Monday, February 11, 2019

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




33 comments:

  1. Thanks Joe as always. I am one of the few perma bear left in this community.

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  2. No yer' not...!!!
    Bull bait being deployed....;)

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  3. It's all cool, it'll start on 14th, finish on 27th.

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  4. I have just about given up on public forums. I read with the hope of trying to learn something from other traders but have come to the conclusion that is a fool's errand. Best of trading success to all...

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  5. We have now retraced 90%+ of last week's selloff.

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  6. Even with the 56 point sell off from last weeks high, price never closed below the trigger line (8 EMA) which is still acting as support. A rising trigger line is causing price to be sandwiched between it and a flat 200 MA. It should be noted that this configuration has a high degree of probability of punching through to the upside.

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  7. We are not there yet (and may not reach there), but should we take out last week's highs, this is an adjustment to a prior posted chart to reflect a possible complex corrective move up from Dec. This would tie in with the AO as well as the minimal relative mom. showing on 3/10 on last week's selloff. Just a possible framework.
    My DJI are delayed, so this chart is behind current pricing.

    https://imgur.com/cGQlNHC

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  8. Today places 3 (as yet unfilled) gaps on the chart. Will this be the exhaustion gap?

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  9. Looks like the market is applying the old adage, when one side's key setup fails, time to slaughter them. lol

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  10. With the new high, a larger (c) wave must be considered. Perhaps it will form as an ending diagonal (c) wave. Perhaps not.

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    1. could (a) (b) be (1) (2), and now we are in (5) to form 1 impulse up from low?

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    2. Much harder to form either a channeling impulse or a wedge impulse in than manner. Not impossible, but much more difficult. And see post below.

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  11. Nice application of a good ole bull flag, reached measured move. :o)

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    1. Yes, I noticed that. It also corresponds to a fibonacci, and price has pushed just a smidgen over it.

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  12. With the death of the flat scenario, R.I.P., we'll need to "recount" last week's selloff.

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    1. As you note, the potential flat turned out not to be the flat. The five-count down was likely correct. And subsequent to it, the lower lows were a diagonal 'C'. Several had counted a diagonal there. It was short, but valid. So, that's how I'm showing it in the potential larger diagonal ((c)) wave count, below.

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  13. This is the best evidence I can offer at the moment; two decelerating trend line breaks.

    https://invst.ly/a0mbk

    TJ

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    1. It was not incorrect to count yesterday's move down as the expanding diagonal, or it's triple zigzag cousin the w-x-y-x-z; and I specifically noted that the point loss was minuscule; saying new high fourth wave in the S&P was possible, as no overlap occurred. (But not in the Dow as overlap did occur). Thus, a 'b' wave or a 2nd wave was created. I'm showing the 'b' wave possibility in the diagonal above.

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    2. good idea
      and good work last few days

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    3. On the wave (ii) of circle C, it appears you have an abc zigzag down for last week's selloff. I don't at all disagree, but this seems to be in contrast to the "wave-b can never be less in time than wave-a in a zigzag/flat" per Mr. Neely.
      I find this difficult to agree with personally. You as well?
      Without this "constraint", things make much more sense (to me at least).
      Thanks

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    4. The b wave rule for a zigzag is just one of his I disagree with.

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    5. Lol, that makes me feel MUCH better! Thanks.

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  14. Under the impulse for C, standard relationship suggest that the potential target 3rd to be 2866 and a 4 + 5th wave to almost the ATH. Hard to believe but yes a possibility.

    Which one do you think is a higher probability? Lastly, the impulse for C would make the bigger picture roadmap diagonal look very very flat. In other words four more round trips of 500 to 600 S&P points to be made via current degree wave 3, 4, 5 followed by a larger degree retrace wave 2. Potential to confuse the heck out of bears and bulls.

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    1. I'm pretty sure a standard impulse in the Dow would take it 'over the top'. And the daily Bollinger Bands are just a few points overhead at 2,758 in the ES. They usually provide some resistance - or lightening up of positions.

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  15. Interestingly 8 out of the top 17 IBD Leader board stocks are slightly down today. These stocks are usually almost all green during a strong uptrend and a strong day to the upside. Unfortunately, over half of the top 35 put in a new yearly high which is still bullish. IMO, This seems to fit your current account above, TJ.

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  16. Just an observation. I have a concurrent scenario wherein (ii) and (iii) of circle C (both 3 waves) can be a/b of a potential expanding flat. Will be watching the ensuing move down for 3 or 5 waves. This is within a much different longer term assessment. Should be interesting.

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    1. Yes, such a count is possible, if it all falls apart tonight or tomorrow. Nothing quite indicated that at the end of the session today.

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  17. A new post has been started for tomorrow.

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