Wednesday, December 12, 2018

Count and Best Alternate - 2

Market Outlook: Likely Long Term Top Identified
Market Indexes: Major U.S. Equity Indexes closed higher; DJUtil lower
SPX Candle: Higher High, Higher Low, Higher Close - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)

If you have been following our blog, you know that we have counted wave minuet (i), down, and are trying to count minuet (ii), up. Based on the position of the Elliott Wave Oscillator on the fifteen minute chart, this is the best count at this time. However, risks of an incorrect count are exceptionally high in this wave. Anything could happen - including a government shut down. Therefore, we are posting the current count, and showing the best alternate in red.


S&P500 Cash Index - 15 Minute Chart - Potential Ending Diagonal


Today, we noted that the potential wave ((3)) has a lower high on the Elliott Wave Oscillator (EWO) and has made only a marginal new high. But still, it was a high enough high to suggest an uptrend. Prices broke down to the nearest 15-minute candle at wave ((3)), with it being approximately as long as wave ((1)). 

And if wave ((4)) is in place, or nearly so, then it is shorter in price and time than wave ((2)). A Fibonacci ruler shows that if ((5)) is just less than ((3)), it can crest over wave a, and avoid a truncation. Avoiding a truncation does not have to happen. The upward wave can fail, and must be allowed to fail.

Only because of the near equality in time between waves ((3)), and ((1)), and the fact that we are not yet out to the apex of a wedge, we are showing the alternate that wave ((1)) may have crested at today's high, with the other prior waves as just a zigzag of the new first wave. They are a little ambiguous. If wave ((1)) only occurred today, then a lower low would likely drive the EWO lower. So far, it has held well - near zero - for the diagonal signature in the main count. Also, there did appear to be a running triangle as wave B in today's wave ((4)), and that make have put the brakes on that wave.

And that remains why patience, calm and flexibility remain the by-words.

Have a good start to your evening.
TraderJoe

112 comments:

  1. We should now if high today was 3 or the red 1 you provide by futures. they need to "time out" in the coming hours. I have it at 18:00 Chicago time. I am looking at 15 min chart. just now nice green candle.

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    Replies
    1. need a lower low to time out

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    2. wave 4 needs to take less in time and price than wave 2.

      here is chart.

      https://invst.ly/9i6hy

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  2. Joe,
    I don't know if this has been considered but it occurred to me today.
    Is it possible that y ended minute ((2)) and that minute ((3)) began and minuette (i) down of ((3))is a leading diagonal? That would put submin i down @ the 2583 low and submin ii up at today's high. The entire minuette (i) diagonal would have to end above 2340 to avoid a degree violation. The up move that ended today was just short of a 50% retrace and I'm not sure what the retrace requirements are for a diagonal.

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    Replies
    1. Correction : diagonal would have to end above 2440

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    2. .. plausible, but diagonal often have greater than 50% retraces.

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    3. Yes, I thought so. That's what was troubling me.
      Thanks!

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  3. This is my count on the RUT - has helped me (so far) with trading, along with AAPL

    10th DEC - https://imgur.com/a/zLkuxrQ

    12TH DEC - https://imgur.com/a/0h0QXcg

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  4. I love all these comments being posted here. Reminds me of the old chat room only better because I can keep coming back and reviewing the tidbits of knowledge that are posted.

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  5. Question to all: why would the US government shutdown be good for financial markets?

    ReplyDelete
    Replies
    1. I am learning a lot from all of you. Thank you

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  6. Stop listening to the news, its irrelevant to trading. Trade what you see, not what you think.
    There is a major shortcoming of the "news-driven" market approach: First, you must wait for something to happen -- and only then react.
    EW analysis, on the other hand, allows you to make probability-based forecasts without relying on the news. Please do your own HWK.

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  7. Joe, early today I showed a chart in the previous blog post that had A in a contracting diagonal after (3) as a flat. That is incorrect count, correct? By rule only B in a contracting can be a flat. It was at 1:28 PM.

    This would give the (4) a 3-3-5 structure. It needs 3-3-3.

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  8. Good morning Joe,

    Is their any way to produce a target from a triangle breakout. I know they are termination patterns but is their a way to possibly judge how far that move will go and potentially find support/resistance. I have heard its typically the same length of 0 to A of the triangle as E to target?

    ReplyDelete
    Replies
    1. Draw the trend lines back to the origin of the pattern. In a strong market the target is "the widest width of the pattern, added to the breakout point".

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  9. I think red 1 is the count, Joe. Futures look a little telling.

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  10. The alternate is confusing me. That is showing we have a red 1 up and therefor would be in red 2 here and still need a red 3 an 5 higher? Doesn't momentum feel pretty weak for that

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  11. 4th wave should be ending by 11.05 am EST after that it will take more time than wave 2.

    ReplyDelete
    Replies
    1. Also wave 5 should remain shorter then wave 3. It can go as long as 2714 and still remain shorter.
      However once wave 3 high is taken out, it might fail anytime as minimum requirement for diagonal will be fullfilled.

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  12. EDT we need new low after 1105 to get us to alternate

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    Replies
    1. I missed ur point on alternate. What does last wave has to alternate with ?

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    2. still a 4th wave unless we take out todays low after 1105.
      it owuld mean we are in 2 down see joes chart

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  13. Looks like we are going down for at least red ((2)).

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    Replies
    1. i think your initial read is alive unless we break low...thanks joe...

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    2. i have abc for W2 with b triangle. putting us in W3 (with a new low)

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    3. not W2 on your chart - higher degree done - not in an upward diagonal

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  14. I guess this way we could rally into fed decision on Wednesday. 3 -4 the indecision leading up. then sharp sell off?

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  15. Good morning Joe,
    Would a 50% retracement of red 1 at 2634 be a potential target for red 2?

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  16. Is there a way to differentiate between (4) of diagonal vs ((ii)) of alternate bigger diagonal if (2) is not taken out.

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  17. 0 to red 1 38 retrace off the top on futures being attacked for 3rd time now. joe, why not expanding diagonal off low? 2 would have went between 50 and 61.8.

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    Replies
    1. I checked my notes. 3 has to be greater than 1 in ED. 38.2 just coincidental.

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  18. Has anybody else counted ABC down to finish Red 2?

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  19. IF we go beyond 78% lower, then this would be the 'failure' count, as best as I can tell. There is not a lot of evidence for it yet as we are missing a wave three gap.

    https://invst.ly/9ii-1

    ReplyDelete
    Replies
    1. Joe, when you get time I am curious your thoughts what made you think we be getting the contracting diagonal and 5 waves for a flat and not the wxy 3-3-3? is it that 3-3-5 is more common?

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    2. First, I said, "IF", second, down move from the high was corrected less than 50%. That's ok, but a little less common.

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    3. I understand I am just trying to understand how best to map out a future path. Why you choose 3-3-5?

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    4. Is possible a triangle from (i) and now in d? or c is too long in time ?

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    5. Gerald - I already said, because the up move was corrected less than 50%, and there was no gap down. This is the last response on this topic. Both are ok (3-3-5, and 3-3-3). Corrections always try to muck up things. That's the way they are.

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    6. 6Q. No, it would not be a triangle from (i). Only a possible y wave triangle for part of (ii). That is still possible. Last comment on this topic of a triangle from (i).

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    7. Sorry, I forgot you told this yesterday.

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  20. RUT acting nicely so far - impulsive looking decline from yesterdays high - let's see what type of bounce we get #doyourownresearch

    13th Dec - https://imgur.com/a/tPTFwhY

    Prev...
    10th DEC - https://imgur.com/a/zLkuxrQ
    12TH DEC - https://imgur.com/a/0h0QXcg

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  21. We are now back over the unchanged level on futures; possible we had a diagonal down. Can be counted that way. Is it ending or leading is the question. Very difficult to tell.

    ReplyDelete
    Replies
    1. Previous bars exceptionally choppy. Potential diagonal on the 5-min, below. Question is, is it leading or ending?

      https://invst.ly/9ijlt

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    2. SPX 2 OPTIONS (just my counts)

      Leading diag - https://imgur.com/a/uFAOsAP

      ABC - https://imgur.com/a/WVxkOGO

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    3. Glad im thinking along the lines of the GURU

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    4. Being 'longer in time' than the Dec 11 move down, we 'know' that the degree of the waves has changed. Nothing has yet ruled out red ((2)). But, we'd need to see a higher high day for that.

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    5. Looks more like a leading diag on NDX??

      https://imgur.com/a/HEJVBBZ

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  22. Would it not be a degree violation if potential (i) of C of flat is bigger than all of A?

    ReplyDelete
    Replies
    1. Even the subwave of (i) of C is bigger than A

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    2. Same for Y as triangle, subwave of (a) of triangle bigger than all of W

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    3. Yes! I think that is the key point. Very, very good Erik!

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    4. Thanks! Let’s see if the degree reasoning can prove itself

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    5. try this
      https://imgur.com/hVnOzUo

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    6. Marc , nope (a) can't be longer than ((a)); give me a sec.

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    7. you are thinking hard now i like that

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  23. This is the only way I see to explain the degrees now. It's ugly but it DOES work, and it makes the diagonal a 'leading' diagonal, most likely.

    https://invst.ly/9ikhm

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    Replies
    1. Good job, Erik B.! Even though I 'hate' the pattern, I have to accept it.

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    2. thanks. i was waiting for example to clarify that the "time" constraints are guidelines and not rules. (ii) shorter than (i). opening up a whole can of worms moving the (1). now (2) may not be finished.

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    3. That looks quite similar to my RUT count..hmmmm

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    4. Not following. (ii) and (i) are of the 'same degree' in your comment.

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    5. that count is next to "game over" when I open dictionary.

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    6. ET, I think i might have pointed out expanding diagonal to you on "December 10, 2018 at 11:46 AM".
      But it was rejected due to less retrace for wave 2.

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  24. neelys rule that wave 2 is longer than wave 1 same degree

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  25. maybe that where all the confusion stems from - i couldnt tell if you are adhering to that "rule".

    ReplyDelete
    Replies
    1. No, he is correct; "in certain circumstances only". I have found his errors.

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  26. i dont follow. Unless you are saying that the wave in question does not meet criteria to be required to have 2>1???

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  27. 2 does not have take more in time than 1.

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    Replies
    1. correct, but it 'can' in 'certain circumstances'.

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    2. I missed the reply to Marc. I think I know about 38.2% of this stuff. :)

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    3. joe thanks. im back on same page as you. one day you can share those 'special circumstances' if i havent figured it out by then lol

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    4. prior to moving (i), was (ii) required to be greater in time?

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    5. ..only in certain circumstances .. let me just say this for now; "degree can NEVER be compromised". There are ways time can fit with degree.

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  28. From the bottom of the LD on 10/29, could we not be doing a Flat/X/ZZ? Its in a nice channel since then on SPX.

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    Replies
    1. I don't think so ..because the flat failed. If it would have completed successfully I would say, "plausible, but not proven". But that is not the case.

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    2. Get the point but would think in any type of corrective series in a weak market, failure would have to happen to form the down sloping channel.

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    3. This comment has been removed by the author.

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  29. Do symmetrical triangles have a high rate of success? I feel like the larger time frame triangles like 4 hours fail quit often while the intraday triangles work great!

    Referring to crude oil as it is a possible failed bearish triangle now.

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    Replies
    1. Likely complex leg of triangle; I warned about that yesterday. It's not over until upper trend line exceeded.

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    2. Yes you did I just referred back to our conversation. So am I reading it correctly that the December 7th high to today's low is a double zigzag?

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    3. Okay thank you. Just making sure I was on the rick track for the most part.

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    4. Triangle trend lines can 'breathe' a bit - move out - within certain limits.

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    5. Last question just trying to gain a handle on this.... Is their any chance that is is a bear market ascending triangle or no is it symmetrical?

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    6. As I read Pretcher book right now it says "usually" wave c is more complex so its making me wonder if this is not a wave 4 triangle but rather a B wave triangle that will break up and terminate for a wave 4. Not sure if that is plausible

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    7. It 'could' Robert; that is the real risk with triangles - that they morph into diagonals. That's the real reason traders have the expression, "trading is treacherous in triangles."

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  30. Downward diagonal may continue; there are no upward degree violations at the close.

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  31. ET, I think i might have pointed out expanding leading diagonal on "December 10, 2018 at 11:46 AM".
    but it was rejected due to less retrace for wave ii.

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    Replies
    1. Yes, as it should have been E_D_T. Until there was a degree violation. Now it 'must' be accepted.

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    2. Ah... nice... I was too forward looking :P. Agree with you.

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    3. Your comments have been right on the money, in almost every case, including this one - so keep it up! You are gaining much credibility here.

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    4. This means a lot coming from ET. Thanks.

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  32. In that case we would expect atleast 61.8 to 78.6 deep retrace up now ?

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    Replies
    1. That happens 'sometime', not always.

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    2. can't get a retrace like that. The black down line must hold for joe's (iii).

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  33. 30 min futures just barely held the line for (iii) to proceed today. quite amazing.

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  34. looking at joe's chart he post end of day it is post (ii) is not even in yet.

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  35. i see us done with this w2, just as i saw us done with larger degree w2 in my posts yesterday. We will see. Its funny how the simple eyeball 5 down 3 up count from December 3 high is "right" - but how much back and forth it took to get it there. IF this is a wave 3 coming (which is what we are here to trade) then the joe's approach has not disappointed.

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