.

    ReplyDelete
  8. Hey Joe,

    So with 5 waves up from the recent low in place for most of the indexes, and the deletion of "Probable Long Term Top Identified" in today's daily summary, does that mean you are giving much higher odds to the bull market continuing?

    Thanks,

    Andy

    ReplyDelete
    Replies
    1. Absolutely not. I'll clarify it to say; Likely Long Term Top Identified. Just retracing Minute (i), down.

      Delete
  9. The S&P now stands still at the 38,2% retracement from 2940 to 2603.

    ReplyDelete

  10. Hello Joe, I love reading your analysis, maybe you should write a book on Elliot Wave. I have a question. You mentioned that due to wave degree labelling requirements, no sub-wave within ((3)) maybe longer than ((1)). If this guideline is violated does that mean the wave in question is counted wrong or isn't an impulse wave? The reason why I mention this is because when we have an extended 3rd wave some of the sub-waves seem bigger than wave 1.

    ReplyDelete