Friday, January 11, 2019

Inside Day

Market Outlook: Likely Long Term Top Identified
Market Indexes: Major U.S. Equity Indexes closed higher
SPX Candle: Lower High, Higher Low, Higher Close - Inside Day
FED Posture: Quantitative Tightening Interim Patience (QTIP)

As the FED has sent all its messengers out to say how patient they can be, today resulted in an inside day - also requiring patience. The hourly chart of the S&P500 Cash Index is below.

SP500 Cash Index - Hourly - Minute ((c)) Nears Equality

One can see from the Fibonacci ruler that a minute ((c)) wave is now nearing equality with minute ((a)). One can also see that the tail end is wedging prominently and price is below the mid-line of the channel. Since the cash index did not form an over-lapping diagonal for minute ((a)), then it would be acceptable for minute ((c)) to have formed a diagonal in its entirety.

Did the diagonal fail, or will it continue? That is a good question. There is a way to count such a diagonal for either case, unfortunately. The waves are so compressed, they do not provide a good answer. Monday and Tuesday should bring some better information.

Have a good start to your evening.


  1. Replies
    1. wave 4 must be shorter in price and time than wave 2.
      Thats my version:

      Should not breach 2616 next week, i can imagine that news from the trade talks over the weekend are enough to trigger the selloff on monday.
      And from next week has a 75% chance to end in the red.

    2. Very good proportions. My only question would be about the manner of the fifth wave completion. The throwover does not HAVE to happen, but if not, the implication of price weakness is a swift reversal and break of lower ED boundary and we simply did not see that on Friday. Of course this is not a normal market and one has to expect anomalies...thanks frommi...

    3. You are probably right, when looking at the last waves on friday it looks like one little throw-over wave is still missing to complete wave 5. There are enough catalysts for a decent selloff available over the course of next week, so something will be there to trigger it. (earnings reports/BR-Exit poll)

  2. Thanks Billy. Looks good to me.
    Move back to wave four territory and a nice upper boundary throw-over should offer nice support. If correct, a swift move back below B should be on tap next week! :-))

  3. That is the neckline that is being tested.

  4. Meant to say "wave one"....of course! :-))

  5. ET.. are there any rules for the length of time and retracement for Wave 2 compared to wave 1 in a leading diagonal?