Looking for the Last Waves

Below is the hourly chart of the cash S&P500 Index. By measurement, you can see with about 140 candles on the chart, the Elliott Wave Oscillator has now crossed down below the zero line and is likely indicating the fourth wave sequence, (iv), of the minute ((c)) wave. If you are new to this blog the 'double parentheses' in text are to be read as circle-c in the upper right of the chart below.

S&P500 Cash Index - Hourly - Looking for Final Sequence

Because every fourth wave at every degree of trend poses it's own set of challenges - which I have termed 'The Fourth Wave Conundrum', the question now becomes whether this fourth wave, (iv), will end as a 'running triangle' or as an 'expanded flat'. Today's waves downward ended at the 78.6% level of the b:3 wave upward, bolstering the case for the triangle.

If a triangle forms, it would be making the case that "the last wave sequence is dead ahead". But the triangle must form properly in every detail. In this case, the d:3 wave would likely be limited also to a 78.6% wave upward on the c:3 wave downward, and then the e:3 wave must cross down over wave (iii) to be corrective to it as a fourth wave. 

The alternative is that the entire downward wave from b:3 is really an ending expanding diagonal in construction, but then a fifth wave down is needed to end the sequence as a 3-3-5 expanded flat wave. This would allow a deeper wave (iv), and better challenge the lower boundary of the Elliott parallel channel from wave (ii). I have no preference as to which occurs as long as the rules are followed. That includes that wave (iv) must not overlap wave (i), up, in the downward direction.

Further, if the b:3 wave is exceeded in the upward direction then we may have to again consider an ending diagonal.

This is just the nature of The Fourth Wave Conundrum, and it is why patience and flexibility are required to avoid getting turned around as best as possible. This is the true nature of alternates which the analyst must learn to appreciate and grapple with.

Have a good start to your evening,

TraderJoe

For the Beginning Elliott Analysts

Please review the chart below. Hopefully, because it is annotated it is self-explanatory. The issue is whether we are in an overall impulse wave. My question to you, is based on what you know about Elliott Wave theory, does momentum indicate that we are?

ES E-Mini S&P500 Futures - 5 Hour - Momentum

The chart helps explain with few words why my analysis is that we are in a corrective wave - as long as it takes.

Have a good evening,
TraderJoe

Near Conclusion

When applied to the ES 2-hr futures, The Eight Fold Path Method suggests we are nearing a conclusion to an impulse wave. See chart below.

ES E-Mini S&P500 Futures - 2 Hr - The Eight Fold Path Method

After having dipped slightly below the zero line (at the black circle) for a likely fourth wave, there now appears to be a divergent wave up within the correct number of candles. Again, this does not mean the wave 'is' over. It just means the likelihood of a wave being over is getting increasingly high.

Again, because of the nature of the advance - and the degrees of the various waves involved - we still think this is the minute ((c)) wave up from the January low which was the minute ((b)) wave. For those who have read and studied The Eight Fold Path Method it should be very clear there is no "higher high" peak in the center of the Elliott Wave Oscillator which is likely the clue that this impulse is an impulse in a corrective wave, and not an impulse in a larger impulse.

As always, time will tell. Have a good start to the week.
TraderJoe

Consistent With

In a daily price pattern that is at least consistent with the potential ending contracting diagonal count we posted yesterday, today the daily ES E-Mini S&P500 Futures made an outside day down as the chart below shows. One does have to ask, "why did it do this today?". Is it because the cash index can not travel any higher? Cash did not make a higher high today as the futures did.

ES E-Mini S&P500 Futures - Daily - Outside Day Down

We are the first to admit that it's not the largest down candle ever, but it did make a higher high than yesterday's bar, and then it turned around and made a lower low - not only over yesterday's low, but also of Tuesday's low, as well.

Again, we said yesterday this price behavior simply is simply not reminiscent of a powerful third wave in an impulse, and therefore, it seems best - at this time - to call it the minute ((c)) wave of Minor 2.

The slow stochastic indicator is shown for reference only. While there is a cross lower - showing some loss of momentum - neither of the lines of the indicator have crossed below the 80 level. There is still nothing overtly bearish on the chart, and even today's price decline was quite choppy. Still, this is the best way that we can count and maintain the required degree labeling, so we'll see what develops in the next couple of days. 

From an Elliott wave perspective, the chart can be counted as if a top is 'in'. Now we need to see if confirmation occurs. An initial confirmation would be making a low beneath wave (iv) of the diagonal. Refer to yesterday's chart if unclear. A second level of confirmation would occur by overlapping the upward minute ((a)) wave in the downward direction. A third level of confirmation would occur by trading below the ((b)) wave in less time than the diagonal took to form. This would be the 'post-pattern-behavior' that an analyst such as Neely would expect us to obtain to call the count correct.

Have an excellent start to the evening.
TraderJoe

P.S.  Early in the morning, the DJIA made a new daily high. Shortly before 11:30 AM ET the S&P500 also made a new high. As a result, the minute ((b)) wave triangle can be re-established as the more correct count, as below. And, there are either five waves up or three waves up to the current high. Price is closing in on the 50%, and possibly the 62% Fibonacci extension on the minute ((a)) wave, as below.

S&P500 Cash Index - 90 Minute Chart - Back to Minute ((b)) Triangle

The alternate is clearly shown in red as minuet (iii), still.

FED Caves to Markets

Minutes of the prior Federal Reserve Meeting were published today at 14:00 ET, and even as some news outlets were having trouble getting copies of them and interpreting them, it was pretty clear the FED had acquiesced its policy in favor of calming the markets. CNBC reports the minutes of the meeting below have an unabashed reference to the decline in equity prices since the fall of 2018, as follows:

Participants noted market belief that the balance sheet reduction helped cause the late-2018 market volatility, and noted that investors interpreted communications from the December meeting as "not fully appreciating the tightening of financial conditions and the associated downside risks to the U.S. economic outlook that had emerged since the fall."

Meanwhile, back at the S&P500 Cash Index, as this 90-minute chart shows, prices keep getting wedged into a tighter and tighter formation.

S&P500 Cash Index - 90 Minutes - Still Wedging Below Channel

This action does not seem characteristic of the broad gains in the middle of the third wave of an impulse. Therefore, we still think it is the minute ((c)) wave of the overall Minor 2 correction. And it may end shortly, but has shown few price declines significant enough to draw that conclusion.

From a price perspective, nothing has invalidated the count of an ending contracting diagonal for the minute ((c)) wave. Wave (v) is still shorter than wave (iii).

Things could start to get bumpy soon, but remember, ending diagonals can be cantankerous to count. They can give the appearance of ending, only to begin another series of waves. So, patience, calm and flexibility are still required until the pattern resolves.

Have a good start to your evening.

TraderJoe

Common

There is a favorite character of mine in the television series about railroading days in the wild west called "Hell on Wheels" that is played by an actor named Common. It is because so many people now think that the market "on a straight track to new highs" that I talk briefly about what is Common.

In section 2.5 of (the online edition of) The Elliott Wave Principle by Frost & Prechter, this statement appears as the very first in the guidelines for diagonal waves.

"Waves 2 and 4 each usually retrace .66 to .81 of the preceding wave."

This means that if we are making a diagonal, lower, as the start of a bear market, that it is "usual", which means it would be "common" to allow the second wave to retrace up to 81% of the first sequence downward. It is not a 'rule' but is a tendency which has been observed enough on different time scales to call it 'usual' or 'common'.

A quite typical criticism of people who chart the market using Elliott Waves is that "the count is wrong", or "the count changed", or "you said the market movement might stop here, but it didn't". But, what many such people also don't quite get is that counting any corrective wave - whether it is a minor wave 2, as I think we are now in, or a minute wave ((b)) - can be as confusing as heck. I don't say that lightly. It is the very purpose of corrective waves to confuse. Sometimes, they can start, appear to stop, and then re-accelerate to convince us of a new trend in the corrective direction - only to immediately and sharply reverse without warning proving out the now abandoned corrective count. 

Other times, after the correction ends prices can only "ooze" lower or higher at the start - making one think nothing of it - only to explode later in a volley of impulsive behavior in the direction of the expected reversal.

If you have not seen this and experienced the same, then you have not been observing the market for long. This is the case often enough for corrective waves that it must also be called "usual" or even common.

And if counting corrective waves is "usually" confusing, then why would you expect it to be anything else? Why would you expect me not to become at times incorrectly reversed, or only be correct in the short run? This is the nature of corrective waves. It's what they do. The question is why would you expect differently? I don't.

We write this today again to try to sever what some people see as the "pure link" between an Elliott Wave Count and a trade or a market action by a participant.  For example, yesterday we posted a count of potential diagonal. The count currently follows the rules of wave counting. But, is the pattern done to the upside? We don't know that definitively for certain. Diagonals can "throw over" their upper trend lines. And, diagonals are a pattern that can even "explode" upward into their alternate of 1-2-i-ii. Have we seen this before? Yes, we certainly have. Has it surprised us when it has happened? Sometimes. 

That is why one becomes familiar with Elliott Wave patterns. I'm not just talking about what the patterns are, but how they also form their alternates. This is what helps to prevent such surprises.

Now, I know what you're thinking - "hmmm, I wonder by this if TJ is hedging on his longer term count?". And the answer is a clear and unequivocal "No."

But, does this mean that action is to be taken Monday, or that it should have been taken on Friday? That choice very clearly remains up to you. 

In two articles going back more than three years I have paraphrased what one broker sees as the correct market steps to take, and when to take them. The articles are below.

A Paraphrase of Ira Epstein's Guidelines for Trading : LINK
Ira Epstein Example - Part 2 : LINK

In it, Ira - as well as a number of other trading coaches, master trader's, and market writers that I have learned from - teach that one should generally trade in the direction of the trend as given by a significant moving average. This is what is known colloquially as "putting the wind at your back" or "not fighting the trend of the market". 

Now while I do not offer any trading or investment advice - at all - ever - I can tell you what I have personally found to be valuable lessons from others.  And trading only with the trend is one of them. Sometimes not trading during FED meetings or major significant economic report - like a payroll report - or sometimes not trading while on vacation or away from home - are some others. 

So, because I do not offer trading or investment advice - you are clearly free to trade against the trend, or to trade impulsively from your phone, or to trade through a FED meeting. Go right ahead. That is up to you.  All I can tell you is very rarely will you catch me doing the same. I view it as one of the surest paths to ruin.  Again I offer no trading or investment advice, and you are solely responsible for the consequences of your decisions and actions.

But I can also tell you, that by keeping an Elliott Wave count - one that follows the rules and guidelines - it will help open your mind to possible market action. And it can sometimes provide clear invalidation points which can be used for ... ? No, not necessarily only stops, but for determining what alternate the market may be trying to construct.

Use wave counts for stops? Well. Does that mean you are trading against the trend? Why would one do that? Again, your choice. Not mine. Perhaps if you are a highly, highly skilled individual with a truly first rate level of market knowledge or available metrics, or if you are exceptionally well capitalized and understand what it is to 'probe' a trade, you might attempt such a thing. Many, perhaps most, blog readers are likely not in that category. So, be realistic. That's all I ask.

Lastly, in this discussion of what is common, or usual, I find that people who criticize Elliott Wave or it's practitioners "usually" don't have a deep appreciation of what Elliott Wave counting involves. That's OK. It takes many months, sometimes years to get even a clear overall grasp of the concept.  But beyond that there are intricacies such as "the speed of moves", or the importance of "degree" that can take even a seasoned professional many more months or years to grasp or to actually see examples of it in action in the market.

So, you can take the position, "I know everything I need to know about Elliott Wave, and this is it in the nutshell: it's hogwash!". Fine. So be it. But I can tell you - when used properly - it can be used as another great lens with which to view market action through, and to help shape your opinion. And I can also tell you what it is not. It is not a fail-safe, fool-proof manner by which to use to place trades against the trend.  And, if you think it is, or you have heard that it is, or if you are trying to use it for the same, then you probably fall in the category of people that do not have a deep appreciation for it yet.

Which will it be? Ignore it? Or try to learn something from it?

The choice is entirely yours.

Have a good weekend,

TraderJoe

Potential of An Ending Diagonal

I have showed this as a possibility before. But it counts much better today. As a diagonal, the upward structure is not definitively over, yet.

S&P500 Cash Index - Hourly - Potential Ending Diagonal

As a potential diagonal, such a count must prove itself by retracing below the minute ((b)) wave in less time than the diagonal took to build.

More later.
TraderJoe

Lower Low Day

In case you weren't able to follow all of yesterday's intraday comments, we may have been able to rescue the Minor 2 label at this level. First, here is the daily chart of the S&P500 cash index.

S&P500 Cash Index - Daily - Does ((c)) = ((a)) in Time?

On a two-hourly chart, we showed that from a time perspective, wave ((c)) could equal wave ((a)) in time two within two bars! That was quite astounding. We are showing it above on the daily chart.

Next, using the following chart, we were able to count five waves for a minute ((c)) wave as follows.

S&P500 Cash Index - Hourly - Minute ((c)) Completed?

It turns out in this count, all of the sub-waves of minute ((c)) are smaller than minute ((a)). So, degree labeling is adhered to in that regard. Further, within minute ((c)), when counted in this manner, each of minuet (ii), and minuet (iv) are shorter in price than the minute ((b)) wave. And, so, degree labeling is adhered to in that regard, as well.

With today's downward movement there was at least an overlap on wave minuet (iii) of ((c)). We just note that so that it prevents calling minuet (iii) as minuet (i), instead, and this down wave as minuet (iv), because that count would not be allowed by the overlap rules.

Further, today was a true "outside day down" in the daily ES E-Mini S&P500 Index futures. We have not seen one of those in quite a while, and it was maintained into the close. So, there is some level of evidence the downside is being temporarily favored here. Further indications would be a gap down day tomorrow, and lower histogram bars on the Fisher Transform indicator. We are not quite there yet, so patience, flexibility and calm are still required.

Have a good start to the evening.

TraderJoe

Doji on a Divergence

While there is nothing concrete, yet, warning signs are building. In the chart below, today there was a Doji candle at the recent top of this upswing. The Fisher Transform is still on a divergence (a double divergence - which is quite rare for this indicator). Here is the chart again.

S&P500 Cash Index - Daily - Double Divergence from Fisher Transform

Relative to wave labeling - as awful as it is - for reasons of avoiding degree violations, one good way to label the chart, now, is as the minute ((a)) wave up. That count works as follows.

ES E-Mini S&P500 Index Futures - 5 Hour - Wave in a Wedge

It was not possible to show this count in its entirety until the final up waves today. However, as a five-wave-up sequence, the cash S&P500 truncated twice - the second time today - when compared to the Dow. In this sequence wave ii is only a 38.2% retrace - allowing wave (i) to be the extended wave in the sequence. And wave (iv) did not overlap wave (i).

This 5-hour count assumes there is no additional upward movement. There were signs at the end of the day - the possible truncation, and the Doji candle - that upward movement might be over. But there was nothing conclusive. So, the overnight futures need to be examined to see if the 2,745 level is exceeded lower or not. If it is, a downward wave may well have started. However, it is only overlap of wave (i) at 2,675 that will force that call.

If there is one more downward, and then one more upward wave sequence roughly equivalent to the former ones, then, and, only then, might it suggest that (i) = ((a)) and the new wave up = ((c)), as there would be seven waves up, not five, and that would be corrective. But such a wave is not at all in evidence, yet.

The market is not yet making this call definitive. So be patient, calm and flexible. Remember, even if this is minute ((a)) up, then a minute ((b)) wave could be anywhere from 38 - 78%, as typical. Then, we could only project minute ((c)) from the end of minute ((b)). But that is putting the cart before the horse. Tonight and tomorrow we need to determine if this up wave has ended or not.

If you would like more detail on the possible truncation count, see my comment at the end of the day in yesterday's post.

Have an excellent start to your evening.
TraderJoe

P.S. Is this count workable? All the sub-waves of ((c)) are smaller than ((a)). That much is clear. And there is no overlap between (iv) of ((c)) and (i) of ((c)). Such a count would prevent another round trip to the top.

SP500 Cash Index - Hourly - Zigzag Count

The question becomes, within a zigzag how does the degree labeling of the "b" wave of the zigzag relate to the waves that emerge after it? For those who are wondering, both the wave (ii) and the wave (iv), the downward waves, are smaller than ((b)), which is a downward wave. So, that portion of degree labeling is maintained.

For Better or Worse

From the standpoint of the divergence on the chart with the Fisher Transform, did today make things better or worse? There is now a higher high price, and, although the indicator histogram ticked up a bit, it is still much lower than either of the prior peaks. Is that better or worse?

S&P500 Cash Index - Daily - Higher High Price, Lower Osc

Today was a spirited up day, which largely resulted from the potential agreement on the budget. Ok. So, now I guess every day we keep the government open, stock prices must go up. Makes sense (not).

In the final analysis, today made a marginally higher high, and it may not be over. See chart below.

ES E-Mini S&P500 Index Futures - 15 Minutes - Possible Triangle

At the end of the day, all there appeared was narrow, overlapping price movement which may be a triangle signalling slightly more upside tomorrow. This depends on if the triangle holds in the after hours quotes. If the 2,738 level is broken lower overnight - below the bar where the black arrow is - then the triangle should come off the table, and a potential expanding diagonal lower might work. (Such a diagonal just hadn't formed properly by the settlement which put the triangle on the table).

Today, the Bollinger Bands are overhead at about the 2,758 level, and this may provide some upside resistance in the next sessions. As a result, some of us were discussing a possible ending contracting diagonal for the minute ((c)) wave. 

If the whole minute ((c)) wave forms a diagonal, fine. If, instead, an impulse forms, then it is possible the Dow might break the all-time high, although it is questionable if the S&P500 would. Another alternate is that a Flat wave forms for a larger minute ((b)) wave down. At this time, I don't see anything not valid about a count like that.

We'll continue to take it step-by-step. As long as the daily ES price is over the 18-day SMA price has a positive bias, and the swing line should now be 'neutral' as there is a lower low and a higher high, which is not a trend. The daily slow stochastic is only back to being over-bought, as well, although I would confirm these tonight.

Have a good start to the evening.
TraderJoe

Today Didn't Help

We have been showing this daily chart of the cash S&P500 Index for a few days, as plotted with the indicator known as The Fisher Transform.

S&P500 Cash Index - Daily - With Fisher Transform

Again, one of the reasons for liking the indicator is the very smooth manner of transitions once it locates the middle of the cycle and the potential divergence. The divergence, as we noted yesterday, was actualized when the first histogram bar ticked lower. There are now three such lower histogram bars. Today's slightly red candle is a Doji, after a prior Doji three sessions ago. And - as we noted intraday - just short of a 62% retrace at the end of the day, after a larger 62% retrace at the beginning of the day.

None of this would seem to help the bullish case at the moment. Perhaps resolving the looming shutdown talks might help that case. Or, perhaps, resolving China trade agreements with the U.S. would go a long way. There are also lots and lots of FED speakers coming out this week, again. Maybe they will talk the markets up. Maybe. Maybe.

Meanwhile, U.S. Tax Refunds in the first week are coming in SMALLER than last year. Here's a LINK. Hey, I thought the agreed tax plan was supposed to be a boon for middle America! Who do you know that swallowed that one hook-line-and-sinker?!

There are other indicators you could look at. One worth looking at today is the daily RSI(14). Does it have that typical look of the 'the green blob' over 70, which often indicates a third wave? I encourage you to look and see for yourself. Also, as we commented earlier today, keep your eye on the %D of the daily slow stochastic of the ES E-mini S&P500 futures to see if it continues under the 80% level. If it does, that could result in a trip to the 18-day SMA or lower.

That said, while the upside is not showing much from the technical tea-leaves, the down-side would need to see price acceleration lower pretty soon to make that case more effectively, too.

Have a good start to the evening.

TraderJoe

Some Divergence

The primary purpose of this post is to show an example of upside divergence in the Fisher Transform, perhaps in time for it to make a useful contribution. We have shown this same exact chart before, but with the 'potential' divergence. That is, when we showed it (see the third chart down at this LINK), the divergence itself could not even be confirmed because there was not yet a lower histogram bar. That has changed. Now there is a divergence - with fully two lower histogram bars.

S&P500 Cash Index - Daily - Confirmed Divergence

Over the last two days the divergence itself has now been confirmed. But like any oscillator or divergence indicator, having confirmed a divergence is one thing. Just like the lines of the MACD crossing over to signal a divergence, the actual price action must follow through. That would most likely mean that a price bar with lower low bar than today would likely be needed to better establish that the indicator is most probably on its way to the zero line, and / or below.

Today is a reasonably good example of why one doesn't necessarily want to be the first pioneer out on the prairie. The day provided plenty of 'snap back' in price movement, and there is no reason to have acted rashly on the first lower candle.

Yes, if you haven't followed all of the comments, in the S&P500 cash, we could count a truncation high where the Dow made a higher high two days ago. And, because of that truncation, it seems like the market is telling us, 'the upward wave ended'. Then, we could count five impulsive waves down to yesterday, and a potential Flat wave up today - which may only be partially completed. The 'b:3' wave of that flat was more than 100% the length of the 'a:3' wave, making the flat a very good candidate for a true 'expanded flat'. In the S&P500, the b:3 wave was less than 138% x a:3, while in the Dow, the b:3 wave was 162% x a:3. That's a pretty impressive set of measurements, but hopefully it will help answer some questions for you about how deep b:3 waves can go, and still be valid. The two indexes are very different, and their b:3 waves did some different things. Hopefully, that is not too hard to swallow.

The divergence above lends some credibility to this count but it is still not definitive. The February highs would have to hold, and / or daily prices resume the gap-open and follow-through action lower to more clearly establish a down trend.

Have an excellent start to your weekend.

TraderJoe

Updated Roadmap

Based on a likely truncation of the (v)th wave of minute ((c)), of which the possibility was noted yesterday in the comments at 10:54 am, this update of the "Current Roadmap", first published here on Jan 26 is being presented.

It should be noted that the Dow Jones Industrial Average and the NQ futures did not truncate. That was the basis for saying that the S&P500 Cash Index (and the ES futures) did truncate.

S&P500 Cash Index - Current Road Map - Updated

The 'b' wave of Minor 2 was a little shallower than we thought, but that's what 'b' waves do. They find almost every way to fool one. Of note, though, the 'b' wave was a triangle - and as we showed earlier, it is very hard to count the up trend as anything other than a three wave move without a violation of wave degrees. (See the prior post on Feb 4th for more detail on this topic.)

Have a good start to the day.
TraderJoe

By Measurement

Noting that we are at a 1.618 extension, I have tried several ways to count this wave impulsively. Every time I do it (and I posted one temporarily), I run into a degree problem. The chart below is the only way I can count, and keep the sub-waves shorter in price and time than their larger degree waves. The problem is the blue box in the middle.

S&P500 Cash Index - 2 Hour - Correction Count

Every time one tries to count an impulse, if the blue box is not the longest correction, then the wave from (a) to ((c)) is too long in time to be a fifth wave of a sub-wave three in an impulse count. And it is off by quite a bit. Therefore, it is likely the wave in the middle is a triangle, and that might appear directly before the last wave in the series. In any other impulse count, placing a wave (iii) where ((a)) is makes one of the waves too long. And, as a triangle, wave ((b)) is longer in time than wave (ii) which is of a lower degree. So, it seems the blue box should represent a degree change.

Yes, the ES daily still has an embedded slow stochastic. And price still has a positive bias because it is over the 18-day SMA. So, it may be that the ((c)) wave is not done yet, although price is bumping on the upper daily Bollinger Band, and the 100-day SMA.

Again, I did try every way I could to count the wave impulsively, but I ran into problems with the degree labeling.

Have a good start to the evening.
TraderJoe

The Dojis at 62%

Here are two examples of a Doji at 62%. The first chart is the present day market. The Doji in the cash market is a weak-green one.

S&P500 Cash Index - Daily - Present Day Doji

Compare and contrast this chart with the similar one for 2007. Note also there is a Doji candle at 62%. This one is red.

S&P500 Cash Index - Daily - 2007 Doji

The reason for this second chart is not so much about the colors of the Dojis. It is more about what happened 'after' the Doji in 2007. Notice that the 62% level was exceeded to some degree. There is no magic, per se, in the exact level of 62%. Still - to some degree - it was respected.

It was not until there was a clear outside reversal candle lower (red bearish engulfing candle) that the worst part of the bear market and financial crisis took hold. But - even then - look at how the bulls fought back on the very next candle and made another 70 - 80% retrace based on the size of the wick.

Next is this present day chart which includes an indicator known as the Fisher Transform. It tries to help spot divergences in the following manner: if a typical stock market move is 18 - 21 days long, then setting the period of the transform at (it's default) of 10, helps identify the 'mid-point' of the momentum. And divergence often, not always, follows.

S&P500 Cash Index - Daily - With Fisher Transform

So, the divergences at the September, 2018 high, and the October, 2018 low are pretty evident. They help show where the wave is 'grinding' rather than impulsing. Of note, there was absolutely no sign of divergence at the December, 2018 low. This is often the sign of a "C" wave. Many, many "C" waves don't diverge on daily oscillators - sometimes they do on the intraday.

Of note, there is 'potential' divergence now with price versus the Fisher Transform. But, the transform is still making higher histogram bars, and would need to make lower bars first, before any assumption that the up move is over. Until then, the divergence is only potential. One of the valuable aspects of this indicator is, however, the relative smoothness of its transitions.

Have an excellent rest of the weekend.
TraderJoe

No opinions - mostly

There are some objective observations one can make without eliciting a whole range of out-of-control conjectural opinions. For example, some people venture a new five-year Elliott wave count, without offering even the slightest resolution of the current week. I will try to avoid that by starting with some basic facts.

First let's look at the daily chart of the ES E-mini S&P500 Index Futures, below. In this chart, for graphic clarity wave a means the same thing as minute-a, or ((a)), or circle-a. But the chart gets muddy with all that stuff on it, so I'm keeping it clean.

ES E-Mini S&P500 Index Futures - Daily - With Indicators

 

Looking at the right-hand side of the chart, there are three objective observations one can make and we can all agree on.

1. Price has 'currently' retraced to the 62% retracement level, and put in a red Doji candle today.
2. Price has run into the daily upper Bollinger Band (18-day variety), gray dashed lines.
3. Price has run into the 100-day simple moving average, green dashed line.

It is clear this is three different levels of overhead resistance. How much more does one need?

A fourth observation is that in mid-November, the NQ futures made a lower low for a true "flat" wave, whereas - as we commented before - the S&P500 could not even made the 90% level downward on the a wave to make a true flat wave. Therefore, it is not much conjecture to say that if there is a "b" wave anywhere on the chart, then the December high is it; otherwise the indexes get out of sync.

A Fibonacci fifth observation is that the daily slow stochastic is only "Over-bought" at this time. It is not re-embedded. At least not according to my chart service, and that is because the red line dropped below the 80 level on both 1/29 and 1/30.

These are the clear facts. 

Now for some questions.

1. Aren't second waves supposed to retrace 62% ?

2. Aren't corrective waves supposed to be a little muddy as to their exact count?

3. What happens if another wedge forms here (suggested by the blue lines on the right)?

If, as the chart suggests that wedge would be a 'c' wave of 2, then it should wind up overlapping the 2,676 level - at least - so it overlaps the first wave of a potential diagonal.

Whether that happens or not remains to be seen. I can tell you - for sure - you just got more information here than I just got in my recent monthly edition of a newsletter from a major Elliott Wave organization. They didn't even take a stab at a count. But we're to believe them ???

Have a good start to your weekend.

TraderJoe