Sunday, June 30, 2019

First Day of Month, First Day of New Quarter

As you might have been able to read in some of the comments, particularly from the previous post, some people spend a lot of time and energy on news-related and, often, opinion-related matters. We try to keep life much more simple. Below are two charts. The first one is of the ES E-Mini S&P500 futures.

ES E-Mini S&P500 Futures - 15 Min - In a Channel

Up until late Friday, prices were strictly trading in a channel. It was very sloppy price movement which is typical of the "end of month window-dressing" we have so often written about. There are several ways to try to count this wave - some of which are even valid. We have just shown the simplest way. It is that of a "running b / ii" wave. At the end of the day (meaning 4 PM CDT), prices none-the-less put on a 14 point premium to cash - ending the futures session at 2,955 versus 2,941 for cash! This moved the premium from the typical 5 - 8 points to the whopping 14 points!

Somehow the "Smart Money" - those with account sizes large enough to move markets - wanted to front-run either the trade announcement, or the typical "beginning of the month / quarter inflows" we have often written about.

But, our job is simple. It is not to care about the news; rather it is to measure. Right now we have either the c = a, or iii = i. It would be difficult to say until or unless price breaks below the channel again. The channel could be part or all of a "bear flag". It could be a "base channel" for a new up move. If one is neutral, calm and patient, then one primarily measures. Does any extension of the up move get past the 1.27 mark? how about the 1.618 mark (both of which are shown above)?

In addition to measuring, one can also compare. Here is a chart of the NASDAQ 100 futures (NQ).

NASDAQ 100 (NQ) Futures - 15 Minutes - Likely Triangle

Here you can see there is very likely a triangle in the structure. In fact, we were trying to count a possible triangle in the ES late in the day, but it ended as a "running flat" and never properly finished the triangle structure. And one can ask more relevant questions of the market structure, like "if tech is leading this market, why does the NQ have a lower daily high than the ES"? Notice it has definitely a higher low at the bottom. And if we are going to impulse up, then perhaps this is just a "running ii / b" wave also. None-the-less, the Elliott Wave Oscillator in this index is a  flat as a pancake.

Have a good rest of the weekend.
TraderJoe

P.S. The chart below is updated for the large upward move in the futures tonight, presuming it holds until morning. (That is an assumption).

ES E-Mini S&P500 Futures - 120 Minute - Revision to Minute ((a))
 
The above count only revises the minute ((a)) wave to be a diagonal, and then the largest wave down must be of the same degree as ((a)) because it is larger and possibly longer than all other down waves.


42 comments:

  1. ET, The current ES open is implying an open above the 21st June high on the SPX cash. You had implied, from your previous posts, that an impulsive wave had formed from the high. What is your alternate count?

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    1. @KS, an impulsive wave definitely formed from the high. It was the five waves of the (c) wave of a 'flat' for minute ((b)). There is a chart showing the formation in the P.S. of this post. We are now in the minute ((c)) wave up.

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  2. How is the pattern from the December low heading into July 1st 2019 so "clearly not impulsive" compared to the perspective from July 23rd, 2009, coming off the March 2009 low and breaking to a high for the move?

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    1. https://invst.ly/b5336

      July 23rd 2009 is the big green bar going through 960 on the chart - seemingly similar to now. The first move up from March 2009 must have had the same 0-2 problem as the move up from December 2018?

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    2. posted that analogy many months ago

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  3. All, please note, a P.S. and chart has been added to this post.

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  4. I thought ending contracting diagonals had as a defining characteristic that they swiftly retraced to the origin once completed. I assume that is only a guideline and not really a rule of the pattern. This one appears not to follow that particular feature, and certainly seems to meet all the other requirements.

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  5. (iii) shorter than (v) in your diagonal i believe

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    Replies
    1. Use the deepest part of (ii) for the zigzag in the futures. Then, a, b and (iii). And (iii) is longer than (v) by quite a bit.

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    2. so is it always measured from deepest point ? and what about time? is that always from deepest point? kind of surprised just learning this after 18 months paying close attention

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    3. also is the deepest point where we always project 1.618 for impulse wave 3?

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    4. I'm curious, too. If we should measure the length of (iii) from a certain point, wouldn't (iii) start at that point? Please address marc's questions. Thank you.

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    5. @gentlemen: when you have a diagonal - such as this one that we had in 2015 - that I both predicted and counted correctly, you will 'often' find that the wave 0 - ((ii)) trend line is broken. See chart below.

      https://invst.ly/b5bhn

      That 'is' what happened in the above wave. This is one of the key ways higher highs let you know you are in a diagonal, and not in an impulsing third wave. Are the higher highs uncomfortable? "Tough" says Mr. Market.

      TJ

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  6. Hm don’t think this works in cash because no overlap, and (iii) shorter than (v), so can’t count impulse either? Maybe we should at least be open minded about cash already finished ((c))?

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    1. Maybe that’s why cash have that diagonal on top and futures not?

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    2. Nikkei index is now approaching upper trendline from Oct 2nd 18 top,

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    3. What I presented is a futures count, not a cash count. They can be different.

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  7. From December 2018, it could be 5 up, then 38% retrace, then 5 up, then 23% retrace - now kicking off 3rd of 3rd of what would likely be P5.

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    Replies
    1. I fail to see your "giant leap for mankind".

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  8. Gold Update. 4th wave looks good here.

    https://imgur.com/ZHqVcmk

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    Replies
    1. Looks like contracting diagonal off the bottom with back test.

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    2. https://imgur.com/naslskq

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  9. Just for fun, I wonder on the longer term (since 1982), if 2000 was the top of extended 1st wave. 2009 bottom of flat for 2. 3 was top of Oct 2018 and now we are going to be in a large triangle.

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    Replies
    1. Or Jan 2018 was 3, and we're now in "d" of expanding triangle?

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    2. Who knows were it all ends. Over 12 trillion trading at negative yield. Maybe at the end the fed will just till us were they will close it at the end of each day.

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  10. S&P500 cash - downward overlap on the prior high.

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    Replies
    1. Same for RUT and NDX. Dow never did get a new high this morning.

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  11. Very interesting to see the gap opening being faded across many stocks and indices but the VIX hardly has budged....yet

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    1. I'm a little more curious as to why you don't note that with each new successive stock market high, the VIX has refused to confirm with lower lows, as below.

      https://invst.ly/b5c8z

      TJ

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    2. While I haven't noted it in the comments here, I have had a trend line drawn across the bottoms on my VIX chart as reference. So, I am paying attention :-)

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  12. Here's what I have at the moment. There is a way to see the ES half-hour as being back to a prior fourth wave, with 130 half-hourly candles on the chart. I have seen these break down before, so there is an ALT:top on this chart.

    https://invst.ly/b5crh

    TJ

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    Replies
    1. DOW futures (YM) have a downward overlapping wave; warning sign.

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    2. Thanks,
      could also be another expanded flat (B), if DOW wants to do ath. No degree violations?https://invst.ly/b5cwu

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    3. @Erik B. can't be an 'Expanded Flat" in the Dow without a higher B wave. The Dow did not exceed it's high so far this morning. It would be a zigzag in the case you are showing, or possibly a regular flat.

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    4. ES 30-min now has contact with the lower channel line shown previously.

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  13. DOW futures just closed their opening gap. Second warning.

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    1. DOW cash now has overlap on 6/28. This is a third warning sign. In terms of 'up' counts the DOW cash has removed everything except the very low probability expanding diagonal.

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    2. ..the 'form' of an expanding E-D for the DOW does not look good. I'm going to cross it off the list for now.

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  14. Daily CL has given it all back: https://invst.ly/b5dja

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

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