Sunday, June 23, 2019

Watch Hourly Trend Channel Closely

If the trend channel gives way in the cash market, even printing a couple of full hourly candles below the lower trend channel boundary in the chart below, then it likely means the up movement is over. And there will be one, clear, unambiguous Elliott Wave count that results.

S&P500 Cash Index - Hourly - Trend Channel and Divergence

Yes, there is an outside chance that the futures will lurch up one more time in the overnight, but this is not required for a completion count in cash.

The unambiguous count will be that the third zigzag, Minor Z, of Intermediate wave (B) will have been completed. The market would have topped in a "three-wave sequence".

There are already three points of divergence in the minute ((c)) wave versus the Elliott Wave Oscillator, and the ((c)) wave is between 0.382 and 0.500 x ((a)) at this point.

If this top occurs, then the 2,720 level will likely be revisited quite quickly. Confirmation would come with an overlap of the minute ((a)) wave. Further downward movement would be pending a break of those lows. For now, as usual, let's take things a step at a time, and remain patient, calm and flexible.

This is another good session to monitor the overnight futures and keep a close eye on things. As we said in the previous post, the Dow futures already threw off one kind of invalidation (that of a continuing contracting diagonal). And, as Erik B. and I were discussing yesterday, the smaller diagonal in cash could have finished already.

Why would this count be an unambiguous one if it plays out? It has to do primarily with the 'depth' of the minute ((b)) wave. It really has too small of a retrace on the ((a)) wave to be a second wave. It's that simple. And, in addition, there are virtually no significant retracements in the wave up to June 11, which almost assures that wave is one of  those no-retracement A waves, and not a first wave.

So. Be careful. Keep an eye on things. Have a good rest of the weekend.
TraderJoe


47 comments:

  1. Thanks Joe reviewing my charts I was seeing the same thing. As you say patience and flexibility but things sure do look complete. For those who count the Dec low as P4 we blast off from here. Like you don't see it that way

    ReplyDelete
    Replies
    1. ..if the up wave from ((b)) was a i, it would be a leading diagonal. But the ((a)) wave started with a leading diagonal so that would seem to be poor alternation in the wave set.

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  2. "If this top occurs, then the 2,720 level will likely be revisited quite quickly"

    What is the time rule/guideline you are using for this?

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    Replies
    1. If minute ((c)) is complete as an ending diagonal, then wave ((b)) lower should be exceeded in less time than wave ((c)) took to build.

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    2. Wave ((b)) lower ends at 2889 not 2720? The ending diagonal from 2889 just retraces itself in less time, no?

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    3. Wait, the diagonal was only from 2910, so that's the level to hit quickly in reversal?

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  3. Joe,
    I am working on long term. Here is a comparison of wave 1 and wave 2 from 1942 bottom.
    Everything from 2009 may be same degree but thats not the point.
    Very interesting fractals supporting a case that B wave highs with 1.618 to 2 X retracements are not out of the ordinary. A rally to 3300 wouldnt change any long term count. I put an arrow where we could be in the fractal - that doesnt mean we have to go higher.

    1942 W1 and W2
    https://imgur.com/eFUruy6


    1942 W1/W2 zoom
    https://imgur.com/7B6lRZh

    present
    https://imgur.com/eZ1Reey

    ReplyDelete
    Replies
    1. ..the fallacy of 'what worked in the past will work in the future".

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    2. The EW was founded based on past stock market patterns. The market resembles the 1920s behavior quite remarkably. I still believe this is similar to the 1930 rally that almost broke to new highs and then we failed dramatically over the summer of 1930 into 1932. The declines were massive but so were the rallies.

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    3. @Tim; "specific" patterns, not "pick a pattern".

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  4. the point was to illustrate your last lt count could go over the top with large b waves and its happenned before. im not making any predictions.

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  5. Is this impulse on futures valid? Looks like a tiny overlap of A leg of triangle and (1).
    https://invst.ly/b30dh

    ReplyDelete
    Replies
    1. Or maybe triangle fits best as a B wave:
      https://invst.ly/b30ed

      Delete
  6. Sideways cosolidation entered in an uptrend is one of the most obvious price patterns, I continue to be amazed at how one can extract a downward count from this kind of price action. EWT is certainly an interesting approach but I think to be really useful it has to be informed by other metrics. Few EW analysts I have seen consistently get market direction right. intetesting site though!

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  7. Waiting for e wave on 10 min gold.

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  8. price did cross e on the 10, would not be surprised if cross on the 15 is waiting.

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  9. SP500 cash 'can' - just barely - be counted as 'five waves down' to it's first breach of the hourly trend line. So far, a 62% retrace, and a bit more. Watch it closely.

    https://invst.ly/b38z2

    TJ

    ReplyDelete
    Replies
    1. using futures that 5 waves down took up more time than prior move down so how does that impact the count

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    2. futures need a lower low for a :5 down, but on the larger time scale, and based on degree labeling, it would be hard to see the futures as making five-down any way but this way.

      https://invst.ly/b39xo

      Otherwise we are just in some kind of whippy triangle.

      TJ

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  10. Last update using this small a time frame.

    https://invst.ly/b39gk

    TJ

    ReplyDelete
    Replies
    1. Now below the prior b wave.

      https://invst.ly/b39in

      TJ

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    2. whats the label for the 5 down on a bigger time frame on that chart?

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  11. futures need a lower low for a :5 down, but on the larger time scale, and based on degree labeling, it would be hard to see the futures as making five-down any way but this way.

    https://invst.ly/b39xo

    Otherwise we are just in some kind of whippy triangle.

    TJ

    ReplyDelete
    Replies
    1. I wound draw a short term trend line under the lows and monitor it carefully.

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  12. S&P500 hourly: first close below the hourly lower trend channel line. This is a warning sign. Market seems to know the trend line is there.

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  13. Likely or not diagonal was leading?

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    Replies
    1. Maybe that’s why this wave was shorter than all of ((a))

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  14. Now below the prior b wave again.

    ReplyDelete
    Replies
    1. Now below the up trend line I suggested connecting the lows - as below.

      https://invst.ly/b3az1

      TJ

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  15. As I understand 1 of ((a)) is now bigger than all of ((c)) but that isn't a degree violation? Sorry if you need to repeat this but the concept of degree is hard for me in corrections and extended waves...

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    Replies
    1. The only degree violation in that direction would be if 1 of ((c)) was bigger than all of ((a)). You compare the sub-wave of the extending wave to all of the larger degree wave.

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    2. accordingly can 1 of ((c)) be bigger than ((a)) hypothetically

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    3. Let’s say this is 2 of ((c)), if 1 will be the extended wave of ((c)) this 2 doesn’t need to be deeper than ii of 1?

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  16. Joe, are you counting downward or upward at this point?

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    Replies
    1. For the time being, the market is counting downward.

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    2. The reason the market is counting downward is that it is breaking down fractals (the red triangles) below the EMA-34, with the EWO below zero on this time scale. It has not broken any up fractals (the green triangles) above the EMA-34 with the EWO above zero. If it does the latter, then the direction of counting will change.

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    3. @marc - Chart reference for the above comment at 2:43 pm.

      https://invst.ly/b3bcb

      TJ

      Delete
  17. in past you have suggested waiting until overlap of a to begin downward count which is whyvibwas looking for correction and possibly high is b wave

    ReplyDelete
  18. More down fractals breaking downward.

    https://invst.ly/b3bwq

    TJ

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

    ReplyDelete