Monday, June 10, 2019

Can Only Count 'Three-Waves-Up'

Much of this cash S&P chart was shown over the weekend as the post-script to the ES E-Mini S&P500 Futures 5-minute count. Here is the updated cash chart.

S&P500 Cash Index - 15 Minutes - Three Waves Up

At present - because of numerous trend line breaks - this upward sequence can only be counted as "three waves up". It would be very difficult to count it as (i), (ii), (iii) because of the trend line break involving wave iv. The upward structure - while impressive in terms of its point gains - is quite choppy and does not sport the typical 'look' of a thrusting impulse wave.  The overall shape of the pattern is in a wedge, and there are divergences at the highs.

The fifth upward wave of (c) occurred this morning on schedule, and then prices began to break the rising up trend line to the down side again. It is likely that if wave iv is broken lower, then most upward counting of waves by others will begin to end.

But that remains until tomorrow to see if it occurs.

Have a good start to the evening.
TraderJoe

54 comments:

  1. Question on diagonals.

    In a 3-3-3-3-3 diagonal, do the individual progressive waves (1,3,5) have to be 5-3-5 zigzags OR can they be double or even triple zigzags?

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    1. Yes, but sometimes the fact of running triangle or expanded flat 'b' waves within the a-b-c pattern gives the false impression of a multiple zigzag.

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  2. can only count three waves down

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  3. Possible larger pre-FED triangle for iv? (or i, down, and a flat ii, up).

    https://invst.ly/a-eaf

    TJ

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    1. Now with the marginally higher high - possible ending contracting diagonal for v.

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    2. If (b) and (c) of the previous chart became (i) and (ii) of the contracting diagonal I see now an invalidation because (iii) > (i) in ES price. Maybe the contracting diagonal started today. Is it possible to have a simple impulsive wave v ?

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  4. We have two megaphones pointing to 3018 later this week.

    There's the obvious one on the daily S&P 500, but now we have this one, too.

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    1. Can not have 'flat' b or d in a true megaphone. Must be zigzags. The charts are just 'cartoons'.

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  5. joe - look at ndx for better count
    3 should end 7620
    its the count with big impulse i have been watching

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  6. Well, it's for sure we have a false break-out and downward overlap. Now we have to put it in context.

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    1. We also had a degree violation, yesterday, that needs to be put into context.

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  7. The main purposes of this chart is to show that 1) we did not in fact have a degree violation in the futures, and 2) to show that we have had downward overlap.

    https://invst.ly/a-h23

    Only other configuration I can think of is (a), up, at the prior high; and then, 'a', down, 'b', up, and starting a 'c' wave down for the (b) wave of a larger zigzag, up.

    TJ

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    1. ..but right now it looks to me based on measurement like we have only two roughly equal legs up.

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    2. ..measurements show that below 2,892 futures a new wave (iv) will be long enough in the diagonal. But, as a wave (iv) it must not travel below wave (ii)to maintain a diagonal. And so ES 2,886.00 is the dividing line between an expanding diagonal ending count - which could go into tomorrow - and between the 'c' wave of a larger (b) wave downward.

      That's the best I can do at this time.
      TJ

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    3. OK, so 2,892 futures has been taken out lower. As Billy rightly notes below, we are not impulsing. Either expanding diagonal (iv)th wave is in play, or if we take out the low something else. I'm not sure yet if Billy's expanding 'triangle' would be a degree violation.

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    4. Why not an degree violation? Net distance travelled with this expanded diagonal would be bigger than 2015-16 higher degree wave for?

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    5. @Erik ..The blue boxes in the 'futures', not cash, compare the largest downward distances traveled. So far, I don't see a degree violation. If the low of red (ii) breaks, then yes, there is a good chance a violation would occur. That's why I'm think the good alternate is (a) at the prior top, and a larger (b) wave down. But there is nothing wrong with v of (c) being an ending expanding diagonal going into the FED meeting tomorrow.

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    6. The low of (ii) would be 2880.50; so that provides the new dividing point. The 2886.00 earlier was incorrect. Sorry.

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    7. The Fed meeting is June 18 and 19.

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    8. You are correct, JC. Thanks for that! That may change the picture a bit.

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  8. Because the indices are not clearly impulsing in one direction or the other the possibility of the expanding triangle on the SPX remains. 3 waves down from the top would be wave a of the e wave of the triangle. Another 3 wave rally that fails to make new highs would be wave b of the e wave of the triangle thus leaving only wave c of the e wave of the triangle which would need to make fresh lows below the December 2018 low. First objective would be to find 5 waves down for i of 1 of c of e. I would not hazard a guess as to what count we could use on the DOW and NDX to compliment an expanding triangle on the SPX.

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  9. ES futures, new overnight low; that rules out a 1-2 up from the overnight low. Still could be wave (iv) of the diagonal or worse.

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  10. Very hard to have confidence which way the next move will go. Could be a downward minor degree iv as you suggest ET with one more high to come. On the other hand the rally on the YM, SPX and ES managed to inch over the 78.6% retrace. Not overly common to back away from that area and then rally again without making fresh highs. No clear impulse lower either. So mixed signals yet again. Today's "retreat" on SPX/ES is the biggest point drop since the rally began. My guess is we have already seen the bulk of the action today and they will park it somewhere between current levels and the weekend ES gap at 2877.50. PPI was above expectations and not what the market wants to hear as it takes away some of the ammunition for a rate cut. Whilst in Europe, with "possible recession" and "Germany" mentioned in the same sentence, the ECB has come out with the same hoopla it has used many times in past ala "never fear we will supply more stimulus if needed" etc. The only thing holding up continental European equities is excesses in short interest as everyone knows they must come down.

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  11. That red wave (ii) in the potential diagonal top was just busted lower; again showing how rare expanding diagonals (megaphones) are. This suggests at least a (b) wave lower, as an expanded flat.

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    1. Do you have a graphic you can share?

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    2. @ KS ..See comment below for the best count, currently. See the busted megaphone in the comment @ 10:40 am.

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  12. This is the straight-up 'completion count'. I like it best because the wave fours are in the same location.

    https://invst.ly/a-iwt

    TJ

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    1. Thanks TJ! Unless, I see 5 waves up on 1min or 5min charts, I'm selling corrective rallies. RUT is weakest.

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  13. .iv (lower degree) is much longer in time than iv
    Why not as you proposed before ? I mean (a)-(b)-(c) instead of .iv-.v-iv ? And then wave v to complete wave (c) ?
    Thanks for your posts

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    1. Yes, either works.. I was really trying to avoid a wave being longer than (b). But, the idea is the same. Three waves up.

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  14. i have count with we are starting wave 5 from low in june as impulse using nasdaq futures

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    1. ..and you are going to tell me your wave ii is longer in time than your wave i? and your wave iii is 1.618 ?

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    2. this is what im using
      if we take out todays low i will reconsider
      this bull market was built on running second waves
      https://imgur.com/sR0xVWs

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    3. Yepper. I noticed how the first wave is cut short, so 1.618 can be claimed. If not, then the wave is 'inside' 1.618 = c wave.

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    4. how do you deal with 5th wave extensions?
      Would you count ABC where A=C, then adjust when its appropriate?

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    5. I have no idea why these two questions are in the same thought.

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  15. TJ, do you think this decline on the cash market is an accurate impulsive wave?

    https://imgur.com/rV35O4c

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    1. Probably not that count because the correction from 10:45 - 11:15 is the longest in time of any in the decline. That's probably where wave ii of the decline is, and wave iv is a small triangle.

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    2. Gotcha, but we have finished an impulse right? Do you mind showing your impulsive decline? - I would like to do some back-testing.

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    3. Here is the way to count it and follow the rules of degree labeling. It is still a "five", but we can specifically identify that the first wave is the extended wave in the sequence, and wave ii is the longest correction in 'time' to that point.

      https://invst.ly/a-jq1

      Also, look at where the EWO comes above the zero line to identify the second and fourth waves. Hope this helps.

      TJ

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    4. 4 doesn't overlap 1 in expanding leading diagonal?

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    5. @marc - what? I have shown iv overlapping i, as it should in the chart above.

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    6. im sorry i looked at it wrong.
      thanks

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    7. @02:34 wave ii is typo; should read wave ((2)), circle two, is the longest wave correction in time to that point.

      TJ

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    8. Thanks TJ...will be doing some good work on this tonight and compare to my count. The rally from approx. 2878 (1pm EST) on cash looks corrective but can we call it an expanding diagonal?

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    9. @KS .. it could be an LED, but it could be a zigzag where the a wave ends as a 'first' expanding diagonal at 13:45 with a small 'b' wave and then large 'c' wave after it. Will only know if 90% downward is hit. But, I am done analyzing one-minute waves today.

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  16. A new post has been started for the next day.

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