Wednesday, July 10, 2019

Powell Spaketh

Stocks rose on dovish comments from FED chair Powell testimony in front of the House Financial Services Committee. There is now a new 0 - 2 trend line until there isn't.

S&P500 Cash Index - 2 Hr - New 0 to 2 Trend Line

This A, B count in SP500 also recognizes that there was downward overlap in the SPY at B, as well. The current 1 / a, 2 / b is in recognition that the C wave up 'could' be starting a diagonal, but there are insufficient waves to make that claim yet.

Have a good start to your evening.
TraderJoe

43 comments:

  1. Thanks ET. Another potential option: ES/SPX went over the top in 3 waves, so did NQ/NDX. YM/DOW didn't make it to new highs. Thus another possibility is today's high was a expanded "b wave" (not expanded in the DOW). Thus we would need to count 5 waves down for i of c from the HOD. Not so crystal clear but perhaps not impossible either. A flat would imply another visit to sub 2960 for c of 2 of C.

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    1. Yes, a flat is an option, but would need to break that latest 0 - 2 trend line. That's why it's there.

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    2. Another downturn flat will consume more time than B in ES futures and close to in cash, if so maybe B isn’t finished

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  2. The market is in an uptrend until it's not. You're always looking at something different every day which doesn't work. Stay consistent and you'll be right more than wrong. Your "counts" are a moving target. It's nonsense.

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    1. Rules are rules. I'm just trying to follow them as the market moves. Since I've never seen a comment from you before, I'll just assume you're here to give us your 'ego' and not any particular expertise.

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    2. Also, as a relatively new naysayer you should immediately recognize I have 'not' called for a top count in the Intermediate (B) wave, yet. I do 'not' yet see a completed count.

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    3. Not new, been watching your analysis for a long time. You have a bearish bias for far too long as markets move higher. The EW system you use has too many variables, so you're always changing charts, counts, etc... I appreciate what you do and that you believe in it. Chances are we've been doing this around the same amount of time. I just know from trying, it's very difficult to use your methods to make money. They're great to label the market and have fun doing it with other like minded traders and investors, but in the end, IMHO - not an actionable strategy to trade 80% of the time. No ego, just opinion over 30 years. Don't say much, but watching you look for the top is painful sometimes. Wait for a reversal and you'll have one to trade against. Meantime, while you're looking for turn, the market keeps grinding higher. I find it hard to believe anyone following your work was long recently, that's my point. It's still a bull market until it's not.

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  3. Same chart different interpretations everytime you look at it. Here is one such example where B gets revised further along. There is an overlap between A and B in
    ES chart
    If C is equal to A in time then end of july is when it might complete just in time for fomc. Also 2 months is about right it seems based on W X Y before.

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    1. What prevents the nonsensical versions you be keep posting are adherence to 0 - 2 trend lines. You did not do that in your 5 of A.

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  4. What happens to stocks when the Fed cuts and bond yields actually go up?

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    1. Tim, the FED control short rates, thus those are sure to fall if the FED cuts (and says they will keep cutting if needed,) while the market dictates direction of longer term rates. And those should RISE if the FED cuts and helps the economy grow, or inflation grow. The reason the FED want that to happen is to undo the inverted yield curve. The problem comes in if the FED cuts and cuts, and the yield curve remains inverted as buyers keep buying long bonds (which they do in response to expected weak economy and/or inflation. Stocks hate inverted yield curve, and love a steepening one.

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    2. Economy isn’t growing. The Fed doesn’t control short-term rates. The Fed can’t even meet their 2% inflation targets because they don’t control inflation or deflation.

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    3. All the FED has to do is to hint that they will cut rates and instantly short rates fall to price that in. They can lose control of short rates if traders believe the FED is behind the curve, where the FED as to play catch up (though such traders need eco data to land on their side of the trade to prove them right.) What long rates normally do is front run future inflation expectations and economic growth. Unfortunately, that "tell" may be screwed up by central banks around the world buying long bonds. Eco growth is currently fine. Inflation continues to remain weak because banks refuse to lower credit card rates, where in the past they charged CC rates prime + a number, such a 5%. So 2% prime and 5% bank add on - CC rate of 7%. Now they charge prime +13-20%, and when prime lowers the banks refuse to lower CC rates. That was in the past how consumers benefited from the FED lowering rates. Now it's the other way round, where banks are acting as if rates are super high and rising.

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  5. ET, can I just confirm re: the potential diagonal yesterday - in all cases, when 3 > 1, 5 MUST be > 3?

    I did not know this, can I confirm this as a rule? or just your thinking on that case. Thanks.

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    1. ...and 4 MUST be > 2, same as 5 > 3, as part of the same question.

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  6. ET, Doesn't Bill William's if the AO turns red after making a new high sell? (Or place a sell stop) My Daily AO is red, now it could disappear today. That is very very rare red AO bar after a new high. hmm...

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  7. A smaller degree fourth wave, iv, would now be longer in time than either ii, or iii. If a triangle does not form properly, then perhaps the flat discussed yesterday.

    https://invst.ly/b8gjv

    TJ

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    1. Since the original potential triangle broke lower, then 2,996 is 62% for a larger c wave, or lower for an even larger triangle or flat.

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    2. Current situation; ES 30-min small weak hammer candle, plus higher high candle.

      https://invst.ly/b8hgg

      TJ

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    3. Here's an update as of 11:35 am ET. Triangle is possible; truncated flat is possible.

      https://invst.ly/b8ht6

      TJ

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    4. If the impulse plays out, then would this be wave i of 3, where wave 1 is SPXFutures 2915 (June 26th) to 3005 (July 3rd)? If the answer is yes, even a standard run of the mill impulse (i.e. 1.61 Wave 3 extension) would quickly take us to 3100+

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  8. With the current downward wave below the EMA-34, that is one way to count an 'e' wave as completed. However, it could 'also' still be a smaller degree .b wave of d. You know triangles.

    https://invst.ly/b8iuy

    TJ

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  9. Thanks TJ. Hmmm, this link below is the intraday of the NDX. Do you see an ending diagonal or B wave of flat? From an ending diagonal point of view, 4<2 and rest of the measurements are fine. It just doesn't have the right "look"
    https://ibb.co/Gs9w3wv

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  10. AO beautifully chronicling triangle's progress.... :)

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  11. Potential C wave of triangle just busted. A larger flat may be playing out.

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  12. Hm looks like move from spx cash 2992 was an impulse, why did it truncate?!

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  13. Another potential pattern. Market is getting more & more fragmented. Dow new high, but not S&P. Of course, we are near the upper daily Bollinger Bands.

    https://invst.ly/b8j4x

    TJ

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    1. TJ, did you happen to take a look at the NDX link in reference to my message earlier? It tends to align with with your latest post.

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    2. yes, but ES does not have the middle higher high which is required by a diagonal.

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    3. I completely understand that. I'm just following your mantra - "be flexible" BTW, 30yr bonds have broken down after completing a final move higher following a triangle.

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    4. @KS .. I'm just saying what applies to one index may not apply to another.

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  14. S&P500 is down to 78.6% - last chance for a triangle C wave as W-X-Y, but exercise real care.

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    1. Here is a very short term cash chart.

      https://invst.ly/b8jg8

      TJ

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    2. two levels of upward overlap, now.

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    3. ..third level of upward overlap now.

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  15. ET your expanding diagonal C wave pattern you drew up earlier on the ES appears to be still in the frame. The late rally can count as a-b-c of wave 4 of the diagonal. It hasn't gone above wave 3 and is longer in time and price vs wave 2. So a 5th wave down in futures to a lower low is a possibility. Your chart:
    https://invst.ly/b8j4x

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    1. Yep, I was watching that. Triangle or FLAT still possible.

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

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