Friday, August 23, 2019

Powell Snores, China Roars

U.S. Debt Clock: $22.53 Trillion
S&P500 Candle: Lower High, Lower Low: Trend Candle
Market Posture: Neutral-to-Negative and Probing Waves
Swing Line: Neutral (Higher High, Lower Low)
Bias: Down

If FED Chairman Powell's speech at Jackson Hole was meant to inspire today, it certainly didn't. Steve Leisman from CNBC almost fell asleep summarizing it. That, and some announced retaliation by China in terms of tariffs, sent the market reeling today. Price broke through the 100-day SMA and then the 18-day SMA and kept on going. In doing so, prices filled the futures gap (black circle at the arrow) we said could fill relatively quickly because futures gaps are just not as persistent as cash gaps. We will remove further reference to that gap from future charts.

ES - Daily - Lower Daily Low

While the swing line is confused, today we eliminated the alternate labels on the chart. A more than 2.618 wave was made in the downward direction on the cash 15-minute chart, and that means we should err on the side of a third wave. The bias of price is to the downside again, being below the moving averages. Further, if downside movement continues, the lower Bollinger Band would be a good initial target for the move. The moving averages have crossed over - as we noted yesterday - and today price is confirming the bear cross with lower prices.

The w-x-y failed double zigzag also counts like a good example of a second wave. It found a barrier at the 62% retracement and simply was not able to penetrate it. It tried hard even into last night, still reflecting the caution in the count, but it could not do it. The second wave (ii) is also nicely longer in time than (i), and the Bollinger Bands are now crashing down below the prior high - which should give the bulls some pause. The daily slow stochastic was in over-bought territory and, although it has not rolled over as of the futures settlement, if it does, it would likely confirm the lower daily high.

Any price movement below the x wave would also provide more confirmation of a top. One final reminder: Art Cashin likes to say, "stocks rarely bottom on a Friday".

Have a good start to the weekend.
TraderJoe

Thursday, August 22, 2019

Will Powell find Another Towel ?

U.S. Debt Clock: $22.53 Trillion
S&P500 Candle: Spinning Top
Market Posture: Neutral and Probing Waves
Swing Line: Up (Higher High, Higher Low)
Bias: Up

Tomorrow the U.S. Federal Reserve and other central bankers will supposedly provide more clarity on the state of monetary policy probably in a more global context. Of course, if you can believe any thing a central banker says, "good luck". Remember just a few short months ago when the FED said that "the balance sheet roll-off would continue on auto-pilot", or then, later, when they said, "It would end in September", and then later when they said, "No, no. It will end in August!".

Yesterday, we said there was no compelling reason to end a count on yesterday's bars. That statement was proved correct today with a higher high day. A spinning top candle requires a confirming candle lower.

ES - Daily - Higher High Day

So, the daily chart is quite neutral as we head into the Jackson Hole Summit. Prices originally popped higher. Still they did not exceed the 2,944 high of 13-Aug. After the marginal higher high, prices then reversed in five waves down from 2,940 to 2,904, yes, some 36 points, when they met the combination of the 18-day SMA and the 100-day SMA around 11:00 AM (ET) and found near-term support. 

Prices then made a near-exact 78.6% retrace to 2,932 before falling off approximately 10 points near the close to 2,922.

There is now one way to count the wave (ii), above as complete. Two of us found it independently, and it can be interpreted to be a contracting ending diagonal as of today's high. However, the bias of prices remains up, and the swing-line is up even though there was a clear five-waves down made this morning. So, the chart is still fighting with itself (please don't blame your local Elliott analyst: we don't make the waves, we just try to count them). As further sign of the fight, the 18-day SMA has indeed crossed below the 100-day SMA, although this is usually better validated by prices trading below the moving averages, not above them as they are now.

Today we called the 78.6% retrace a retrace to a "Wave Counting Stop" or a warning about the intraday count. That level is often associated with "B" waves, so it might mean that a diagonal is still continuing or is in progress, and in this case "either" higher or lower. Here was today's intraday chart. The five waves down are on the left.

ES - 5-Minutes - c = 1.272 x a?

Then, it is clear there was a choppy wave sequence higher which we could not count as an impulse. Near the end of the day the wave measured c = 1.272 x a, which is a common measurement for a failure wave, before prices fell off below wave .iv at the end of the session. They have still not yet overlapped the a wave, but the blue .i wave has been overlapped.

So, the five waves down make the chart somewhat compelling, but a lower daily low, especially with a close back below the 18-day and 100-day SMA would provide improved confirmation. Why such caution? There is the potential of major news tomorrow - or it could be a "snooze conference" just as well. But, a lot of 78.6% waves have busted higher or been only part of upward diagonals etc. And, there are still ways to count upward. And, as well, the first five waves down with a 78.6% deep retrace could also just be part of a diagonal, downward to start a wave sequence, lower. 

For this reason, patience, calm and a probing mentality might well serve the wave counting studies the most at this time.

Have an excellent start to your evening.
TraderJoe



Wednesday, August 21, 2019

Re-testing 62%

Prices as measured by ES E-Mini S&P500 futures reversed again today and closed higher. In doing so, they closed over the 18-day and 100-day SMA's and turned the short term bias to the upside again, but not the swing-line just yet. We must remain neutral and flexible as difficult as that is.

ES - Daily - Back to 62%

Prices have thus reset back to the 62% Fibonacci level for all intents and purposes. If they fail in this general vicinity, for which there is not good evidence at this time, that would be one thing. On the other hand, if prices proceed to the 78.6% Fibonacci level, then it is just possible they could make the triangle we outlined in the previous post (see LINK here).

Unfortunately, this results in only a contingent market count (or some of you might like the term 'situational' market count better). This means the count develops as the situation proceeds: IF this, THEN that.

This posture is unfortunately required when the evidence is poor, or two possibilities with roughly equal odds can be envisioned. Stock futures settled at the high-of-the-day, but did not make a new recovery high. The new recovery high is needed to turn the swing-line higher.

Prices could proceed higher to make a (b) wave in the alternate count that is longer in time than the (a) wave. There is nothing wrong with that. But, they might also stall in this area or make an ending diagonal c wave of (ii) waiting on the FED's Jackson Hole speech on Friday.

So, in the summer heat, play it cool. There are lots of market participants that are still on vacations both here and in Europe. For me, personally, that means keeping risk very small indeed, and only probing some positions to better ascertain the count until the volume returns and momentum picks a direction. There is no reason stocks are required to top in the next couple of days. They could, but they don't have to. The wave count just is not compelling yet, although the possibility is there. I'm being flexible, calm and patient in wave counting - as best I can.

Have a good start to the evening.
TraderJoe

Tuesday, August 20, 2019

Not an Especially Good Sign

It was not an especially good sign for higher prices that the ES E-Mini S&P500 futures made an equal or higher high (regular e-mini's or micro?) in the overnight and then fell off below both the 18-day SMA (line in the sand) and the 100-day SMA. Thus, the bias is down. There are lower highs but higher lows on the chart.

ES - Daily - Turned Back by 18-SMA

If price continues lower, then it is highly possible for the 18-day to cross under the 100-day which has not happened in several months. Many technicians who watch such things would consider that as a negative. That situation has occurred in Crude Oil futures, and in the Dow futures. It has not yet occurred in the NASDAQ 100 (NQ) futures. 

The up gap from yesterday's overnight jump has not filled yet. We'll let you know if it does. At this time - if further downside movement occurs - the peak to the farthest right would be wave (ii) so as to preserve the 0 - (ii) trend line guideline that has worked so well in the past.

At this point, upward counting would only resume with a full-on higher high day. Should that occur, there is an odd way a triangle could be made out of these waves, but such a triangle would be better proportioned with a higher high to the 78.6% level of the drop to the current wave (i). Therefore, as an alternate, that triangle will not be counted unless there is a higher high day.

Have an excellent start to the evening.
TraderJoe

Monday, August 19, 2019

Gap Up to 18-Day SMA

The so-called "Smart Money", the funds and banks with accounts large enough to move markets, saw a "slow news weekend", and gapped even the ES futures up to start the week (red circle). Prices hit the 18-day SMA (red curve), and promptly stalled for the remainder of the day.

ES - Daily - Gap Up to 18-Day SMA

In doing so, prices also gapped above the 100-day SMA (green curve). Prices traded between the 100-day and the 18-day SMA's for the bulk of the cash session. Futures gaps tend to get filled a bit more quickly than cash gaps. The last such one that filled is shown as the black circle and it was called out in real time when it filled.

With today's up move, it became less likely that a (i)-(ii)-i-ii move, downward, occurred. That is because a line drawn from the top to (ii) would now cut off part of wave (iii), lower. However, it could be that wave (ii) is just becoming more complex and is extending in time. This up move has already consumed more daily bars than the down move, so, it should be corrective.

We'll provide more detail on the count once we see if we get a "turn-around Tuesday" or not.

Have a good start to the week.
TraderJoe

Wednesday, August 14, 2019

Best at this Time

I posted this count earlier in the day in the comments section. Yesterday, I had posted that a larger triangle was 'possible' with the up wave on the tariff news. Today, that counts looks a lot less likely. It is not impossible, but I am not counting upward until or unless there is a higher high day.

ES E-Mini S&P500 Futures - 4 Hr - Downward Count

The count is based on 1) the location of the 0.618 retracement, 2) the lower low today, and 3) the Treasury Dept branding of China as a "currency manipulator" which made the (v)th wave down on the night of Aug 5th - 6th.

The futures kept falling in the after-market to close on the lows. So far, there is not even sign of retracement. I was looking for a good reversal candle with follow-through that stuck. There was only one reversal candle today (hourly or better), and there was no confirmation candle.

People have criticized the turn-about in short-term outlook. Go ahead. Gripe all you care to. I said a larger triangle was 'possible', not for certain; not even "highly likely". Today the poor German GDP took the wind out of the sails overnight. So. So far, we have 1) Hong Kong problems, 2) German GDP problems, 3) Deutch Bank laying off 18,000 people and creating a "bad bank" to house problem assets, and 4) maybe problems in Italy. It looks like the problems are creeping in from overseas again. Beyond that, everyone knows that U.S. debt is exploding with $1 Trillion deficits, and the U.S. Debt clock now over $22.5 Trillion. 

All of you who read this blog know I have been looking to count a top. This Intermediate (B) wave has been among the most challenging to count I have ever encountered. Several of the waves can be interpreted multiple ways. That is the nature of almost all B waves. As I said before, I am not with the people counting an Intermediate (4)th wave, or an Intermediate (5) of a Primary Vth wave, or a Primary III wave. Let's see what those web-sites have to say for themselves this weekend - if anything.

As far as the griping. I can handle quite a bit of it. I recognize a B wave for what it is: a very hard to count wave. So, if you want to make fun of me - good-natured or not, then have at it. Some times I laugh, too, at what the market does. But, then again, if you keep it up without offering suggestions for improvement or your very own brand of "magic methodology", then you might expect this blog to take a new approach.

New Approach?

That's right. There is no reason why comments on this blog can't be held in a "pending queue" waiting for moderation. I'll read each one of them when I 'git a round to it', and then decide if I even want to publish your pearl of wisdom. In case it's not clear, I am trying to show you Elliott Wave for what it is, a sometimes & often useful and descriptive discipline. But Elliott Wave is not a pre-determined, pre-ordained, and fail-safe methodology. If it was, we'd all be rich beyond our wildest dreams by now. But, there are things about it I still don't understand yet and issues am trying to resolve because they are not clarified by the so-called experts in the field. Oh, it turns out every once in a while they get surprised too. There are even some things they have dead wrong. And, there is a big difference between describing an Elliott Wave count, and operating a "news-reading algorithm" that can react to published news reports with the mega-millions of "smart money" before a human can even finish the end of the sentence or paragraph of news. These are two different things. I am trying to do the former, not the latter.

So, what's it going to be? As the world gets more hostile, are you going to join the people who oppose the dark forces; are you going to try to be a teacher, and a helper, too? Or, are you here to grind your ax, and work your own (maybe twisted) agenda, or just complain for the fun of it?

I'll be gauging how you think this should go over the course of the next few days. If you have not complained, please ignore much of the above...

...and have a good start to the evening.
TraderJoe


Tuesday, August 13, 2019

Larger Triangle Possible

The 'stock market by tweet' continued today. This time, a supposed delay in the onset of tariffs - and a reduction in the types of goods upon which tariffs are now being imposed - sent the news-reading bots crazy and created a higher high day. Prices rose high enough in the S&P and the ES to negate a downward count, and put into play the larger triangle we wrote about last week. Here is a LINK to that chart, and here is that triangle updated.

DJIA - Daily - Potential Larger Triangle

As I had written, we have not seen the "large daily triangle" before the ending waves yet. Perhaps this is it. It is certainly a whippy and news-driven environment. Will the triangle play out? It is hard to say for sure. One clue would be that the upward wave terminates at the 78.6% level, or alternatively at the prior high (as a barrier triangle). Another clue might be y = w for the ((B)) wave of the triangle.

Time will tell. Have a good start to the evening.
TraderJoe

Monday, August 12, 2019

Out of Up Channel

Over the weekend, on Saturday, we posted that the up count just could not be made into an impulse wave, primarily because the wave had not broken the channel to the upside, yet. Today, the channel broke to the down side before the channel ever had a chance to break to the upside. That's a negative, not a positive, for the upward progress of U.S. equity markets.

ES - 1 Hr - Broken Channel

Although the Dow finished a ((C)) wave in a way that looks more pleasing to the eye, the ES finished with an attempt at a breakout of a fourth wave triangle, iv, shown above. But, that breakout in the overnight market failed on the news that protesters had shut down the airport in Hong Kong. That news - and the channel break, lower, that follows it - is the proper start of the next wave lower. It breaks the previous up wave in less time than the up wave took to form.

As many noted today, the downward wave overlapped the ((A)) wave high, and therefore lends increased confidence to a downward count. So does the failure. So does the channel break, lower.

Some have criticized this web-site for difficult, challenging or incorrect Elliott Wave counts. In response one can only look at two of the supposedly more popular web-sites and note have they have still been banking on either a primary fifth wave up (wrong - done and over in Oct 2018), or a full on Primary 3rd wave higher.  I think they are misleading their readers and / or paid subscribers.

How are you going to get continued up waves with the clear failures we are seeing between the Dow and the S&P on many occasions now? Ask them. Not me.

Have a good start to the evening.
TraderJoe

Sunday, August 11, 2019

Anyone Paying Attention Yet?

Yesterday, I published a chart - intentionally again trying to see if anyone is paying attention to degree labeling. It was a test. No one is paying attention. Few are challenging. I even gave you a clear clue in the write up. I said, that "I would add the note that since ((1)) is slightly longer than a, then a 1-2-i-ii from the low would seem to violate degree labeling."

But, therefore that also means that as a sub-wave of an ending diagonal, then ((1)) of an ending diagonal c wave would also violate degree labeling. No one is paying attention. Few people get it - or at least no one says so after 24-hrs. Further, I published the ALT labels. I did that for a reason. The ALT labels are the correct ones because of the degree labeling requirements.




The degree labeling interpretation leaves room only for a fifth wave up that is shorter than wave ((3)), because wave ((3)) is shorter than wave ((1)), and/or an ending diagonal fifth wave of c (not required).

C'mon people ... thinking caps on.
Have a good rest of the weekend.
TraderJoe

Saturday, August 10, 2019

No Impulse Yet

With the real strong proviso that things could change next week, the chart below would indicate that at the present time prices can not be claimed to be impulsing higher.

ES - 1 Hr - In Channel

For the moment, prices have not broken the potential channel to the upside. I saw no issue with them potentially doing that. Why has the market said, so far, "prices have not exceeded the upper channel"? Further the measurement from a to ((1)), is just about equality, with ((1)) a bit longer. On Friday, prices retraced to 0.382 in cash, or a little more in cash depending on which peak is picked for the top.

IF a top is being made, the count outlined is that of a potential ending diagonal. There was no clear reason why prices didn't further impulse on Friday. They tried to pop, but backed off markedly and broke a shorter term trend channel. Weak action on the close.

Still, at this point, there was no overlap between ((2)) and the prior .a wave on 8 Aug. So an impulse is not required. It could happen, but it doesn't have to. The market is really getting very, very cagey. That means that just a higher wave to end a 5 th wave (seen in red) can not be ruled out as an almost equal alternate.

To some extent, we must see what occurs early next week. That does not mean the situation is murky. It simply means the market is outlining risk parameters as follows: trading over ((1)) can not rule out further highs. But trading under ((2)), and, more so, under the prior .b wave, and therefore outside of the lower channel line would tend to indicate lower prices to follow. That's about a 45 point price range at this time.

I would add the note that since ((1)) is slightly longer than a, then a 1-2-i-ii from the low would seem to violate degree labeling.

And, as a result, patience, calm and flexibility are still needed until a more clear interpretation is present.

Have a good start to the weekend.
TraderJoe

Thursday, August 8, 2019

Probabilities Change Today

Yesterday we had written that a 38% retrace for a first wave down looked a little too cozy. It was. Prices rose today, and filled a gap on cash - which is quite common - and also filled a gap at 2,934.50 on futures. Persistent gaps in the futures (one that last for more than a few days) are a little rarer than on cash.

SP500 Cash Index - 2 Hr - More than 50% Retrace

Until there is more information, the probabilities have to be spread out evenly at 30-30-30 between these various scenarios.
  1. Second wave up as a,b,c
  2. Impulse up
  3. Larger triangle
The larger triangle arose from looking at the Dow Jones Industrial Average and noting that the down wave took less 'time' than the up wave, but did not make a new low.

You can read more on that comment at 12:33 PM in yesterday's thread. Here is the chart LINK so that you don't have to search for it. Any wave over 78.6% will be considered as part of an impulse up or as a leg of a triangle.

Right now we are counting upward. And as of the futures close a c wave would be greater in length than an a wave, which is really what tilts the probabilities.

Have a very good start to your evening.
TraderJoe

Wednesday, August 7, 2019

Second Day of Snap Back toward the Line

Today made a marginal higher high daily bar, and I said upward wave counting would begin at that point. It is also just the second day of "snap-back towards the line previously violated". The daily chart of the S&P500 shows the most probable count, with about 80:20 probability.

SP500 Cash Index - Daily - Snap Back Towards the Line

During many years of looking at the market, a lot of things have been observed. This nice looking retracement back to the 38% Fibonacci zone looks "warm and wonderful", doesn't it? Today again met with that up sloping trend line of resistance. The probability placed on this count is 80:20 for a reason. All it will take is one "progress on China tariffs" tweet, and the upward wave (ii) could extend to 1.618 x a. Where is a? Here is the short term count, below.

ES Futures - Hourly - Upward Corrective Wave

Right now the upward c wave is very, very overlapping, and it may only be the start of a diagonal for the c wave. It did make a marginal new high today, but only a marginal new high. In no case may the c wave travel below the low of b (in terms of the invalidation level).

Now is the time for calm, patience and flexibility.

Have a good start to the evening.
TraderJoe

Tuesday, August 6, 2019

Snap Back towards the Line

It's hard to make too much of today, other than what it was. When you look at the daily chart of the ES E-Mini S&P500 Futures, all they did was snap-back towards the line that was previously violated.

ES - Daily - Snap Back Towards the Line

The problem is there is no clear information that the rally is over. Numerically, the futures settled back inside the lower daily Bollinger Band, which 'resets to zero' the consecutive number of days under the lower band.

And, when one looks at cash, one does not see the 50 point decline in last night's overnight session, or the overnight reversal, so it is again hard to believe it for the best guidance. Cash 'can' be counted as three waves up from the low to this point, but, again, there is no clear information that the rally is over. Sometimes really sharp and violent waves like this one are the start of a triangle, particularly after a long steep drop.

We'll have to wait to see some retrace waves, and how prices react to the lower trend line before making more firm conclusions. But, as said before, there is no upward counting until a higher high day is made. That has not happened yet. Today was actually a "lower low" day! The swing line is still down and daily prices are still under the 18-day SMA, and so have a negative bias. Further, there is no critical upward overlap, yet.

However, to those who say "what a surprise" today was, we clearly outlined the probability of closing outside the band in Friday's post. No surprise here.

Have a good start to the evening.
TraderJoe

Monday, August 5, 2019

A 2.618 Wave

Prices as measured by the ES E-Mini S&P500 futures on the hourly chart made a clear 2.618 extension today.

ES - Hourly - 2.618 Extension

This ups the odds in favor of the top at the high, but - as the saying goes - it's not over 'till it's over. The last hourly candle of the cash session is an outside reversal candle, up, but, so far in the after-hours, most of its gains have been given up. That being the case, the odds increase to 80% for a top, 20% for the impulse minute ((c)), up. Not impossible, but very hard to see at this point. Sometimes announcements are made the following day which can not be known as of today.

Obviously, this could be part of a third wave down (whether iii or c). The EWO is at a low. There continues to be no counting of upward waves until a higher high day is made.

Patience, flexibility and calm are needed as various nations try to pull the trade rug out from under each other. So silly.

Have a good start to your evening.
TraderJoe

Sunday, August 4, 2019

Weekend Video Update (40/60)

This is the third post this weekend. If you have not reviewed the previous two, you may wish to review them first. Again, to be considerate of your time and mine, this video is limited to about seven (7) minutes.



Thanks very much for watching, and have a good rest of the weekend.
TraderJoe

Saturday, August 3, 2019

Hourly ES

This is the second post this weekend. If you haven't read the first one, you are encouraged to read it now. Below is a chart of the hourly ES E-Mini SP500 Futures. The first thing you will note is that at this time, there are at least 120 candles on the chart for the "wave of interest" - along with the Elliott Wave Oscillator. 

ES - Hourly - Larger Diagonal

Given the usual techniques of The Eight Fold Path Methodology, the pattern seen from the high is very typical of the expanding diagonal. The EWO on wave (ii) just peaks above the zero line, and the EWO on wave (iv) is ever so slightly higher than that of wave (ii). This signature has happened over and over again in my experience. The adherence to trend lines is still outstanding.

Further, I would be remiss if I did not see wave (iii) on the low of the EWO - which it is where indicated at this point. Wave b in a diagonal can be a flat, a zigzag or a triangle. So far, it is a flat. That 'could' mean that we have waves .i, down, and .ii, up of c of (v) or it could mean than wave b will continue for a while in the after hours. It needs to be watched closely, but the diagonal could still finish with a lower low against the daily up trend line at the 100-day SMA.

The very, very interesting thing again is that the last b wave on the chart was a "pre-market" wave occurring after the payroll employment report. It never even shows up in the cash market, but may be important to an understanding of wave structure at this time.  The good news is, if the b wave is over, then the count may be straight-forward to the low. The bad news is that almost nothing invalidates a b wave higher, unless it were to travel over the high of wave (iv). Traveling below the low of Friday means the b wave is likely over.

Since the diagonal currently has the structure of 3-3-3-3-3 it has a fairly high probability of being an ending rather than a leading diagonal.

Have a good rest of the weekend.
TraderJoe

P.S. Please see C's comment around 1:09 PM, below. I completely missed that (iv) did not overlap (i). That is my error, and my apologies. I said I would always let you know when I was incorrect. That mean's with C's, help, and Erik's comments regarding degree's, that the Flat-X-Zigzag I mentioned in previous comments is, in fact, the more likely pattern. Here it is, sketched out.

https://invst.ly/bhznp

Thanks & my apologies.

Friday, August 2, 2019

Second Close Outside Lower Band

Today for the equities market, as measured by the ES E-Mini S&P futures, it was a another lower low day. It was also a second daily close under the lower daily Bollinger Band (18), as in the chart, below.

ES Futures - Daily - Second Close Outside Lower Band

As most know by now from reading this site (see this LINK) price has a random chance of closing outside of the daily bands of about 5% on any given day, at least that is the intent of the construction of the Bollinger Band (assuming prices are distributed in a Bell-shaped, or Gaussian, curve - which they are most definitely not!).

However, a rule of thumb is to subtract 1% for every consecutive close outside of the band. Therefore, with two closes outside of the bands the chances of prices closing below the bands on Monday drops to about 3%. There have been instances of 5 - 7 consecutive closes outside of the bands, and that is why the rule of thumb is only that.

Since the "smart money" usually takes some money off the table at the bands, it is sometimes wise to recognize that fact in wave counting. Notice what happened to prices at the middle of May, and the end of May when prices closed outside of the bands. (Past performance is no guarantee of future results).

Further, the daily slow stochastic is in oversold territory, although it has not curled up yet. It is possible and perhaps even somewhat probable that prices will come down to touch the 100-day SMA on Monday and / or Tuesday. But it does not have to occur. So, once again, it is time for caution, calm and patience.

And a reminder: upward wave counting will not begin until there is a higher high day.

Have a good evening and a good start to your weekend.
TraderJoe

Thursday, August 1, 2019

Lower Low Day

Yesterday, we said there were ways for prices to go lower, and we provided a target. And, at the end of yesterday afternoon, we started counting upward with the .a wave shown on yesterday's chart. Today, we showed in the comments that a .c wave did not even make the .c = .a mark. It was interrupted by another one of those tariff tweets, and it sent stock prices quickly lower. We called it a truncation.

ES E-Mini S&P500 Futures - Daily - Lower Low

As measured on the daily chart, stocks hit the lower daily Bollinger Band and bounced around it for a while. At the futures settlement, the close was below the band. So, today's move did three things.
  1. Price is pushing the lower band downward
  2. Price filled the gap shown by the black circle on the price chart
  3. Price overlapped the May high at the black arrow
When that particular futures gap opened up, we noted the rarity of gaps in the futures to persist. This one lasted a little more than a month.

Wave count attempts should be sure to be cognizant now of the overlap of the May, 2019 high. With momentum clearly to the downside, the risk has increased that we will hit the 100-day SMA shown in green. There might be some backing-and-filling, but as long as price remains below the red 18-day SMA, then the bias is to the down side.

Upward wave counts will not be in effect until a higher high day is made. Please remember that the Payroll Employment report is before the market opens tomorrow.

Have a good start to the evening.
TraderJoe

Wednesday, July 31, 2019

Five Waves Down to Minimum Retrace

The S&P500, the SPY and the ES completed five waves down, as suggested by the dotted declining trend lines in yesterday's post. For emphasis, this count is shown below.

SPY - 15 min - Five Waves Down as a Diagonal

In making the five-waves-down, the 'minimum' objective for the move lower was obtained. See chart below. Now it is a question of whether the small-degree diagonal, above, is an ending or a leading one.

ES E-Mini S&P500 Futures - 4 Hr - Five Waves Down to Minimum Target


The downward overlap on minuet (i) - from previous posts - was the first target for a down wave. You can see by the overlap that the target has been obtained. IF the diagonal is an ending one, then the down move is over as minuet (c) of minute ((b)). IF the diagonal is a leading one, then only the sub-minuet wave i, of minuet (c) is completed today. The secondary target is the approximate 2,900 level where the weekly up trend line is located, along with the 100-day SMA.

Any lower lows suggest the diagonal is leading. To invalidate a leading diagonal a new all-time high would be required. From strictly a time perspective, the waves would look and measure much more proportionately if there was indeed additional downside movement.

Remember, tomorrow is the first day of the new month, with potential inflows, and then Friday is the Payroll Employment Report.

Have an excellent start to your evening.
TraderJoe

Tuesday, July 30, 2019

FED Next

Yesterday it was offered that if a third wave down was to start it would likely happen in the overnight or before noon. It did. Then, there were three waves up, which included an overlap.

SPY - 15 Minutes - Lower Low and Overlap

Because there are several patterns that can resolve themselves, including the possibility of an internal triangle (shown in blue), I am neutral until after the FED results. There tends to be a bit of volatility on FED days, and it would be best to see which pattern that volatility best fits with.

There is no reason lower lows couldn't be made, and if I look back to the low on 25 Jul there is also no reason that an even larger triangle could be a play, and that could even result in new highs. I have no particular vested interest in which occurs. So, caution, patience and flexibility are the continual by-words at the moment.

Have a good start to your evening,
TraderJoe

Monday, July 29, 2019

Four Busy Days

First, relative to the wave count, if there is to be a third wave down, it should likely start in the overnight tonight, or no later than noon tomorrow. So, you might like to monitor that.

SPY - 15 Minutes - Possible Start of Minuet (c)

It was very interesting coming into today that the overnight gap was not a higher one. That initially seems to reinforce the above short term count of the minuet (b) wave up. There appeared to be three waves up after the opening drop - right to the the 62% retrace level on SP500 cash - and so it is possible this represents a second wave up 

Prices did fall off from that level into the end of the session, and if they continue we may get a third wave down. If so, it should be a 1.618 length wave, or more. If a lower low occurs but it is not a 1.618 wave, a diagonal 'might' be suspected based on the position of the futures.

The best alternate I can think of at the moment is that today represented another 'x' wave down (shown in red). There is no rule-based reason why the minuet (b) wave could not become a triple zigzag, but triples are pretty rare, and it would be pretty poor form, since the minuet ((a)) wave diagonal represents a triple zigzag in the ES. So, a further triple zigzag for a (b) wave would be very poor alternation. Therefore, the alternate is only that, and would require prices to go over the high first.

This week of course is a full slate of earnings, another torrent of economic reports, and the report-out of the Federal Reserve decision on Wednesday. But beyond that, Wednesday is the end of the month which often (not always) brings some sloppiness from "window-dressing" activities, and then Thursday is the "first of the month" with potential inflows from company bonuses, pension fund and 401k reinvestments, dividend reinvestment plans, etc. Because this is a mid-week change in the month - and not the end of the quarter - the impact might be a little more subdued but is still to be watched for.

Have a good start to your evening and to your week,
TraderJoe



Friday, July 26, 2019

Still in Minuet (b)

Yesterday's post outlined a "five-down" count. We said that if new lows didn't result, the expanding diagonal could have been "ending" and not leading. Today made marginal new highs. The expanding diagonal was ending.

All that likely means is the minuet (b) wave upward is likely extending in time (mostly) and somewhat in price. Here is the updated chart.

ES E-Mini S&P500 Futures - 4 Hr - Longer Minuet (b)

So, the 'invisible' WonderWave from the ECB presser was a flat for the x wave label shown above, and the five-down diagonal was the 'c' wave of that flat. (Remember in the overnight, prices went down, then up, then down big.)

The result is there is a new "three-touch" trend line which is to be respected from a wave counting perspective until it is broken lower. If and when it breaks lower, it will likely signal the onset of the minuet (c) wave of minute ((b)) wave lower.

The reason we have a high degree of confidence in this count is that all of those that were counting a diagonal to Minor 5 of Intermediate (5) at the mid-July high, and there were several, now have extra waves to deal with. The count above does not share that problem. That is very, very encouraging.

Here was my short term wave count over the last two days of observing the ES E-Mini S&P500 futures. 

ES E-Mini S&P Futures - 15 Minutes - Extension of (b)

At the end of the futures session (5 PM ET), there was about a six-point give-back. One internal trend line was broken, and the market may have established that it has taken out the previous fourth wave in less time than it took to form. But further, if a downward wave travels below 3,018 it would likely become the largest downward wave on the chart, and potentially signal a degree change.

Ask yourself if anyone can provide commentary with such specificity and so few words?

Have a great start to your evening and to your weekend.
TraderJoe

Thursday, July 25, 2019

Invisible Wave

I have been commenting recently how little cash and futures are having similar patterns lately. I have seen this before so it is no major surprise, but several days in a row really makes one scratch the head and give pause.

The futures trade around the clock - much like commodities do - and this morning, there was a (not) WonderWave from the ECB Press Conference on the left hand side of the chart.

ES E-Mini S&P500 Futures - 5 min - Intraday

You won't see any of this wave in the cash market. Cash opens with a gap down. The WonderWave was created when Mario Draghi 'promised' to do whatever is needed. The WonderWave disappeared when he provided virtually no details. Markets reversed hard, in their fastest turn in a while.

At the end of the day, I had some other chores to do and couldn't stay with the close. But, in looking over the intraday chart in the after-hours, I couldn't help but wonder if "five-down" was, in fact, made as an expanding diagonal.

Although the wave fits the price measurements with ((5)) greater than ((3)), ((3)) greater than ((1)), and ((4)) greater than ((2)) and overlapping wave ((1)), the interesting thing is it may also fit the same expanding time measurements.

But, even though the pattern is still apparently there, I would like to see more downside follow-through including taking out the b wave low that was noted yesterday. Otherwise, the pattern could be ending instead of leading.

Cash would not count like this yet.

Have a good start to your evening.
TraderJoe

Wednesday, July 24, 2019

Mixed Results

Today, the Dow was down while some other indexes made new all-time highs. As a result and considering all degree labels as best as possible this is the best count on the ES E-Mini S&P futures from the June 2nd low.

ES E-Mini S&P500 Futures - 4 Hr - Leading Diagonal Minute ((a)) and Now ((b))

The degree labels of interest are the down waves in mid-July. Each one is shorter than the down wave to the end of June. So, there are three waves down to a minuet (a) wave, and three waves up, so far, to the minuet (b) wave.

It was correct to call yesterday's up wave a five-wave diagonal move in the futures. It did turn out to be a leading diagonal instead of an ending diagonal. Nothing to be done about that .. that is the pure equivalency of various alternates: the same exact pattern can have two fundamentally opposite meanings in Elliott Wave theory - even if the wave itself is counted properly, which it was.

We showed the above count for the NQ (NASDAQ 100 futures) in the weekend video on July 14th. Today's higher high makes that count the more likely one for the ES, too. It is getting virtually pointless to count the cash market because the futures are making extremes that cash is not. But, even the futures are compressed at times like never seen. It would be nice to see a real, clear impulse wave. Maybe soon. Yes, the expectation from the above chart is that there would be a minuet (c) wave lower, to a minute ((b)) wave. However, there is no claim that such a wave is underway until the sub-minuette b wave of minuet (b) is exceeded lower.

Today's new high was made on another divergence of the oscillator.

Have a very good start to your evening.
TraderJoe

Tuesday, July 23, 2019

More Time

The upward wave in the ES hourly futures, shown below, now takes more time (at 90 bars) regardless of where the downward a/i wave (max 64 bars) started. Therefore, the upward wave should be corrective to the downward wave.

ES E-Mini S&P Futures - Hourly - Upward Correction Takes More Bars

Overall, the count would be a/i, down, and  b/ii, up, with a c/iii down to follow, where b/ii, up, is a flat wave. Cash S&P did not make the lower low at .b, like the futures did, but it darn well did make the 90% level lower. Hence, a flat correction is allowed by the rules.

We do not know that the upward correction is finished. But, there is the clear potential makings of a very rare ending expanding diagonal. If the goal of the upward .c wave was to get above the upward .a wave, to avoid a truncation, it did not do it by futures settlement time. It could easily do so in the after-hours, however. None-the-less, we thought it helpful to readers to show what this pattern is like in near real time.

If this is an overall minute ((b)) wave down, then it is no wonder than the count is so explosive and choppy all at the same time. B waves are among the hardest to count and one never knows if they will be simple zigzags or triangles or some other "three". So, we do the best we can.

IF (again, IF) the diagonal winds up to be an ending expanding diagonal, then the start of it must be exceeded lower in less time than the diagonal took to build.

Have a great start to your evening.
TraderJoe

Saturday, July 20, 2019

In Perspective

The chart below shows why downward movement was expected at this time and is occurring in relative perspective to the overall double-zigzag, upward, in U.S. equities.

S&P500 Cash Index - Daily - Targets

The 'minimum target is that this likely minuet c wave down of the minute (b) wave, down, overlaps the prior minute (a) wave, which would likely also overlap the prior April high. However, a more likely target is to travel down to the 2,900 level to contact the daily up-sloping trend line, and, perhaps even make a breach of it lower to generate some really bearish opinions before heading higher.

The alternation would be that within minor W, the minute waves formed a zigzag, and within minor Y, the minute waves formed a flat.

Have an excellent start to the weekend.
TraderJoe

Thursday, July 18, 2019

Five Down and Flat

Same exact count as yesterday in the S&P500 cash index chart below. This morning we noted the marginal lower low and said a flat wave could form. It looks and measures, so far, like it has.

S&P500 Cash Index - 15 Minutes - Five Down and Flat Wave

Because wave a, upward, is longer in price than wave ii or wave iv, it can not be a sub-wave of a larger down wave. Therefore, it must be the first wave of a new upward flat wave. That is what we mean by "turning a degree". However, b, which is a downward wave, is shorter than wave v which preserves degree labeling.

So far, in the up wave, there are only three waves up, showing. A common expectation of an expanded flat correction - which is the most common among corrections - is c = 2.62 x a. We already know that the wave has made it back to the territory of the prior fourth wave which is 'often', not always, a stopping point for a larger B wave in a (larger) zigzag. This is one of the reasons to try to get the count from the top correct and not include the truncation.

We're not sure we are correct - only that, so far, measurements, degree labeling, and adherence to the 0 - 2 guideline seem to indicate so. If wave c wishes to, in order to waste more time, it may become more of an ending diagonal wave to use more time without taking up much more price.

Have a good start to your evening.
TraderJoe


Wednesday, July 17, 2019

The 'Few More Waves' Seem to Indicate 'At Least' An Interim Top

Few listen. Few care. Today during the trading day I posted a link to this ES 30-minute chart, which I had drawn up with the specific intention, again, to see if anyone is listening with regard to degree labeling. 


People that saw this chart should have been screaming that the supposed a wave of ((4)) was larger than the whole previous wave ((2)). That is a clear and unmistakable degree violation. One is saying a smaller degree wave is larger than it's larger degree counterpart. But, there are other degree violations too. Wave ((4)) - smaller degree wave than i, is longer in time than all of i! That is just as much as degree violation in time, as the former one was in price!

Perhaps one person was on the right trail when they asked if the up wave was over. But, they did not cite the potential reasons why. My point is that people 'should' have really beaten up that chart. What did I get? Silence.

Here is the correct count.

SP500 Cash Index - 15 Minutes - Correct Count

Clearly you can see the diagonal downward did not overlap the prior wave i and is still probably in the fourth wave position. Clearly, you can see that it did not take out the fifth wave of iii in less time than that fifth wave took to build. 

Clearly you can see the only wave that took out it's prior wave in less time, was the new location of i down.

So, what we most likely have is a truncation top. And, if the top truncated that means it also can not be a leading diagonal wave. Ponder on that one. "If the top truncated, it can not be a leading diagonal wave up to that point."

I'll let you sit with that one overnight.
TraderJoe

Tuesday, July 16, 2019

Three Waves Down

From the weekend video, we said sudden set-backs could be expected at any time. Today resulted in only three waves down.

SPY - 15 Min - Three Waves Down

Yesterday, we counted out a potential diagonal lower in real time. Today, that diagonal was confirmed as a leading diagonal. Absent more information we have three waves down from the high, down to a c = 1.618 x a, and then an upward overlap.

As a result more information is still needed. If it's a complete correction it seems very short in time. Three waves could also go on to form a triangle or a diagonal. As a result more waves are needed for the market to show us what it might have in mind.

Have a good evening.
TraderJoe

Monday, July 15, 2019

Mixed Market

The NASDAQ 100 (NQ) futures made a marginal new higher high today. For this reason we need to show the clear invalidation level of the potential 5:3:5:3:5 Diagonal in the NQ futures. The invalidation would be because the fifth wave is not allowed to be longer than the third wave in price.

NASDAQ 100 - NQ Futures - Invalidation Level

So, even with the divergence on the Elliott Wave Oscillator on a four-hour chart, beyond this level (about 8,045 - given the accuracy level of this particular tool) a 5-3-5-3-5 diagonal would invalidate, and a different count must be in play for this index. Because each of the waves is shorter in time and in price, it could be that an impulse would explode upward in a third wave, but that seems to run directly into the upper daily Bollinger Bands. Not impossible, but the presence of the upper band raises a caution.

Kindly remember, different indexes can do different things at times. Just look at the Russell for an example. It's still time to remain patient, calm and flexible until there is more information.

Have a good start to your evening and your week.
TraderJoe

Sunday, July 14, 2019

New Weekend Video Update

Here is an automated Elliott Wave Video Report prepared for any idle hours you have over the weekend. To be respectful of your time and mine, the video is kept to about 7 minutes.




The video may best be viewed in full-screen mode.
TraderJoe

Thursday, July 11, 2019

Powell Re-spaketh

On the second day of Fed Chair Powell's testimony, this time before the Senate Banking Committee, there was no change in the overall count. 

SP500 Cash Index - 2 Hr - In C Wave Up

Today, we spent most of the time trying to count this next impulse up, and, in particular, counting the long "triangle-shaped" fourth wave as below.

SP500 Cash Index - 15-min - Finishing Fourth Wave

It was surmised that because the ((A)) wave of the fourth wave was so deep, and rather quick that a triangle might form. It was also noted where the 0 - ii trend line (from 2 / b) is on this chart, and that the trend line broke. This means we are not likely in a continuing third wave, and are just waiting for the fourth wave to wrap up. The ((C)) wave of a potential triangle made another 78.6% retrace on the ((B)) wave - which was shown live during the day, and then a potential ((D)) wave took off upward back towards the highs.

This wave absolutely does not have to form a triangle. If the market is unusually strong, then the fourth wave could have ended as a truncated flat at the ((C)) wave low. Still, the wave is taking so much time, that the ((E)) wave of a triangle should be allowed to form before a fifth wave higher. In other words the triangle has a 'high likelihood' of forming properly. Now, it's just a question of if it does. 

The pundits are already out on T.V. claiming Dow 33,000. That gets my sentiment antenna up, making me say I am "neutral only - and counting towards a top". I will have more to say about that on the weekend.

For now, have a good start to your evening.
TraderJoe