Thursday, August 22, 2019

Will Powell find Another Towel ?

U.S. Debt Clock: $22.53 Trillion
S&P500 Candle: Spinning Top
Market Posture: Neutral and Probing Waves
Swing Line: Up (Higher High, Higher Low)
Bias: Up

Tomorrow the U.S. Federal Reserve and other central bankers will supposedly provide more clarity on the state of monetary policy probably in a more global context. Of course, if you can believe any thing a central banker says, "good luck". Remember just a few short months ago when the FED said that "the balance sheet roll-off would continue on auto-pilot", or then, later, when they said, "It would end in September", and then later when they said, "No, no. It will end in August!".

Yesterday, we said there was no compelling reason to end a count on yesterday's bars. That statement was proved correct today with a higher high day. A spinning top candle requires a confirming candle lower.

ES - Daily - Higher High Day

So, the daily chart is quite neutral as we head into the Jackson Hole Summit. Prices originally popped higher. Still they did not exceed the 2,944 high of 13-Aug. After the marginal higher high, prices then reversed in five waves down from 2,940 to 2,904, yes, some 36 points, when they met the combination of the 18-day SMA and the 100-day SMA around 11:00 AM (ET) and found near-term support. 

Prices then made a near-exact 78.6% retrace to 2,932 before falling off approximately 10 points near the close to 2,922.

There is now one way to count the wave (ii), above as complete. Two of us found it independently, and it can be interpreted to be a contracting ending diagonal as of today's high. However, the bias of prices remains up, and the swing-line is up even though there was a clear five-waves down made this morning. So, the chart is still fighting with itself (please don't blame your local Elliott analyst: we don't make the waves, we just try to count them). As further sign of the fight, the 18-day SMA has indeed crossed below the 100-day SMA, although this is usually better validated by prices trading below the moving averages, not above them as they are now.

Today we called the 78.6% retrace a retrace to a "Wave Counting Stop" or a warning about the intraday count. That level is often associated with "B" waves, so it might mean that a diagonal is still continuing or is in progress, and in this case "either" higher or lower. Here was today's intraday chart. The five waves down are on the left.

ES - 5-Minutes - c = 1.272 x a?

Then, it is clear there was a choppy wave sequence higher which we could not count as an impulse. Near the end of the day the wave measured c = 1.272 x a, which is a common measurement for a failure wave, before prices fell off below wave .iv at the end of the session. They have still not yet overlapped the a wave, but the blue .i wave has been overlapped.

So, the five waves down make the chart somewhat compelling, but a lower daily low, especially with a close back below the 18-day and 100-day SMA would provide improved confirmation. Why such caution? There is the potential of major news tomorrow - or it could be a "snooze conference" just as well. But, a lot of 78.6% waves have busted higher or been only part of upward diagonals etc. And, there are still ways to count upward. And, as well, the first five waves down with a 78.6% deep retrace could also just be part of a diagonal, downward to start a wave sequence, lower. 

For this reason, patience, calm and a probing mentality might well serve the wave counting studies the most at this time.

Have an excellent start to your evening.
TraderJoe



42 comments:

  1. Is there a an EW patten for the national debt? Seems like it’s been straight up with no way of going down?

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  2. Thank you Joe, for sharing the counting technique and reminding us to be patient. Appreciate your effort.

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  3. Looks like an ending diaganal of the Dec lows forming.

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  4. The ending diaganal may be in play from the Dec lows if 2944 gets broken.

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  5. Cash currently has a 5-3-5 down. Reminder: FED speech should be released near the top of the hour.

    https://invst.ly/bvcmk

    TJ

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  6. A fifth wave truncation of c, up.

    https://invst.ly/bvdt2

    TJ

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    Replies
    1. I was preparing the chart in the process.

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    2. Thanks TJ. I had it as a w-x-y up but whatever the case it was looking corrective.

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    3. ..and when I published the chart was still good for another 20+ points down in price.

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  7. Dow drops more than 200 points after Trump orders US companies to look for ‘alternative to China'.

    https://www.cnbc.com/2019/08/23/trump-says-hes-ordering-american-companies-to-immediately-start-looking-for-an-alternative-to-china.html

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  8. SP500 now has a 1.618x i wave downward.

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    Replies
    1. Here is the 1.618 x i wave being referred to.

      https://invst.ly/bvd-s

      TJ

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  9. SP500 90% downward wave; b wave of 'flat' or next impulse lower.

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    Replies
    1. ..just fyi -- 1.382 at 2,867 was just hit. Info only.

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  10. If B completed today, are we facing a C wave targeting SP 2600-2700 (that may morph into a bear impulse)?

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  11. For the moment, please try to keep this chart in mind. The ES futures gap closed today, now shown as black circle at the arrow. Price is now below the 18-day and 100-day SMA, the 18-day SMA has crossed below the 100-day, and a potential target is the lower Bollinger Band.

    A lot more of the count depends on whether downward impulses form properly.

    https://invst.ly/bvesh

    TJ

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  12. SP500 5-min; Upward overlap of wave iii, down, formed from a little more than 1.382 x a; could be a FLAT, or part of a running triangle.

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    Replies
    1. ES has a higher local high. Watch for the the flat, or triangle. Any lower low than the noon low, with much more impulsive bars, lower would suggest that wave three is extending (i.e. 2.618).

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  13. ET can the whole move from last week's low (ES 2817) be counted as a "C wave" contracting diagonal with a 5th wave truncation as noted on your chart?

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    1. Can the up move be counted as an impulse (i), with the plunge today post topping a C of (ii)? Thus about to rocket higher in (iii)? The bearish count needs more work to confirm, though that bull one could be complete. I guess I'm saying does the move off last week's lows break rules of impulse waves?

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  14. QQQ daily
    https://invst.ly/bvfd9

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  15. Possible wedge here on the ES 5-min: watch it closely

    https://invst.ly/bvgwr

    TJ

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    Replies
    1. ..such a wedge would become "too long" below ES 2,849 (i.e. v would be longer than iii, not allowed); and that would likely mean additional down side if that occurs.

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    2. ..wedge has the expected new low below 2,857; now - how much lower?

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    3. ..upper wedge line 'was' exceeded before 2,849 was broken lower. Wedge likely validated.

      https://invst.ly/bvhnz

      TJ

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    4. ..bye..bye 2,849; wedge was likely "leading" in some manner.

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    5. 2.618 in cash at 2,846.77, low - so far - 2,848.56

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  16. Still going after 2.618

    https://invst.ly/bvi8k

    TJ

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    Replies
    1. AND ..we have 2.618 on a larger 15-min time scale (not 5-min as previous)

      https://invst.ly/bvi95

      TJ

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  17. Replies
    1. ..would not be a very proportional triangle

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    2. agree but still possible, based on sentiment, I would give it even 30%

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  18. ET from where you called the truncation in ES I have a near perfect 2.618 extension for the 3rd wave down. Furthermore the bounce of the LOD (iv?) was the same size as the ii. Might meander and make a flat/double top (or may go straight down again for v … lol).

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    Replies
    1. My apologies, I'm getting confused. The potential truncation I'm referring to occurred around 2.00am EST around 2936. This "may" be the truncated end of "C wave". From that point there is a near perfect 2.618 extension for the 3rd wave down and the bounce off the LOD was a near perfect point match for what is likely ii up in this sequence. Thus possibly a 4th wave in progress at the end of the futures session.

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    2. My thinking is up to 2.00am EST at 2936 it may be possible to count the "C wave" as a truncated contracting diagonal. Because from moment the 2.618 fib worked a charm on the ES and we potentially have have ii = iv as well.

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

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