Monday, December 31, 2018

Old Year - Neely Style

I thought it might be helpful as we move into the New Year to have a look back at the last few months as one might if they were analyzing it using some of the techniques pioneered by Elliott analyst, consultant and money manager Glenn Neely. The techniques below are the simple basic ones from his book, Mastering Elliott Wave. I decided to plot each month's significant waves day-by-day plotting the high of the day and the low of the day - in order - depending on which came first. That's why you will see both an A&B data point for each day on the x-axis.

With that, let's have a look at the month of October, 2018.

S&P500 Cash - Daily - High/Low Plotted in Order - October 2018

So, here you can pretty clearly see the contracting leading diagonal minute wave ((i)) as counted in near real time on this blog. The chart doesn't change anything, but it does tend to abstract the wave just a bit. It's very clear in this manner where the "big moves" are, but it's a little harder to see the internal detail. That being the case, let's focus on the most important detail in this chart. That is that wave minuet (iii) is shorter in time than wave minuet (i). As shown, if T1 is the time of minuet (i), then that arrow, copied over, shows that wave minuet (iii) is shorter than (i). T3 is shorter than T1.  It should also be clear to all that wave (v) is shorter than wave (iii) in time, as expected.

Neely terms what we call a contracting diagonal a "1st Extension Impulse". I don't think the renaming is needed. I think it creates more confusion than it helps resolve. He is very clear in the so-named wave that there is overlap between parts of wave two, and wave four. Sounds like a simple diagonal to me!

Now let's move on to the month of November.

S&P500 Cash - Daily - High/Low Plotted in Order - November 2018

In the second chart I have included the most significant lows and highs to serve and an anchor for you to view, so the chart covers a little more than a month. Besides the pretty clear three-wave (w) wave, the other item to note on this chart is that the time signature of the (x) wave is much longer than that of of the (w) wave. So, T2 as shown, is much longer in time than T1. It is not disproportionately so, but it is enough to be noticeable - perhaps about a third more.

The (y) wave is then shorter in time that both the (w) wave and the (x) wave which represents nice time alternation within the correction. Plotted in this manner, the (y) wave failure is clearly noted.

I am focusing on the time signature as we move into the month of December, below.

S&P500 Cash - Daily - High/Low Plotted in Order - December 2018

So here we see the most recent data - always the most difficult to deal with  because one doesn't know for sure that a move is over with. But let's focus on two of the time signatures. The first clear result is that wave minuet (iii) of minute ((iii)) is clearly longer in time than wave minuet (i). In other words T3 is clearly longer than T1. That is important. Why? Because it allows us to assess than minuet (iii) may be the extended wave in the sequence - not just by price, but also by time. So, we mark that wave as x (iii) - extended wave (iii) in the sequence.

The next time signature I will leave for you to measure, but, as far as I can tell, wave minuet (iv) is already longer in time than wave minuet (ii). And that is the usual state of affairs in wave counting, is it not? So, at this point, even though the pattern is expanding a bit, there are no overlaps, and we should consider this count as a valid one - provided one thing is true.

That one thing is that minuet (iii) of minute ((iii)) as a sub-wave, must be shorter than all of minute ((i)).

I did that measurement tonight. At the wave that ends at the point of the arrow, it is exactly shorter by two points! Whew! That to me was itself an astounding result. So, either the wave ends at the arrow or wave (iii) ended at the bottom of the wave on 12/20 - and there is a long b wave in a flat - which adds more cushion. Either way, the count works. We also know that level is the 1.618 Fibonacci extension on wave minuet (i) of minute ((iii)).

In Mastering Elliott Wave, on page 5-14, Glen Neely shows a picture much resembling the impulse wave shown in the December chart. The second wave is somewhat shallow, and the fourth wave is deeper in relationship to it - which is already the case. In reality, the pattern is not expanding. What will most likely happen is that wave (v), if it occurs would end roughly parallel to wave (i) once the first line of the parallel is redrawn from waves (ii) to wave (iv) and the parallel copy is placed on wave (i).

We also know, by measurement, that wave (v) will most likely not become the extended wave for the simple reason that at it's current length wave (iii) is as long as degree labeling allows. So, wave (v) should not become longer than it.

Given all of this, we should have some pretty good degree of confidence a full impulse will form. Of course, we'll have to wait to see if it happens.

In the mean time, rest up. Enjoy the celebrations, and have a great start to the New Year!
TraderJoe

47 comments:

  1. Marvelous! Indeed great work all the way. Happy new year and continue the generous work with our EWT followers.

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  2. Thanks Joe! Happy and Prosperous New Year!

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  3. Happy new year Joe. With you and your family a happy and fruitful New Year!

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  4. happy new year 2o19
    a lot of success and especially health
    joe thank you for your work
    question
    How long is the wave (iv) and (v)?
    Thank you joe

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    Replies
    1. Wave (iv) between 38 - 50% of (iii); wave (v) 'should be' 2256.

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  5. Thx. Where do you best guess ends v? I know its early. But 2303 2266 or 2220? Thx

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    1. 'Should be' 2256 where minute ((iii)) would be 1.618 x minute ((i)).

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  6. Further confirmation of w4,
    https://imageshack.com/i/ploodR5dp, https://imagizer.imageshack.com/v2/xq90/922/DPKojF.png

    Happy new year TJ!!


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  7. Sorry, but when 100% of all EW counters that i know count that we are in wave 4 with 5 down to come, its time to consider the bullish alternate.

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  8. Maybe tripple combo currently in Z

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  9. Then wave (iv) could be longer than expected. I am now counting wave c, started on 27 Dec at ~ 2.400$ , as an ending diagonal still in progress

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  10. Three waves up form this morning's low. Potential wave 4 in progress. If SPX drops below 2494.31 then wave 1 is overlapped, impulse negated and leaves up move as a three wave affair or a possible diagonal up.

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    Replies
    1. PT
      look at 2007/2008
      1/29/08 - similar setup

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    2. Marc
      Feb.4 2008 looks like today.

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    3. draw trendlines from big 0-2
      and what youthink is 3rd wave 0-2
      then compare to today.
      measure it...

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  11. On the daily chart as per Ira Epstein's method. After losing an embedded reading, price and the line in the sand (18 day MA) will work towards convergence. Currently price is only 30 points below the 18 day MA. If hit, price will not have overlapped wave 1 and allows Minute ((iii)) down to remain in tact as a valid impulse..

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    1. that move gets this wave close to october large WXY wave 2 in size. Then we would need a triangle or flat to form off dec lows to add time to larger 4th wave n progress. that gets us to few weeks out and wave 5 down from october. thats best case scenario for bears. Got to think every day we dont crash means this move will be longer and take more time than a lot of counts suggest. There are several points of recognition coming up regarding the count we will just have to wait for crash or overlap or other alert.

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    2. time and price not looking like diagonal on futures. maybe im counting wrong

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  12. Joe,
    i ran neely chart on SP futures. Wave x (iii) had to end earlier than bottom was too big - so end around 20th as you suggested. That would put largest decline and rally since october in (iv) of ((iii). Is that ok ?

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  13. Hi Joe
    Your work has and is much better than Glen Nealy , His wave count in December was completely wrong , while your was correct .. so my question is why need to refer to him from time to time .
    Regards
    AZ

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    1. I treat others as I would like to be treated. If Neely devised a method of plotting waves, then I want to give credit to him. I learned a lot from him, and have 'unlearned' some, too.

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    2. Very wise reply ... Thank you

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  14. https://www.tradingview.com/chart/ES1!/dUNmwvEx-End-of-iv-of-iii-in-ES-2019-01-03/

    This 30 minute chart OF ES only focuses on the end of wave (iv). It should be about the correct number of bars from the beginning of wave (iv). After ES (and SPX) completed the upward motive wave, I show a triangle, then a flat to end (iv). Wave (v) of ((iii)) may have started.

    Though I don't know the optimum price and time requirements for (iv) because I'm bogged down in the Neely book, this is my best guess.

    I don't wish to debate where wave (iii) ended or if the beginning of wave (iv) was a diagonal triangle or not. The labels beginning with 5 of the upward motive wave display the only corrective move I could find that works on ES (and SPX) to satisfy both price and time requirements. (Actually wave (iv) met its minimum price before 1/2/19 and its minimum time in the first hour of cash trading 1/2/19.)

    Questions? Comments? Rebuttals? :)

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  15. Hi Joe happy new year (late). All the best

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  16. Is it possible to see an expanded diagonal inside a corrective wave ? .. such as in current wave (iv) ?

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  17. Yesterday's ES daily low has been exceeded lower. This turns the swing line down, and exceeds the low of an "outside day up" within two days, setting a trap for the bulls (to paraphrase Ira Epstein guidelines).

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  18. I noted that comment on Ira's closing video last night. He also gave a great explanation of imbedded readings and the behavior when they are lost. I would suggest that any new followers give it a listen. Here is the link.

    https://www.youtube.com/watch?v=Jsxb85zrUTk

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  19. 'Possible' pre-employment triangle? Decline is reasonably slow this way.

    https://invst.ly/9olvl

    Counts ok in both cash and futures

    TJ

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    Replies
    1. You know, I wish there were 'Like' buttons here...

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    2. It's just a possibility. Watch it close & welcome.

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    3. Joe, What other possibilities to be on the look out? Thank you

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    4. A straight-on impulse lower could still occur.

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  20. Down wave is now at least 90%, of the three-wave up wave.

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  21. There is a new post started for the next day.

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