Thursday, June 6, 2019

Outsized B Wave - Part 2 ?

In the comments in the previous post, we showed some potential break down and break up patterns (called brackets) based on fractals and a very neutral EMA-34 on the ES fifteen minute futures chart. We reminded how the EMA-34 is the "chaos attractor" in the market when there is no fresh news. Prices were trading sideways then. After the post, CNBC had a FED interview, and prices broke to through the upside fractal which started a good sized move upward. We said that "when a bracket goes", it usually makes a move greater than most people expect, and prices popped.

As the interview ended, prices reversed a bit as best seen on the half-hourly chart of the S&P500 cash index.

S&P500 Cash Index - 30 Minutes - Outsized b Wave ?

From one perspective, the little a? wave down is just "too short in time" to, in any meaningful way, correct the entire prior up move to (a). We've tried various counts to 'try' to make the up waves past the a? wave a fifth wave. They don't work well. But, we want to remind all of this post regarding out-sized B waves:


From this perspective, we find it interesting that the lower Bollinger Band on the half-hour chart comes in between the 62% and 78% of the upward move from a ? to b ?. Could it be that a running flat wave, or running triangle wave is occurring? It is a good reminder to all, that in strong markets "running flats" and "running triangles", in particular, are quite common structures. So, far, we have counted the b ? wave up as a triple zigzag. If it holds, then the employment report might provide some volatility upon which to make a c ? wave down which would be likely to fail to trade below the a ? wave.

If that were the case, then I would expect - at some point - another five waves up in the form of a larger (c) wave. I am only looking for a (b) wave that takes some time to correct the (a) wave. But to actually correct the (a) wave, the downward wave must at least cross down back over the top of that (a) wave.

If a triangle should form as the (b) wave, well, we'll discuss that if and when it occurs.

For now, have a very good start to your evening.
TraderJoe

35 comments:

  1. thanks joe
    i appreciate your willingness to reply today to specific questions that i had in a timely and constructive manner. very much appreciated.

    ReplyDelete
  2. Pretty amazing read if it comes off. Hats off Jack, I mean Joe.

    ReplyDelete
  3. This outsized B wave in ES keeps getting even more outsized.. Does a “1 become an ABC” ever? At what point?

    ReplyDelete
  4. Thought on triangle for (b) on futures. Following (a), abcde barrier triangle, e ending on 6/6 1:00am (cst). If this is e, then (b) overlaps (a). Possible?

    ReplyDelete
    Replies
    1. If reached, watching the 2880 area closely for signs of turn (basis cfd contract, assuming prior suggested triangle).

      Delete
  5. ET, since the Sept high, there has been an abc 50% retrace of the rally from 2016, a marginal new high, a 38% abc retrace of that rally, then turned up. On the surface it sure looks like 1-2 from December low, and seems hard to reconcile a bear count from Sept top. Can you re-visit your big picture overview?

    ReplyDelete
  6. b wave not right
    either extended 5th off bottom
    or 1 2 i ii bot runnning flats

    ReplyDelete
    Replies
    1. Can't be 1-2, i-ii in the DOW. 2 is smaller than ii of 1.

      Delete
    2. 5th not really extended. 78.6% x (1 thru 3). Common enough.

      Delete
    3. Look at Russel. (b) is already completed Jun 5 - Jun 6

      Delete
  7. It does not look - based on the extent of the price move today (with the gap up open after the employment report), that the b wave triangle is playing out. Price has now retraced 62% of the three-wave down move and has tagged the 50-day SMA. The only other "running" wave set I can find that honors the 0 - 2 trend line for the next wave three is this one, below.

    https://invst.ly/azjm5

    I fully admit that even though I likely suspected the "running wave" I could not find it until now.

    TJ

    ReplyDelete
    Replies
    1. I have tried several other variations of leading diagonals, etc. And can't find one that works in cash or futures yet.

      Delete
    2. I have a x 0.891 = c for SPX and a x 0.772 = c for the DOW. Retracement levels back to the highs are 68%/SPX and 70%/DOW. These are within the diagonal common area of 66%-81%. I'm not suggesting the highs are in, just passing on the data.

      Delete
    3. ET the correction for "wave a" on the DOW is actually shorter than ii of 1. This is not the case with SPX. Any issue with degree violations in such a situation?

      Delete
    4. @Billy - the DOW did not bottom where the S&P did, true??

      Delete
  8. If today’s strength holds, it will be a very strong follow through day after the Tuesday reversal. This market has been so strong, that it couldn’t even barely pull back.
    I’m not a believer in EW, but if it is real, the market might be in a wave 3 from its impulse early this year. Way too much index strength. NYAD will hit new highs soo.

    ReplyDelete
  9. joe, havent heard yet about your long term count.
    The best I can do is call 2015/2016 bottom as wave 4, 2017 top as wave i of 5, 2019 bottom as wave ii of 5, recent ATH as (i) of iii, and recent bottom as (ii) of iii.
    Thus we are in (iii) of iii of 5. meaning a significant high to come - sideways action for a larger 4 then another major high to wrap up everything from 2009.

    ReplyDelete
    Replies
    1. this count would not have siginficant pullbacks given its in early stages of third wave of intermediate or minor degree based on how you use the labeling nomenclature.

      Delete
  10. So far today very relative strong vix..is’t because smart money buying puts or the crowd buying calls? Or maybe both..

    ReplyDelete
  11. True. Unlike the S&P 500 the DOW (YM) bottomed after hours. So on DOW cash ii of 1 is in fact smaller than "wave a". Cool.

    ReplyDelete
  12. This is the best I can do on the potential (c) wave at the moment. Looks better with EWO on 3-min chart.

    https://invst.ly/azkml

    TJ

    ReplyDelete
    Replies
    1. i of 3 looks longer than 1. But it isn't. 1 is longer by the handsome margin of 0.24 points. Handy, thanks ET. 1475 YM points this week at the HOD. Straight up or straight down market.

      Delete
  13. joe,
    since 2009 this count has been common in hindsight for initial moves off of lows
    https://imgur.com/XL4P6ja

    ReplyDelete
    Replies
    1. ..the lower degree b wave of iv in that count is longer in time than your supposed higher degree wave iii; not allowed.

      Delete
  14. SP500 5-min; well cash did make contact with the lower channel, and the EWO went to zero (+10% - 40%).

    ReplyDelete
    Replies
    1. Here's the updated chart

      https://invst.ly/azlns

      TJ

      Delete
    2. One more down wave on the 5-min without making a lower low could make a triangle fourth wave.

      Delete
    3. Cash and futures broke the local low, ruling out a triangle. Possible double zigzag, downward for 4.

      Delete
    4. In cash, a wave 4 is longer in time than a wave 2, which is the usual order of things. Can also become longer in the futures by the Sunday night and Monday morning trading hours.

      Delete
  15. maybe the recent all time high wad the outsized b wave....

    ReplyDelete
  16. im not saying market will rise forever. but we now have 2 large rallies in january and june following 3 wave declines with overlap. if the opposite occurred - 3 wave advances followed by large declines - i do not believe anyone would be making a case for market to rally by calling a bottom - yet many are doing just that in reverse. If we do not see a swift decline in near future this post becomes more relevant

    ReplyDelete
  17. A new post has been started for the next day.

    ReplyDelete