Thursday, August 29, 2019

How Good Counting Adds Flexibility

U.S. Debt Clock: $22.55 Trillion
ES Daily Candle: Higher High, Higher Low, Higher Close: Trend Candle
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

Yesterday, we counted out an exacting diagonal on the five-minute chart. We did not call it an ending diagonal for a reason. Near the center of a chart such a structure can wind up being a leading diagonal. And, as the ES 15-minute chart, below, shows, it was! Recognizing that fact can help prevent some big mistakes.

ES 15-Minute - Position of Yesterday's Diagonal was Leading

It is nice to have an example to show particularly those newer to Elliott Wave, that not all diagonals are the "death knell" they often hear that they are. Sometimes, instead - as in this case - they are "the wind up before the pitch" or the leading variety of diagonal. Remember that leading diagonals may only be in the 1 or A wave positions on a chart.

Today was a powerful third wave that followed the diagonal. The chart above shows the market poised to make a fourth wave, but it hasn't yet. At today's ES settlement, with 119 candles on the chart - well within the recommended range of 120 to 160 from The Eight Fold Path Method - the Elliott Wave Oscillator is nearing the zero line again. Wave ((3)) of iii is on a peak of the EWO, and wave ((5)) of iii is on a divergence. So, right now, the wave fits an impulse, but it has not yet followed through with the needed form. If there is a drop in the overnight, or at least a running triangle followed by a fifth wave, then that fifth wave should occur on a divergence with the peak EWO.

Yesterday, I said if the market makes a higher high then it opens up several options. We have covered some of them before, but will I recap them in light of recent pricing on the weekend.  Again, it is not a problem so much in wave counting at this time as it is matching up the wave count to the money flows and news cycle here in the middle of the wave.

This is again a reminder that tomorrow is the last day of the trading month - with a propensity towards "window dressing" and some of the sloppiness that entails. Then, Monday/Tuesday will be the first trading days of the month with the likelihood of inflows from pension funds, 401k's, company bonuses, dividend reinvestment plans, etc. Oh, and  this first of the month will be the first of the month of September, which, in a study from 1950 to 2018, has the largest negative seasonality of any individual month overall. (Past performance is not necessarily predictive of future results.)

Have a good start to the evening - or to your long weekend if you are in the U.S. or otherwise celebrating the holiday or a vacation.

TraderJoe

22 comments:

  1. Another good reason why counting in cash is losing it's appeal. None of these waves for ((C)) of iv or v have even shown up in the cash market. Yet, the futures impulse meets all the requirements.

    https://invst.ly/bykq2

    TJ

    ReplyDelete
    Replies
    1. An impulse after an X wave would suggest a zigzag for Y. We may be headed much higher.

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    2. Nice looking impulse ET. Im on that is the end of 3 of Y.

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  2. Now outside of channel to the down side.

    https://invst.ly/byn06

    TJ

    ReplyDelete
    Replies
    1. Since wave iii in cash is less than 1.27x i, then wave v may extend if it wants (upper Bollinger band?).

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    2. Doee a break of 2924 rule out wave v extension?

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    3. ..cash missed making a new high by 0.12; truncation?!

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  3. Keeping with the theme of 'being flexible' and not having an agenda, as far as I can tell, the next thing to do is to back off to the hourly chart, and place the five waves in the context of a channel. Could be #1, thrust of or part of thrust out of triangle (e), #2, entire a-b-c up to c = a, #3, part of a further non-overlapping impulse, but then, why the short three?

    https://invst.ly/byntn

    TJ

    ReplyDelete
    Replies
    1. Now back to the area of the prior fourth wave ((4)).

      https://invst.ly/bynx2

      TJ

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    2. Why short? Because every wave is so large nowadays with 20+ pts swings..

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    3. Now below prior fourth wave; and back to channel mid-line; cash truncation confirmed.

      https://invst.ly/byo1p

      TJ

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    4. @C, just that it is much shorter than 1.618 x an A, or a i.

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    5. just fyi : ES 100-day SMA at 2,912.50

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  4. Based on this one minute cash chart, 2,929 is the absolute max for a fourth wave because of the presence of a diagonal - which may be ending or leading. If the diagonal is exceeded higher, it may likely mean the "window dressing" is over, and the front-running of the monthly inflows by the "smart money" has begun.

    https://invst.ly/bypad

    TJ

    ReplyDelete
    Replies
    1. ..after a 78.6% "deep retrace". 2929 was just exceeded higher, without having made a new, lower low first.

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    2. ..that leaves us with an a-b-c down, then an a-b-c, up

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    3. here's the a-b-c down, then a-b-c, up

      https://invst.ly/byqp-

      TJ

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  5. This is funny to watch. SPY 296 plus by Sept 20th

    ReplyDelete
    Replies
    1. You're giving 20-days for only 4 points? That can be done in a day, today. No. I'd say your post is 'funny'. SPY closed at 292.45 today. Any more comments like that and you'll be banned. It is not related to wave counting.

      Delete
  6. A new post has been started for the next day.

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  7. Yes it's will be hilarious that I will be right and you will have a 100 cross outs before that date and likely still be wrong. But you usually have 3 counts going at the same time and the goal line moves daily so one eventually has to be right... Right? At least I'm giving a (uno, one) target not multiple. Ban me for giving a target? Seriously?

    ReplyDelete