Wednesday, August 21, 2019

Re-testing 62%

Prices as measured by ES E-Mini S&P500 futures reversed again today and closed higher. In doing so, they closed over the 18-day and 100-day SMA's and turned the short term bias to the upside again, but not the swing-line just yet. We must remain neutral and flexible as difficult as that is.

ES - Daily - Back to 62%

Prices have thus reset back to the 62% Fibonacci level for all intents and purposes. If they fail in this general vicinity, for which there is not good evidence at this time, that would be one thing. On the other hand, if prices proceed to the 78.6% Fibonacci level, then it is just possible they could make the triangle we outlined in the previous post (see LINK here).

Unfortunately, this results in only a contingent market count (or some of you might like the term 'situational' market count better). This means the count develops as the situation proceeds: IF this, THEN that.

This posture is unfortunately required when the evidence is poor, or two possibilities with roughly equal odds can be envisioned. Stock futures settled at the high-of-the-day, but did not make a new recovery high. The new recovery high is needed to turn the swing-line higher.

Prices could proceed higher to make a (b) wave in the alternate count that is longer in time than the (a) wave. There is nothing wrong with that. But, they might also stall in this area or make an ending diagonal c wave of (ii) waiting on the FED's Jackson Hole speech on Friday.

So, in the summer heat, play it cool. There are lots of market participants that are still on vacations both here and in Europe. For me, personally, that means keeping risk very small indeed, and only probing some positions to better ascertain the count until the volume returns and momentum picks a direction. There is no reason stocks are required to top in the next couple of days. They could, but they don't have to. The wave count just is not compelling yet, although the possibility is there. I'm being flexible, calm and patient in wave counting - as best I can.

Have a good start to the evening.
TraderJoe

37 comments:

  1. This is what I mean. EW is good for identifying what happened after it happens. I've been following this for about 2 years. You're right less than 40% of time. Wrong count, switching charts to support a case. It's ridiculous. Doesn't work other than a third of a third and they are few and far between.

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    1. It's nothing more than a tool, like any other trading indicator you might use. I'll also say that EW isn't for predicting exactly what will happen, but to know what you can expect. How you trade with that knowledge is up to you and your risk tolerance.

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    2. It's actually quite good at 'ruling out' what is 'not' possible. But that is likely not anything of value to a person who's market calls are exact to every penny - as I'm sure your's are.

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    3. joe whats ruled out now?

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    4. @marc; ..the expanding triangle Prechter is predicting is likely ruled out because 1) the S&P500 did not make a lower low in Feb/Mar 2018, like the Dow did, and 2) the wave C which he claims has occurred would be 'shorter in time' than the wave B. Usually the legs of an expanding triangle expand in time, as well. Secondly, an impulse is likely ruled out from the Dec 2018 low because any 0 - 2 trend line keeps breaking. Further, an impulse up on the 4-hr ES is ruled out because of two factors: overlap, and 0 - 2 trend line breaks. Among other things.

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    5. @marc; that 4-hr ES impulse that is ruled out would be from the 5th - 6th AUG 2019 low.

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  2. I have found EW most useful when used in conjunction with other market indicators. I think the various bullish EW counts I am seeing now, for example, less probable because of clear momentum divergences we have been seeing at the recent highs, and of course the TWO live Hindenburg Omens on the clock. I fully agree patience is required under the circumstances until we break cleanly from the current trading range...

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  3. On ES diagonal watch. We would be in a of 3 of 5.

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    1. I have it in 5 of 5 now. If it's real, it should finish up no later than sometime tonight.

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    2. Could have already finished going below 2918.

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    3. Having trouble counting an ending count to the high on es from 2887ish.

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    4. 0:2819
      1:2932
      2:2893
      3:2938
      4:2918
      5:2939

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  4. Joe, if you do publish a book, I'll definitely buy it. Hope it'll be available in Kindle format!

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  5. It is 'possible' to consider this as the completion count. Would like to see prices below (ii) as confirmation.

    https://invst.ly/bur89

    TJ

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  6. ES has five waves up off the low, to beyond 38.2%, but has not taken more time yet than the down wave. Watch it closely.

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  7. Joe, I've really confused myself in regard to degree violation with some of the proposed diagonal counts and the "backwards in time" comments over the last few weeks.

    I understand the simplest example of degree violation is no subwave of 3 can be larger than 1.

    But in some diagonal counts, a or c of 1 is larger than 3. Is that what "backwards in time" means? You can only compare subwaves to previous larger degree waves. You cannot compare subwaves to subsequent larger degree waves.

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    1. Joe, your life would be far easier if you actually published your rules on degree violations. Something similar to "The Eight-Fold Path Method for Counting an Impulse"

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    2. Great idea, preferably with illustrative examples. Doesn't have to be actual charts, straw man drawings should suffice and save time.

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    3. Absolutely! One tends to wonder why you have not published them already...you would think, "rules" are meant to be published?

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  8. Non-EW SPX observation: since crossing below the Sept2018 ATH level on 8/2, price has now been rejected at that level 4 times.

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  9. ES now at 62% retrace in more time than down wave took to occur.

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  10. Looks like they will save the main action until Fed is done at Jackson Hole. Powell speaks tomorrow at 10am.

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  11. Powell says we monitor. Trump starts tweeting tariffs to get market down. Fed caves, back off tariffs.

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  12. Here's a picture, still inside of c = a; and back to 62% retrace

    https://invst.ly/buu2k

    TJ

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    1. ..clear breech of rising intraday lower trend line.

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    2. down wave too slow, can still be a fourth wave of c..

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    3. ..would need to break wave .iv in less than five five-minute candles; got a good start on it.

      https://invst.ly/buu-z

      TJ

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    4. ..wave .iv at 2,923 was exceeded lower in less than five candles; likely means count to the c wave is correct.

      https://invst.ly/buv8d

      TJ

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  13. With the lower low, I'm putting a "wave counting stop" above 2,932. Above that level is a warning sign that something is wrong with the count.

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    1. Seems that somebody moves the price at the limits. Awesome.

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  14. The wave counting stop (warning) at 78.6% was hit and prices reversed. This could mean there is an overall larger (b) wave up. The new wave .iv low did not overlap, and then it was exceeded lower by the final bars.

    https://invst.ly/buvvh

    TJ

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    1. Thank you ET.

      This last wave seems the catapult effect necessary to drop the prices overnight.

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  15. Hard to see market dropping severely before Jackson Hole. Still with my bias for above 2943.31. A sound EW count now is difficult to configure. Could be w-x-y(s) for all we know. Will say that the afternoon spike high was a 1.382 extension of the down wave immediately before thus could have been an expanded wave and offering the bulls something positive. This was on the DOW and SPX. NDX fell just short of the 1.382 marker but not by much.

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

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