Thursday, December 6, 2018

When Have You Ever Heard?

When have you ever heard in your lifetime, the U.S. Federal Reserve make a market assessment like this one?

Fed warns that a ‘particularly large’ plunge in market prices is possible if risks materialize

And when have you ever heard them say that, "asset prices appear high relative to their historic ranges"?!

If you have not heard or paid attention to this information, here is the LINK, so you can see it again.

This is not me saying something, this is the central bank. Why now? What do they know that you and I don't? They get information from banks all over the U.S. and all over the world. I don't.

All of that aside, from a wave counting perspective, we were able to count five waves down in very near real time this morning. The five waves have an extended first wave, and so appear in a wedge (see yesterday charts for the updates).

SP500 Cash - Daily - Minuet (i)

The daily chart above shows that the minute two wave ((ii)) did have the Elliott Wave Oscillator trace back above it's zero line indicating an excellent location for a second wave up.

Today's down wave undercut the prior (x) wave low, and shows the power of a 'motive wave'. It is shorter than the minute ((i)) wave down, and therefore, can be a valid sub-wave of wave minute ((iii)) in the downward direction. After morning,  the retracement of this wave of this wave began, and almost made for an unchanged close. but, not quite.

In order for wave minuet (ii) to remain a valid sub-wave, it must now remain shorter in price and time than the minute wave ((ii)). Further, it would be especially indicative if this up wave stops short of the down-trending upper channel line. 

That's it for now. You know about corrections, right? They are there to try to mess everything up. If you counted a,b,c up today, remember that c waves can get longer than c = a, and remember that to extend a correction, if the market wants, it could make a double zigzag instead of a single one.

Be careful and prudent. And have a good evening.
TraderJoe

P.S. Chart added at ~1:30 pm
Five Wave Impulse? (a) does not overlap (v) of ((1))

We said, if the low was take out, this would be reconfigured as a double-zigzag. The low was taken out. So here is a third chart.

ES 5-min - Reconfigured to Double Zigzag

67 comments:

  1. Joe I am a bit curious about the EWO movement relative to minuet 2 and minuette 2. I noticed that is has already moved above the zero line for the presumed minuette whereas for the higher degree minute 2 it did not. Is that apparent divergence unusual? Thx!

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    1. No. It can not be considered divergence because the indicator has 'lag' in it. The lag is caused by the histogram requiring 5 days, and 34 days for calculation. This recent down move occurred in only 3 days. It's 'catching up' with prices. There is nothing more significant to be seen in the EWO in the future until it makes a lower low than ((i)), indicating a third wave confirmation - assuming that should occur.

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  2. Fed is basically warning investors that their policies of QE and extended low interest rates will create a plunge in stocks. The Fed warned investors of the same risk in 1929 before the crash. The extreme market moves over the past two weeks are very typical of what happens just before a crash. Especially the one in 1929.

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  3. I think the FED is opening the floodgates

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  4. Don't forget the three waves up could also start a 'leading diagonal' for an 'a' wave in the upward direction to build many more frustrating daily bars here - if the market wants.

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  5. joe, a "tool" i have implemented from the neely video was using rectangles which surround prior waves and moving them forward to current wave. its efficient way to monitor a wave as it unfolds. you need to choose correct historical waves (i'm not sure it that is an art or science or combination). I'm sure you know this but it may help some visitors to your blog.(

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  6. I used to excel in making a chart look very pretty with cool trendlines and channels etc. But EW is opening doors to an ugly chart that only a very few truly dedicated and detail oriented folks like Joe can explain and make sense out of it.

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  7. As far as I can tell, we've had three-waves up to the 2,710 gap fill, with c = a if b is the triangle. Could be in either 'x' wave down for double-zigzag or b:3 of flat wave.

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    Replies
    1. joe, have you ruled out the leading diagonal? you mentioned it a few posts up.

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    2. rejected from 50 percent Fibonacci from the top , can we say possibly ii may be done ?

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    3. That's what I was wondering but I guess we need to convert 2654.77 to confirm we are in next impulse?

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    4. From what I can tell we are 5 waves down now about to backtest?

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    5. Have not ruled anything out, at this point although triangle often signals "last wave was dead ahead". Because of only "three waves up", the risk & opportunity here is that the market can trade all the way down to the lows in a b:3 wave of a flat or beyond. Will be hard to confirm wave (iii) in progress until 1) EWO makes new low, or 2) there is a day opening gap down for a third wave of a third wave.

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  8. Cash just broke it's rising trend channel.

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    Replies
    1. We are also below the (e) wave of the triangle. See yesterday's comments.

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    2. Yes. I had an eagle eye on that "e" wave. Thank you!

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  9. A bounce from here would increase the odds of a more complex upward correction?

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  10. Lower low is now likely iii of a (c) wave

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    1. ES 2682.25 is likely the high of a (b) wave. Exceeding it upward would likely mean the correction upward would continue. Until then ...

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    2. thanks for the comments during the day's trade. it is definitely helping me to understand how to analyze the market.

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  11. On a 1 min chart today's down move channels very well as an impulse. EWO is off as it looks like an extended first wave so max not 3 of 3 but it looks like all the other elements are there.

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  12. SPX barrier triangle since 10:26?

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  13. ET, does abc from yesterday has to be taken out in less time for the downmove to be impulsive than the time it took for abc to form ?

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    Replies
    1. Not likely E_D_T, impulsivity would have a gap in it.

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  14. Width of triangle is down around 2640.

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  15. Looks like we might be forming an ending diagonal for wave 5 of the za c wave?

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    Replies
    1. Possible. . but watch the wave lengths, and potential overlaps closely.

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  16. Width of triangle is down around 2640.

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  17. Possible to see the whole 5-minute down move as a non-overlapping 'a' ..wave, or as a-b-c-x at this point.

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    Replies
    1. I added a chart to show this count.

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    2. thanks joe.
      what is 0?
      (ii) or a of (ii) or we need to wait

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    3. Any movement below ((v)) would likely require the a-b-c-x count downward.

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    4. Now below ((v)) and must be reconfigured to the a-b-c-x downward. Likely target is 90% level retrace.

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    5. Perfect count Joe! If you look at the RUT, it gave you a clue about a half an hour ago...if this is wave B of a flat, then might be a good time (soon) to buy some calls.. 90% @ 2692 - will wait for some confirmation..watching AAPL for clues as well.

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  18. is 0 too soon and too shallow a retrace to be (ii)?

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    Replies
    1. ..probably, but not by 'rule' .. and more by time.

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  19. Should we also be aware of a possible flat for 2 off of 2621? Would be in b down currently. Since minute (ii) was a flat this would be a fractal of that. Also the current down leg doesn't seem to have the velocity of a 3.

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    1. Yes, that flat is what might be suggested by 90% down.

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  20. I have the 90% level as ~2,630 on the ES.

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  21. A flat would also be perfect from ES 2700, C= A*2.62 ES 2634

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  22. 0.782 fib for 2018 to date (high/low) is at 2617 FYI.

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  23. ES 2,630 has been busted lower; the (b):3 wave of a flat, is now allowed by EW 'rules'. No need to bend 'em.

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    1. Now at Y = 0.618 x W; upper channel line break and X wave are now key markers. 'Could' go to more common Y = W, but doesn't have to. Daily Bollinger Band at prior lows. So, Ira Epstein's trading guidelines suggest "no new shorts here". This is not trading or investment advice - just a recap of his guidelines.

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  24. A b:3 wave down is now confirmed to have consumed more 'time' than an a:3 wave up.

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  25. my view - https://imgur.com/a/SK6wNBl
    no confirmation of wave completion yet

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    Replies
    1. agree, so far. Thanks for posting!

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    2. No problem Joe. I'm sure everyone here appreciates all your hard work!

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  26. nasdaq went below yesterdays low today , trying to go back up .. but not a good day for bulls

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  27. Currently breaching upper channel line .. warning. Only down would be a triangle ((b)) wave of Y.

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    Replies
    1. If potential triangle busts up; then ended as a contracting diagonal at Y = 0.786 x W.

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  28. joe thanks
    im having a real hard time sorting out rules and guidelines. rules must be adhered. where do i find rules on flat that they must retrace 90? it sounds like guideline. where could u find the minimun set ok rules? i thought there were very few rules...

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    1. Here you go Mark - straight from the bible (pg 89)
      https://imgur.com/USm1I4H

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