Thursday, January 3, 2019

Still Nothing Preventing Wave Minuet (iv)

Market Outlook: Likely Long Term Top Identified
Market Indexes: Major U.S. Equity Indexes closed lower; DJUtil higher
SPX Candle: Lower High, Lower Low, Lower Close - Red Marubozu
FED Posture: Quantitative Tightening (QT)

After trying hard to break upwardly through the 2,520 resistance level, stock prices as measured by the S&P500 cash index gapped down and fell back today. They made a lower low, and began to display some of the 'post-pattern behavior' one would expect if the minuet (iv) wave count was correct. The Dow Jones Industrials were lower by some 660 points, and the S&P500 cash index by some 62 points.

S&P500 Cash - Daily - Minuet (iv) Likely Completed

Wave minuet (iv) is more involved and complicated than minuet (ii), although the shape is similar, and it takes considerably more time. Therefore, there is a minimum pattern of alternation shown.

Tomorrow are two significant pieces of information: 1) the employment report, and 2) a combined NY Times interview with FED chairs Powell, Yellen and Bernanke. Given all that, even though a lower low below minuet (iii) is expected, it could be bumpy as get all. A triangle for wave minuet (iv) is even a possibility, but so is a plain old impulse for wave minuet (v). It should be clear than if wave (v) = (i), then it would make a new low. But, it could go lower than that, too!

Best wishes for a good start to your evening.
TraderJoe

69 comments:

  1. ty 4 all u do TJ. Thots on wavecount for 90 d t-bills; USA interest rates?

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    1. Welcome. But, really? Try 'em yourself. I refuse to do all the work.

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  2. Thanks Joe for the great posts! Really appreciate it. Do you know of this guy and the counts he posts? How does this differ from yours if I may ask?
    https://www.marketwatch.com/story/the-next-drop-in-the-sp-500-is-a-buying-opportunity-2018-12-31

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    1. Ya. Minute ((iii)) - at the top - longer than Minor 1. Ah. No. No way.

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  3. Jay - Avi Gilburt is looking at the same big picture that Tony Caldaro at https://caldaro.wordpress.com/ is looking at. Tony was a bull all the way up from the 2009 bottom so his record is great, and I can see his count too.
    I'm in not a fundamentalist, but given the condition of the world right now I'm leaning toward a bear market and expect this to be one the worst.

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  4. That count has so many degree violations I don't know where to begin criticizing it. Please read Joe's many previous postings..

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  5. I found a longer negative divergence in gold. This is a 1 week chart, shows up on daily as well. The green arrow on right side of the chart is the target, time isn't a factor. Could be long shot given time for divergence to form.
    https://www.tradingview.com/x/8f8v2N3f/

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  6. I wonder about volume and volatility it looks like it's getting quiet. 61.8% retrace of last weeks S&P weekly bar is about 2413. I'm kinda expecting a throw back to 2 4 trend line 2470's. ET I think you were showing that as well? Is a throw back to a trend line a sign of weakness?

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  7. Joe, consistently great work, thank you.

    If you are familiar with Terry Laundry, McClellan Volume Oscillator was one of his main indicators. He has said not to trust V bottoms in the oscillator. Marty Schwartz has said that market reversals often happen at the zero line. Chart posted:

    https://c.stockcharts.com/c-sc/sc?s=%24NYUD&p=D&yr=0&mn=11&dy=0&id=p06554769860&a=262343879&r=373

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    1. FYI- Joe will not respond to Unknown user

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  8. As usual brilliant work, thanks. As I watched people get wiggy and suggest other paths its was inevitable that we'd roll over. Does seem we have to have some impulse day to make what is a large move that is in front of us.

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  9. my advice is wait for impulse down before you disregard other paths. joe referenced this move down may not be impulse and that opens up many options

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  10. Joe, is it common for diagonals to have gaps? Or would that be very uncommon?

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  11. .786 retrace of ES Contracting LD?

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  12. 2520 is resistance. (Daily chart) At that level we are bumping up against 18 day sma (Line in the sand), 2 previous daily highs, and 50% retrace of (iii) for the third time.

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    1. Resistance taken out. Ira Epstein's swing line method confirms uptrend.

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  13. Those highs are the bottom of where I would place the virgin wave box.

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    1. What pray tell is a virgin wave box? Sounds a little salacious. lol

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    2. Area were market usually were 3 of 3 of 3 is. No backing and filling with other candles before or after.

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  14. last wave is an expanding diagonal i.m.o. , we will see a new max in (iv) wave in my count. Am I counting something wrong ET ?

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    1. A diagonal is not allowed as an entire 4th wave. Would have to be only A of 4. While technically correct wave 4 is only 2 points larger than 2 which makes me a little skeptical. Just my 2 cents.

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  15. european markets are up more then 3%... the move in spx looks like a third wave gap & go... think we need a new count at end of the day.

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  16. My alt count would be since diagonals are often A waves, that this entire move from the all time highs to the low is 1 of a larger diagonal.

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  17. 15 mins SPX showing 5 non overlapping waves in wedge like formation. Is it ok to assume C of 4th. Up move from 12/26 to 12/28 can be A and after then until today can be choppy B ?

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    1. That's my view at this point. No reason that cant be all of C as it is within rules as far as I can tell.

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  18. Im seeing an abc up for wave 4. Probably tag that 50% of wave 3. 2575

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  19. Well have a great weekend all. I cant handle listening to one fed chair, let alone three.

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  20. Joe,
    taking advantage of the holidays I am reading all of your old posts.

    Today I arrived at this one
    http://studyofcycles.blogspot.com/2017/10/exceptionally-light-volume_16.html

    What I see is that wave (e) of iv seems to be a flat, so I take advantage of asking a theoretical question: "Why the legs of triangles, or diagonals, must be (clear) zig-zags and not flats?"
    Was that labeling an error?

    Another question... in those posts I see you used Fisher Transform to show divergences. Any particular reason to use that particular indicator?

    Thanks in advance

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  21. i still dont see how get around 5 down from dec 3

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    1. Marc, if I understand correctly, wont get 5 down fron dec 3 until this 4th wave finishes and 5th finishes.

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    2. now larger than wave 2 off october high with alternation. not as much time so this move off bottom has another leg down and up at least. just my opinion hope it helps

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    4. this whole thing can count as complex combinations from october top.WXY with Y as WXY

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    5. How about a WXY down from Oct 3rd high? (3 legs of abcs). Just throwin' that out there. :o)

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    6. Marc:
      Think I was typing the same time you were in the process of posting, lol. I think we're in C up (of abc), so iv is still alive. But, Dec 24th could have been it for larger A wave (imho). Just focus on what I see, not what I think. :o)

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    7. Certainly possible. A nice .786 retracement for X works for me! :o)

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    8. One other WXY to ponder. Start from Jan '18 high (charts like an expanding flat). All w4. :o)

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  22. Joe, Do we have Triple Zig Zag for this Wave ((iv)) nearly done now at 2531.37?

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  23. If we shift up to 120min candles ewo looks much better for iv

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    1. Not enough candles. would need around 70 min bars to measure from top of minute ((ii))

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    2. We need some room for potential V, but yes probably to few candles still, if potential V doesn’t extend

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  24. 120 candles minimum to get a valid EWO reading. The max 160 candles allows room for fifth wave. You must have 120 candles to evaluate wave 4.

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    1. Okey didn’t know 4 had to have 120 candles thanks

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    2. No problem Erik. The EWO is a great tool if used properly. I would suggest you read the eight fold path method with the link in the top right hand corner of the page. It's so important that Joe has given it a permanent place on the page.

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    3. Yes, I have read it a long time ago must have forgotten..or maybe just confirmation bias lol

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  25. Hey Tom, it looks like an expanding diagonal, we'll see if new max in (iv) th wave will be touched

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    1. My thoughts are running towards another pattern. As I said, a diagonal Would have to be just an A leg of 4. 4 is already 50% as long as 1-2-3 combined. With what you are proposing by the time 4 completes it would just be too disproportional in time to the rest of the wave. Not the right look as it says in the book. I am leaning towards something more complex like a w-x-y.

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    2. Tom: I show (i) through (iii) as 95 bars, right? So (iv) has met the minimum requirements in terms of price and time. If it ran .62 of 95, it could still run through mid-day Tuesday 1/8. Is that what you show?

      (Wave 4 of an impulse only has two rules: it never moves beyond the end of wave 1; it always subdivides into a zigzag, flat, triangle or combination. So far, (iv) is adhering to these rules. Everything else is guidelines. I agree that it is, so far, a combination.)

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    3. I have no issue with your statement.

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    4. New maximum have been touched in wave 4 !

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  26. On 30 mins spx chart, am seeing overlap of 4th wave with wave 1 from todays morning.
    wave 1.

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  27. If I look at today's up move on a 2 min chart (150 bars) it looks like wave 1 was the extended wave. It looks like 3 has a negative divergence and possibly in 4 currently. Just an amateur asessment.

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  28. On a cash 5-min chart; the gray line is drawn so that no part of a third wave is cut off. Then 5 < 3 < 1 is possible.

    https://invst.ly/9p1e0

    TJ

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    1. Thanks Joe. A 5 min chart is what I stare at all day long. Don't know how I missed the triangle. Must be getting loopy staring at charts. lol

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    2. Thnx ET, i was lost hunting for ending diagonal, this helps !

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    3. i think 1 more leg <25 points and its a diagonal different count

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  29. i believe 240 minutes (126 bars) EWO within 10% of zero line

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  30. leading diagonal to kick off bear market. extremely bearish. 2601 not too far away
    https://imgur.com/a/U9E2SmI

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    1. Marc,
      Good catch. At a glance it looks like a definite possibility but I'll defer to Joe. The sell-off that started in October of 2007 looks very similar.

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    2. Totally agree Marc. That's been in the back of my mind for some time, but admittedly a very low probability until today. It would help to explain why (iv) seems to have traveled a disproportionate amount of time and price in relation to (ii), why the EWO exceeded the typical guidelines for (iv), why (v) has not yet materialized, and why ((iii)) stopped way short of a 1.618 extension of ((i)). That said, ((iv)) must still be on the radar until ((i)) is taken out at 2603 SPX. If we are in an expanding leading diagonal, a of ((iv)) would equal c of ((iv)) at approximately 2620 SPX, just enough to overlap ((i))...

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    3. And to be clear, (iv) is still on the table (per Joe's 1/4/19 post) until (i) is taken out at 2583. Gosh, it looks awfully stretched, but still possible...

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    4. Marc, how do you count move from 3/10-29/10? I can't measure anything else except the contracting diagonal, you can't subdivide it and still follow the rules, and because of this it can only be A:5 or 1:5.

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    5. If we start from here it will be easier to focus on the current wave from 3/12

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