Market Indexes: Major U.S. Equity Indexes closed lower
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
When the market meets our expectation, we simply don't want to argue with it. We just want to try to count it properly. Over the weekend, we showed you the double zigzag count (w)-(x)-(y) to the potential minute (ii). We said that the 'c' wave must be allowed to fail.
Why did we say that? Because if there was another 'c' wave up to the (y) wave, it would have taken the second wave, minute ((ii)) well beyond the 62% retrace level. Ah, you say, "the Dow went almost to 78% - how can you say 62% is a problem?". Well, that is the difference between the Dow and the S&P500. The Dow has 30 stocks and the S&P500 has, well, 500 stocks,. They count a bit differently.
Wouldn't it be interesting if - when Frost & Prechter and even Elliott were first discovering diagonals - they did so primarily on the Dow? The S&P was not invented in Elliott's time. It was only getting started when Prechter was a technical analyst. This is likely where that 'deep retrace' for the downward diagonal came from. The Dow did do the 78% so-called deep retrace in this cycle, the S&P did not. It has more deteriorating stocks, and can't do the higher levels.
So, as best I can tell, this remains the downward count.
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| SP500 Cash Index - Daily - Minute ((ii)) Completed |
It should now be clear to most that this is not bull-market action. And while a lower low than minute ((i)) is needed to fully 'prove' that case, when else do you get 90+ point one day moves on the SP500 except perhaps at an election day or a very few times during the cycle. This one happens to be down.
I have to admit, it was a bear to figure out whether the up move had failed or not. It threw twists and turns in the cash market, but eventually the down wave got too long for a sub-wave. And, during the day, with the market down significantly, we published that this type of failure could likely have occurred.
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| SP500 Cash Index - 15 Minutes - 5th Wave Failure out of Triangle |
The failure occurred along the futures upper daily Bollinger Band, and in proximity to the futures 100-day SMA. Many will see that as significant.
As we were even generating the chart above the market kept moving lower. It was hard to keep up with.
If and when the market begins retracement, it should now respect the down trend line from the top. Wave ((ii)) is longer in time than wave ((i)), and so there is very, very good proportionality at this point. Acceleration lower would be characteristic of minute ((iii)).
My posts are a bit delayed and short as I am on a short trip.
Have a good start to your evening.
TraderJoe
thanks joe. safe travels
ReplyDeleteSafe Travels Joe. I got roasted with my bullishness. But I did cut it short just below 50 DMA. I was hoping Santa Claus would show up but it appears we will be seeing lower lows in Dec for a jolly little X-mas. Going to set up for a short into any bounce Thur.
ReplyDeleteHave a great trip, Joe!
ReplyDeleteTravel safe Joe and have a great time!
ReplyDeleteThanks Joe. I have been following your blog for a while but here is my first observation. Why can't this follow your Dec 1st post "What may be next" chart, where we completed a at 2800, now b at 2696 (+/-) with a rally starting now to finish (y) and ((ii))? can't b be a 5 wave down sharp like it has just occurred?
ReplyDeleteThanks again for sharing all your knowledge! Best wishes and have a safe trip.
When you start a question with, "why can't", somehow your mind is layering an interpretation that I said, "it can't". Please. It is rare that I say words like "always, never, can't". I did not say this "can't be the B wave". But the probability is much lower now because of the sharp acceleration downwards. As I said during yesterday's comments, "all other counts now get relegated to the 'slope of hope'." People will 'hope' they come true to get back losses or look for a place to get in. This doesn't mean other counts "can't" happen. It just means the probability is lower. Some triangles start with a sharp down move. OK. But, if this is (a) of a triangle, those on the slope of hope have to prove out, (b), (c), (d) and (e), yet, and there is no evidence for them. And yet, a triangle "can" be found in the prior up wave.
DeleteIt is stunning how powerful bias can be.
DeleteI actually have seen one count that purports to call today's plunge a minor 2nd wave of an impulse up!!!!
Thank you Joe. Apologies, my usage of "can't" is indeed misplaced now that I read it. Got it, its all about the odds.
DeleteThanks Joe, again very interesting days and nice formative comments that helps a lot.
ReplyDeleteFyi, Neely published a very interesting video about his current long term view in his website and in youtube.
https://youtu.be/EyjITpcizbM
Definite thanks for the link! While I differ with Neely on some parts of his analysis I have two comments. 1) Beginning at 33:30 in the video he AT LEAST shows a wave "f" triangle, where I showed the Minor 4 triangle. So, we completely agree on that segment of the analysis. 2) In the video he mentioned the "expanded triangle" where wave (e) would come back BELOW the wave c low! That would be a devastating drop, and look similar to a bear market than took price back to the area of a prior fourth wave.
DeleteI am not as familiar with Neeley but I did also notice that while flipping through his diagrams, the chart show a potential neutral triangle towards the end of the year with a higher C wave (he had labeled with an E) - so I will keep watch that Y wave has not yet completed
DeleteEdit: I realize we are currently thinking the C wave failed. I am just unsure if it has been validated with a 5 down. Seems like yesterday we discussing whether the waves down was 3 of 5 or 5 of 5.
Deletein the 6 month neely chart if you zoom you can see an x wave.. thats 2016 sell off. Basically, we are now moving down faster and a bit beneath feb low will confirm confirm we are in the last wave down of the 4th wave to 1600. On many levels then the move from Sunday, and move from october high to next low, can both confirm that we are in higher degree waves and not in bull market.
Deletefurthermore, i believe move beneath 2650 in shot term will confirm new higher degree wave down just begun. This wave needs to travel faster and longer than the a wave of the X wave down....
Deleteit would be decline similar to 2000-2003 to retest 2000 high based on applying his methodology. It would be nice to know when he gets "confirmation". We should look for it as well.
DeleteI suspect impulse done at 2721 (if not earlier) with extended 5th and everything else is second wave possible "running". use 1 min chart.
Deletepbeck
DeleteGoing to take a stab at this as it helps me think things through. I hope you have read the "Eightfold Path" If we can agree that from the c failure we have 1 down and 2 up ending at 2792.63. Using a 5 min chart. It would appear that 3 of 3 down ended at 2702 based on the max EWO reading and 3 ended or is ending now on an EWO divergence. One thing I have observed is that because of the shallow 1 and 2 off of the c wave failure, using a 0 to 2 line is useless but we can get a nice channel connecting 1 and current 3 (subject to adjustment and putting the paralell channel line from 2. Would love to hear criticism and other ideas as this is a fascinating point in the market.
Please review the next day's post.
Delete@Pittsburgh Tom: The failed 5 wave that ET is showing in the second chart above is what I was referring to in "Gap Up Futures" post on December 3, 2018 at 2:12 PM
ReplyDeleteNice post ET. Does i of ((iii)) has to take out ((i)) ? or we can discount iii of ((iii)) to do that job ?
ReplyDeleteThink about 'degree'. Wave (i) of ((iii)) must be shorter than the higher degree ((i)).
ReplyDeleteAgree, projecting length of ((i)) from our potential ((ii)) gives 2463.86 on spx which will take out ((i)) @ 2603.54. But then the question is can (i) of ((iii)) become as long as ((i)). And if it does then can (iii) of ((iii)) become longer than (i) of ((iii)) and still remain shorter than ((i)). Tricky ? So I assume we will have to wait to see how (i) of ((iii)) get formed ?
DeleteNo. All subwaves of ((iii)) 'must' remain shorter than ((i)), or they are not subwaves. And this applies to both price 'and' time (number of bars).
DeleteET, Am getting what you want to convery. Am just trying to see if (i) of (iii) can break ((i)) and its possbile but we will have problems with measuring (iii) of (iii). If (i) of ((iii)) becomes as long as ((i)) BUT does not exceed its length in time or price (say one bar less in time and one point less in price) then we can still break ((i))'s low. But then (iii) of ((iii)) cannot be longer than both (i) of ((iii)) and still remain shorter than ((i)) in both time and price. May be a picture on what you want to convey will help.
Deletei am looking for anyone who reads to critique my thoughts on ABX. i count to the high on 9/25 as an expanding diagonal (a). good alternation with the 2 in ed a flat and the 4 sharp. the (b) is a flat ended 10/10. i have (c)/A on 10/23. B ending 11/30. i put it there so that 0 to b does not cut off any of c. i am thinking this is ABC because the retrace from 10/10 to 10/23 went just about to 61.8. far too much for a 4. there was also the gap down 11/29 it filled so it is a bullish exhaust gap. anyone else follow? they are large gold miner.
ReplyDeleteFrom sep/11 low, I see that could be an impulse leading 1, 2, 3 and a very long 4 triangle or complex correction.
DeleteLook at ewo in 4h chart. Is what I see.
can you provide the dates that end your 1,2,3,4?
Delete1=sept 11- sept 25 (leading expanding diagonal?)
Delete2=flat to oct 8
3=oct 8 to oct 23
4=until nov 14 or triangle until nov 30 ?