Tuesday, August 27, 2019

Battle at the Line-in-the-Sand

U.S. Debt Clock: $22.54 Trillion
ES Daily Candle: Higher High, Higher Low, Lower Close: Neutral Candle
Market Posture: Neutral-to-Negative and Probing Waves
Daily Swing Line: Neutral (Lower Low, Higher High)
Daily Bias: Down (Settle Under 18-day SMA) for third day

First, let's finish with yesterday's chart for consistency. As anticipated, prices traded higher in the overnight, then opened higher this morning and traded marginally higher for about 30-minutes, then began to sell off.

ES - 120 Minutes - Second Wave


The up waves are best interpreted as an ((A)) wave, up, and a barrier triangle for a ((B)) wave - based on degree - followed by a ((C)) wave to the new high. After today's high, we counted five waves down in a channel, with good form, using The Eight-Fold Path Method. IF today's high is a second wave, then the dotted magenta line down from the previous high should hold. If the bottom is not exceeded relatively soon (days), then the best alternate is that a second wave might extend as a double zigzag, so a lower low below ((B)) that does not break the wave i low might only be an alternate x wave. But, right now, the EWO signature is that of a second wave, having retreated most of the way to the zero line.

Next, let's go back to the daily chart.

ES - Daily - Battle at the 18-Day

Prices briefly exceeded the 18-day SMA and tried valiantly to reach the 100-day SMA but could not do it. Then, they were turned down by the 18-day SMA as well, and closed lower. This is what was called "having a battle at the 18-day SMA". So far, the downside forces are winning a bit. The daily slow stochastic has turned lower, and as long as that remains the case - from a wave counting view - it should be respected.

Have a good start to the evening.
TraderJoe



42 comments:

  1. ES running correction since yesterday's low?

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  2. If the 1-2 i-ii is going to work it needs to reverse before 1pm-ish

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  3. Yesterday we saw the cash indexes fall 5 waves from the early morning peak, followed by a modest bounce that failed to deliver a retest of yesterdays low. Now we have five waves up from this mornings low. That, to me, has the look of a (i) down yesterday, then a-b-c (with this morning's 5 waves the c) of (ii). If so, we're for a break of the lows, which would confirm we are in (iii) of multiple degrees. If we break above yesterday's highs, then clearly the breakdown gets postponed. That count break any rules?

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    1. That's exactly my thought Kevin. In addition to what you said, that 2889 is the line in the sand today (the 18 day SMA). Frankly, I didn't think an up leg would take us that far high.

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    2. Yeah, look at the battle between SMA 18 and SMA 150. The 18 is falling fast, providing upside resistance to rallies at 2889. While the 150 is rising fast, providing downside support at 2866. A victor has got to be declared in the next few days as the gap between the two is narrowing fast.

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  4. We may only be making a diagonal lower.

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    1. This is contingent upon a abrupt turn around here - which is not in evidence yet.

      https://invst.ly/bxspv

      TJ

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    2. Thanks for the intraday chart updates. You're the bomb!

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  5. The five up from todays low, and subsequent 3 wave churn since, could also be wave i and ii of a larger C rally, right?

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    1. Or can we be working on e upward of a triangle on the daily SPX?

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  6. ..just an idea .. there is a marginal higher high; diagonal or barrier triangle.

    https://invst.ly/bxus5

    TJ

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  7. I know Elliott_Trader is doing his best and we all appreciate it but if you guys want some clues on whats moving the market (as apposed to changing ideas every 2 hours) and how to trade it in near term - check out the correlation between the 30y vs SPX - perhaps it would "pay" to look at the EW structure of the 30y or ZB1 and not to forget XLF (financial moving as result of the turnaround in yields) LINK - https://imgur.com/CRiUfCy

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    1. @KS .. please do not refer to things like "how to trade it" in this blog. This is a 'wave counting' blog only, and not a trading blog.

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    2. what do you think the correlation is between bonds and stocks KS ?

      and how could that help you?

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    3. https://i.snipboard.io/IaZewP.jpg

      the correlation swings from positive to negative
      i dont see how this could help

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  8. Looking better as the diagonal. I could not count five waves up in the futures because of a) overlap, and b) 0 - 2 trend line breaks. Also, the algo's are squeezing this one hard due to the lack of volume (vacation time).

    https://invst.ly/bxv14

    TJ

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    1. ..now downward overlap, again, as should occur for a fourth wave in a diagonal.

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    2. Yes, volume is low but today is mainly about the financials - just look at the out-performance in the RUT
      #INTERMARKETANALYSIS

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    3. ..remember ((4)) can not be longer than ((2)); ((5)) can not be longer than ((3)) to maintain the pattern. Also, there is 'always' a chance that the fifth wave fails if this is the end of the move.

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    4. Here's an update

      https://invst.ly/bxv4q

      TJ

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    5. ..below 2882.50 ES any fourth wave would be longer than wave ((2)).. just fyi - so, if it is exceeded lower, the pattern is 'likely' over.

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    6. Agreed. Looking for the "over-throw" and reversal to confirm.

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    7. Yep. Fourth has to remain above possible second...

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  9. 30 yr bottomed (TEMPORARILY) at the exact same time the SPX bottomed (TEMPORARILY) - Elliott_Trader knows this formation well - watch the 30yr for a clue on a downward reversal on the SPX - everything else is noise
    fly baby fly - love this market!! LINK - https://imgur.com/a/8P7tUsK

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  10. Make or break time for SPX - https://imgur.com/XiWzy2F

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  11. SPX: rather than a 1-2 with 2 as a flat, thinking the 5 down yesterday (27th) was a-(b)-((ii)) where ((ii)) is a zigzag. ((i)) is the decline from 23rd to 25th.

    degree labels above are just to show relationship, not actual degrees

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    1. wouldn't we need to see an impulse move prior to that 5 wave down be an a-b-c (ii)? Do the prior move look 5 wave to you? I see 3, which to me was either an a off (ii,) or the entire (ii). So far the bounce of today's low remains below the high of the 27th, thus the (ii) complete pattern remains intact (as far I believe, anyway.)

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    2. you are correct, but if it's a :3 then it would be w-x-y double zigzag instead of a-b-c zigzag, but same outcome.

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    3. of course, that doesn't mean the flat count is incorrect. It has retraced 78.6 so far so still perfectly valid

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  12. In the after-hours, the level of 2,882.50 was exceeded lower - making any potential fourth wave at that location 'longer' than the second wave - speaking of the ES 5-min diagonal, above.

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    1. That tends to mean, since the diagonal's high was not exceeded - by just a couple of ticks, while the downward wave length is too long for a fourth wave - that the diagonal ended exactly as described at 3:22 PM ET, above.

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    2. IF a diagonal it should be retraced in less time than it took to create … often much less. Looks about 5 hours in the making.

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    3. Postulating further … as this pattern out played during cash hours it would be applicable to SPX as well. Therefore SPX would need to trade below 2868ish before 2.00 pm EST on Thursday … interesting. Thanks ET, we'll see how she follows the script.

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    4. We did get a new high, but not much of a throw-over. If the ED completed, futures should really get busy to the downside...

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

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  14. This comment has been removed by the author.

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