End of the Month

U.S. Debt Clock: $22.64 Trillion
ES Daily Candle: Lower High, Higher Low, Higher Close: Inside Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Lower (Lower High, Lower Low), but can go neutral over 2,993
Daily Bias: Down (Settle Below 18-day SMA)

Today, we were able to count five-waves up from Friday's low on the S&P500 cash index, in near real time, with a near perfect timing of the turn (see this LINK). After the cash close, the futures lifted significantly higher, and made a higher high. We had noted in today's comments that it was "the end of the month, and some sloppiness due to window-dressing was possible." Likewise, tomorrow is the first day of the month and that could mean inflows from the usual sources (401K's, company pension plans, corporate bonuses, dividend reinvestment plans, etc.)  As a result, the daily ES chart remains the same. The minute ((b)) wave may have bottomed Friday.

ES Futures - Daily - No Change

Just one reminder - should the minute ((b)) wave decide to extend in time, which seems less likely at this point, then, by the principles of degree labeling, since we are saying it is a smaller wave degree than X2, then it must take less time than all of X2. So far, it is fine.

Have a good start to the evening and to your week,

TraderJoe

Tariff Tweet Terrifies Ticker

U.S. Debt Clock: $22.63 Trillion
ES Daily Candle: Lower High, Lower Low, Lower Close: Trend Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Lower (Lower High, Lower Low)
Daily Bias: Down (Settle Below 18-day SMA)

When the White House (Occupant to be unnamed) declared that limitations on investment in China were being considered and that Chinese stocks might be de-listed from U.S. Exchanges (see story at this LINK if needed), the stock market said, "Excuse me", barfed, and headed lower. In the process, the low of two days ago was exceeded lower, and contact was made with the lower daily Bollinger Band. It was pierced a bit, and then the settle was slightly above the band as the "Smart Money" lightened up.

ES Futures - Daily - Minute ((b)) ?

Because of the relative slow decline of this wave compared to minute ((a)) of X2, and minute ((c)) of X2, it certainly 'feels' like this wave is a "b" wave and only part of a corrective sequence. The 100-day SMA is shown as the green dotted line and coincides with the second level of support. There is nothing wrong with prices attacking that level if they wish.

Have a great start to your evening and to your weekend.

TraderJoe

Flexibility

U.S. Debt Clock: $22.63 Trillion
ES Daily Candle: Higher High, Higher Low, Lower Close: Yin-Yang Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Neutral (Higher High, Lower Low)
Daily Bias: Down (Settle Below 18-day SMA)

If you don't think patience and flexibility are needed in this current market environment, then you must not be looking at the same market I am. If you don't know the allowable rules and have flexibility, it will not allow you to make, not one - but three - near perfect wave-count calls in near real-time in two days.

SP500 Cash Index - 5 Minutes - Three Wave-Count Calls

Yesterday, we had called for a five-wave impulse wave upward as shown with waves ((3)), ((4)) and ((5)) on the left. This was documented in the comments. Then, this morning we called for a double zigzag, lower, shown as ((W))-((X))-((Y)) also in real time. We then provided clear instructions to watch for a possible channel break and back-test before beginning any upward count.

When the double-zigzag clearly ended, the first wave ((1)), up, could only be counted as a "three", and we noted the same with wave ((3)). When wave ((4)) also also was a "three" and overlapped the first wave in the downward direction, we said be on the look out for an expanding diagonal. We said that crossing 2,983.50 would prove a diagonal was forming. Prices then crossed 2,983.50 higher at 2,985 and they fell off a bit in a b wave, before resuming the c wave of the fifth wave, higher. We said that the limit on ((5)) is usually 1.618 x the length of ((3)) and prices did not reach that far. The market is still fairly weak.

Then, prices turned and the lower diagonal trend line was breached - which likely ended the diagonal. So, bottom line, yesterday's low still remains in tact, and because the high of two days ago was not exceeded upward, then neither was a "bear trap" declared (ala Ira Epstein).

You will note that at no time during the day, did critics of this blog say "good call", "good job" or anything like it. Why? Probably because they are just trolls or just trying to express their all-important egos. I'm trying to indicate to you, that, if you are willing to take the time, the energy and the patience to learn the Elliott Wave rules that it may be productive for you. Maybe not: they can always be misused.

I certainly do not intend to count five minute waves every day. But, today, I did it for the exercise and because, well, there was nothing else to do with this market.

But, there is clearly something operating that needs to be worked out. If you look at the overnight futures, you will see a higher high: another one of those invisible waves that don't show up in the cash chart. Yet, the cash chart counts properly and channels properly without those waves. With the overnight futures considered as 'invalidating' cash, then the downward count in cash does not work. But, the count did work and led to precise timing of a turn. And the futures also count properly as a diagonal upward after the cash market opened. So, what is going on here? Which set of data is better?  This is truly a topic to explore. I really hope some smart people can present some cogent information or excellent arguments relative to counting in one versus the other.

Until then, we do the best we can. 

Have an excellent start to the evening.

TraderJoe

Back to the 'Line in the Sand'

U.S. Debt Clock: $22.62 Trillion
ES Daily Candle: Lower High, Lower Low, Higher Close: Yin-Yang Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Down (Lower High, Lower Low)
Daily Bias: Neutral (Settle On 18-day SMA)

Overnight the ES futures were roughly unchanged within a range, and traded lower as the market opened - making a lower low day. From the 10 AM candle forward, prices traded higher in a wave we were able to count as a five-wave impulse, upward (See yesterday's comments, if interested).

ES Futures - Daily - Higher Close

Yesterday, we said that "fighting a battle at the 18-day SMA was always a possibility." Today was just that - a return to the 18-day SMA and a poke above it. As a result, we can now show the best alternate, IF the market has found an additional layer of support at today's low.

ES Futures - Daily - Alternate for Z

The second level of potential support is shown by the higher of the two dotted orange lines. If the high of yesterday's outside day down is exceeded, then the focus would turn to this second chart. If, instead, the market decides to put in a good gap down - and follows through - then the count on the first chart remains. Part of the reason we show this Z wave is that the SPY did make a new all-time-high in that ETF in mid-September. An additional wave up could close the gaps at the highs in the cash S&P500.

The market remains a very sloppy and news-driven affair. And wave counting remains difficult in that environment. It can be trying, and yet a flexible and calm approach can help one see the legitimate ruled-based alternates until a clear winner emerges.

Have a good start to your evening.

TraderJoe

Impeachment News

U.S. Debt Clock: $22.62 Trillion
ES Daily Candle: Higher High, Lower Low, Lower Close: Outside Candle Lower
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Down (Lower High, Lower Low)
Daily Bias: Down (Settle Over 18-day SMA)

Yesterday, we had noted that the slow stochastic of the ES Daily was no longer embedded. Often, not always that portends that price and the 18-day SMA will try to come together. They did not yesterday. They did today. Today the daily swing line changed to down (for now) as there are lower lows and lower highs. And today's bias ended lower at the settle as price settled under the 18-day SMA.

ES Futures - Daily - Bias Down

Today shows a way that the Intermediate (B) wave could have ended it's upward travel. Is it for certain? No. But, if so, the Z wave would have ended in a truncation. The alternate is that the minute ((a)) wave of minor Z ended at the very early September high, and we are in a minute ((b)) wave flat. However, the alternate now "requires" higher high days, and therefore it will not be counted until there are higher high daily candles. That is a very simple instruction.

The orange dotted line on the chart is the potential horizontal support provided by the combination of prior highs and low and  the daily Bollinger Band. It 'could' be a stopping point for a minute ((b)) wave, but that is a "wait-and-see".

Since the daily slow stochastic is not indicating over-sold conditions at this time, it may be that the so-called "Smart Money" will target the lower daily Bollinger Band. That, too, remains to be seen, and it is in no way trading or investment advice. Ira's guidelines also indicate that since today is an outside day down, then the high of an outside day down should not be taken out in the next two trading days (Wed or Thu) or breaking the high would be considered a "bear trap".

Similarly, the 18-day SMA may provide some resistance to the upside, and a "battle at the line in the sand" certainly can also be an expectation. 

Have a good start to the evening.

TraderJoe

Slow Day

U.S. Debt Clock: $22.62 Trillion
ES Daily Candle: Lower High, Lower Low, Higher Close: Yin-Yang Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Neutral (Higher High, Lower Low)
Daily Bias: Up (Settle Over 18-day SMA)

The futures were higher over night, and lost all of that by the open. They then traded down to 2,982 - just shy of the 18-day SMA which is at 2,980 before rallying most of the day to settle at 2,998. It's a weaker day in terms of a lower low day, but a stronger day in terms of the close. Very mixed. The ES daily slow stochastic did lose its embedded status by the close, and this needs to be monitored to see if remains so. 

ES Futures - Daily - Lose Embedded Status on Settle

So far, the potential B wave triangle in the ES has not technically invalidated, but it has in the Dow unless it becomes a wider triangle.  The daily Bollinger Bands are beginning to curl in again, and this may indicate further consolidation of some type, which we think is a minute b wave of some type.

Nothing overall has changed. We are looking to finish the minor Z wave, upward. Sometimes, being the last wave in the set, Z waves have a propensity to truncate. So, we'll keep an eye on it.

Have a good start to your evening.

TraderJoe

Razor's Edge

U.S. Debt Clock: $22.58 Trillion
ES Daily Candle: Lower High, Lower Low, Lower Close: Yin-Yang Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Neutral (Higher High, Lower Low)
Daily Bias: Up (Settle Over 18-day SMA)

Yesterday, the outlook changed to "neutral-to-negative". Today was a lower close day. We had suspected it would take another news item or tariff tweet to provide more clarity to a market count. Today that occurred when Chinese negotiators canceled a trip to the farm belt as the result of a tweet. What the day 'finally' provided was a way to legitimately count a potential triangle. Here is that potential triangle as a b wave on the ES Futures - 4 Hr chart.

ES Futures - 4 Hr - Triangle

The count reads as follows: from the second X wave of Intermediate (B), there are five-waves up in an expanding leading diagonal to a minute a wave. This is followed by a potential triangle minute b wave. IF the potential triangle is to play out, the triangle may not go lower than the ((C)) wave of the triangle. So far, it has not. However, what makes the triangle potentially legitimate is that its potential ((E)) wave has crossed back under the high of the a wave to make the triangle corrective to it.

If the triangle busts lower, then it suggests that a FLAT b wave is in the making instead, or that the market has topped. There is nothing wrong with such an alternate count. It just means a b wave wants more time. The DOW futures have, in fact, already broken this level of triangle which is what prompts an alternate (the DOW futures could still go on to make a slightly 'wider' triangle).

You'll note that some people are getting very rude about not calling every wave (as if that is even possible some times). Few have the patience for this work. Instead they say their view of a new high "must be correct" because 3,000 has held and been defended. And now? Prices closed at 2,989 today. Can they be correct (ahem 'within a range')? Sure. Still that does not at all detract from the value of wave counting. And you'll also note, they don't say "when" such a new high will occur. It certainly didn't occur today. And - anyone with just an opinion and no flexibility - might have had a nasty surprise today.

What a day like today gives the wave counter is a clear and unequivocal invalidation point for a specific pattern. That might be useful information if used properly. Still, the market is sitting on a razor's edge. It's likely that many market participants want to see the gap at the all-time-high cleaned up. So far, the market has refused to cooperate. Cool. 

So, this triangle with it's marginal new high ((D)) wave would be a "barrier" triangle. Notice that the ((D)) wave did not close above the high of the barrier. Typically, the barrier triangle has less of a 'pop' out of it than do regular triangles because the market would have spent much of its energy banging against the upper barrier. Well, that's the theory anyway. We'll see how well it works - or if we get a chance to test the theory at all.

Have a good start to the evening.

TraderJoe

Poor Close

U.S. Debt Clock: $22.58 Trillion
ES Daily Candle: Higher High, Higher Low, Lower Close: Long Legged Doji
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

The ES futures were marginally higher overnight. We were able to count only three waves up in the futures from last night's 3 am ET low. When we started looking for the 'c' wave of a fourth wave down, the low approached 55%, of the third wave and we said that if prices went any lower it would not be good. They did go lower and unquestionably overlapped the initial wave up. By day's end, the market made a long-legged Doji after the FOMC interest rate cut, and settled for a lower close.

In the process, the S&P500 cash market did close the gap at 3,020.97, but not the one above that.

SP500 - Daily - Gap Closed

The next cash gap up is at 3,025.86, the close of the all-time-high candle. In the process, AAPL closed its downward gap, as well.  My wave-counting outlook has been changed from just "neutral" to "neutral-to-negative", as it does not appear we are impulsing up just yet (that can and might change tomorrow, but we won't predict) and nothing in my outlook is to be taken as trading or investment advice.

The Dow, cash, did not close its gap at 27,349.10 and it did not make a higher high over it's September high either today.

The short term count is muddled: there are ways to count portions of triangles, flats and or diagonals. A small further down wave here 'could be' a flat second wave, but not below yesterday's FOMC candle's low. And today "could" be counted as a Z wave failure, but again, there is insufficient downside price movement to draw that conclusion yet. The ES daily slow stochastic is still embedded as of the settlement, yet a new daily high was not made over prior September highs. That's where the neutrality comes from.

It might be that the market is waiting for Brexit, Tariff or Chinese-economic news to start something significant. As it is right now, daily closes are just riding the 5-day SMA. You might like to plot that one for yourself.

I thought it would be worthwhile to add that Microsoft announced yesterday a $40 billion stock repurchase plan (see at this LINK). That's not just change for ice-cream, Mr. Softee.

Have a good start to the evening.

TraderJoe

Droning On - 3

U.S. Debt Clock: $22.57 Trillion
ES Daily Candle: Higher High, Lower Low, Higher Close: Outside Day Up
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

Today was FOMC day. The FED decided to cut by one-quarter point. The endless stream of "free" money (sic) continues. At one point the Dow was down -250 points. At that point we issued a comment showing the wave count downward as only (w)-(x)-(y): a complex wave - probably a minute ((b)) wave, as shown in the chart below. See yesterday's comments for more detail.

ES Futures - Hourly - Complex Minute ((b))

At that point, the market reversed, headed higher and made a very nice impulse wave upward. Here is the count on that wave on a one-minute chart.

ES Futures - 1 Minute - Impulse

Note the clear 1.618 extension within the wave, the alternation between waves two and four, with two being a zigzag and four being a flat, and, then, the near equality between wave ((5)) and wave ((1)). And this was on a (gulp) one minute chart.

The market should retrace for a second wave, and follow that through with a few further upward waves in what should the minute ((c)) wave of the Minor Z wave within Intermediate (B).

Even though the count was exactly correct at today's low, you will note how few people commented on the value of wave counting. Some want to simply show their ego and their bravado and their ability to express an opinion based on a few facts. Yippie for them.

Have a good start to your evening.

TraderJoe

Droning On - 2

U.S. Debt Clock: $22.57 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 had counted three waves down as c = 1.272 x a, and shown on the chart below, along with the associated overlap. Nothing has changed except the hourly chart is shown instead of the half-hourly one to be able to fit today's waves on it.

ES Futures - Hourly - Smaller Triangle (Green)

Today, we counted out in excruciating detail a smaller triangle shown as green (a) - (e), above. By the time of the futures settlement, the triangle was proven out to be correct as the green (b) wave of the smaller triangle was exceeded upward, and the c wave of an overall zigzag appears to be building.

So, now, as earlier in the day, the question we ask is, "Are we getting a larger pre-FED triangle?" Such a triangle could indeed carry into the announcement and the press conference. While we don't know, we can suspect such. Such a plausible triangle is shown starting with the larger brown (a), (b) in the chart above. Of course, such a triangle would have to form perfectly in every detail. Today's waves are part of the reason I was very conservative on yesterday's call of just a-b-c down. Could it be more? Yes, it could, but for that to occur then 2,980 must be exceeded lower, first. That's not quite the same level of where the c wave following the triangle invalidates. That would invalidate below the (e) wave of the green triangle.

It's very nice to get some clear invalidation points for a change, as it aids greatly in wave counting.

Again, the waves are very compressed. The charts are very messy. A pre-FED triangle in this location would be suggestive of another high to follow. First, let's see if such a triangle forms properly. Keep an eye on overnight developments. The FOMC announcement is tomorrow.

Have a very good start to your evening.

TraderJoe

Droning On

U.S. Debt Clock: $22.56 Trillion
ES Daily Candle: Lower High, Lower Low, Lower Close: Yin-Yang Candle
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

On Friday, we said that there was a possible way to count a top, but there was insufficient length downward to do it. Today, with the price movement after the drone strike in oil territory, there was both more downward length, and an overlap as well. Here is the chart of the ES 30-minute futures.

ES Futures - 30 Minutes - Gap and Compression

As we have noted before, prices are very, very compressed. And there are waves and price highs in the futures that don't even show up in cash (invisible waves). So, we do the best we can under these circumstances. On Friday, we said we counted a diagonal down. We did. It was a "leading" diagonal and not an ending one.  At the moment, we are intentionally being conservative in wave counting, and saying that the overnight futures gap down and waves are only c = 1.272 x a. It is possible a pre-FED triangle or a downward diagonal is forming. It is also possible, this down wave is a "((b))" wave of the final Z leg of Intermediate (B), which means a "((c))" wave up could follow.

In case it was not clearly enough presented, this would be a LINK to the chart showing the triple zigzag as Intermediate (B).  Nothing says the Z wave is over yet.

Yes, it's really a messy count. That's what happens when the market is not clearly impulsing in defined  waves. We'll continue to do the best we can and remain flexible, calm and patient.

Have a good start to your evening and your week.

TraderJoe

Mama's Got a Squeeze Box

U.S. Debt Clock: $22.56 Trillion
ES Daily Candle: Higher High, Higher Low, Lower Close: Yin-Yang Candle
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

The ES futures were slightly higher over-night, but did not make a new all-time high, and sold off before the open of trading, closing with a lower close. The daily slow stochastic is still embedded. In the cash market for the S&P and the Dow, the higher high was not (yet) seen. Imagine that: another invisible wave in cash. Here is the short term picture of the DOW cash on the 30-minute time-frame.

DJIA - 30 Minute - Triangle?

Clearly, the market was squeezed within a range today on the light volume. Therefore, we might expect a higher high on Monday. The Elliott Wave Oscillator is also nearing the zero line and may be indicating another fourth wave. The triangle may not be fully formed yet. There is room for some wiggle, but it is not required. Is it possible futures are making a diagonal while the cash makes only a triangle and a fifth wave? Plausible.

Below is chart showing the ES volume below price. This is what I mean by light volume. Compare today's volume bars to the previous two days.

ES Futures - 15 Minutes - With Volume

Light volume is often a sign of a triangle or diagonal until they breakout to the upside on a bevy of higher volume. Yes, there is a way to see the market as having topped today, however, there is both insufficient downside price, and insufficient downside speed to draw that conclusion. Further, a contracting diagonal in the futures was counted out live in yesterday's comment section, so it 'may' be an ending wave downward, and prior lows were not broken (see yesterday's comments if you have interest). Time will tell.

So, for now, keep in mind the FED meets next week, and have an excellent start to your evening and to your weekend.

TraderJoe

Discount Double-Tweet

U.S. Debt Clock: $22.56 Trillion
ES Daily Candle: Higher High, Lower 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, at the end of the day, we said we had run into "a monkey wrench" counting a fifth wave, and had our eyes on the ECB meeting results to be announced this morning. Draghi dumped a whole pile of cash into the system, with a lowering of the key rate further into negative territory, at -0.5%, and with re-implementation of QE to the tune of €20 billion per month as he retires.

U.S. stock index futures anticipated it over night, ran into the upper daily Bollinger Band, traded higher on fake tariff news, sold off on retraction of the tariff news, and then bounced around with some indexes making marginal new intraday highs - before closing off of the highs. At the end of the day, the slow stochastic of the daily ES chart (below) remained embedded. The 18-day SMA had a confirmed bull cross over the 100-day SMA.

ES Futures - Daily - Slow Stochastic Still Embedded

AAPL stock opened higher today and closed lower, after making at least part of a throw-over of it's potential diagonal trend line.

AAPL - Daily - Part of Throw-Over of Diagonal

Please remember that all potential diagonals can also be their triple zigzag counterparts (w-x-y-x-z) as three upward zigzags are clearly required in every diagonal, and, so, there is nothing that rules out AAPL as an Intermediate (B) wave higher. But, the chart is interesting, and for the diagonal (v) would need to remain shorter than (iii).

Neither the DOW nor the S&P closed their daily gaps from late July. The indexes are trying hard. For those of you who like such things, here is an exercise in Fibonacci, which I found interesting on the Dow half-hourly chart. So far, no one else I know of has mentioned it.

DJIA Cash Index - Half Hour - Two 1.618 Waves

In the chart, a wave ((v)) is very nearly 1.618 x ((iii)), and ((iii)) is almost exactly 1.618 x ((i)). And wave ((v)) is greater than wave ((iii)) which is greater than wave ((i)), and wave ((iv)) overlaps wave ((i)) and is longer than wave ((ii)) without traveling below the low of wave ((i)).

Predictable? Not so much. But, expanding is the mode the ECB went into today. Will the U.S. FED, which was the last to cut interest rates, follow suit next week? Time will tell.

Have a good start to the evening,

TraderJoe

Two Competing Counts Using the 'Same' Waves

U.S. Debt Clock: $22.55 Trillion
ES Daily Candle: Higher High, Lower 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)

Looking at the long-standing chart of the hourly ES, below, it is hard to argue that the structure shown and all of the latest waves have occurred within the patterns indicated. One target was hit today: the upper larger (gray) channel line and the  mid-point of smaller (red) channel.

ES Futures - Hourly - Channel Hit

Tomorrow is the ECB meeting and who knows what they will do. We know that Mario Draghi is retiring, and tomorrow is his last announcement. Christine LeGarde takes over.  One could sense at the end of the day everyone had been chased out of the markets, and so, a final ramp occurred. The up wave may not be over. It is difficult to count.

Part of the reason that only 50:50 odds were given to a downward count was that an awful lot of "B" waves have been observed. They can do a lot of things on "news". They are usually "phonies". For this reason, the alternate count is shown in red on the chart, above. Below is shown how this alternate might play out on a weekly chart.

ES Futures - Weekly - More to Intermediate (B)?

If prices go over the top - like the stock of AAPL has - then it would suggest that Intermediate (B) is extending towards the 1.382 x Intermediate (A) Fibonacci level shown. It's very hard to know where that X wave goes. As it is, it is shown as a 'failure flat', with the five-waves down from b:3 as the c:5 wave of that flat. It could also go where the b wave, alone is shown. The market hammered out a new trend line.

Here IS  the chart of AAPL as shown earlier in the day. While the chart does look ominous - as a possible diagonal - it must, 'indeed' prove itself.

AAPL - Daily - Potential Diagonal

The potential diagonal in AAPL meets all the requirements in terms of both price and time - at least at present. And the signature on the Elliott Wave Oscillator is the classic diagonal divergence. I don't see the market going too far without this stock. The slow stochastic of the ES daily futures is still embedded, however, and that is something to noodle on.

Have a good start to the evening.

TraderJoe

DOW Higher Recovery High

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

Yesterday, we said a fourth wave could trade lower yet. It did. The ES found some support at 2,957 and then bounded higher - likely on the new products announcement from Apple, Inc. The DOW did make a new recovery high - possibly after a triangle formation (see second chart, below).

ES Futures - Hourly Close - Deeper Wave iv

Here is that triangle in the cash DOW. It was proven today by the new higher high over the ((B)) wave.

DJIA Cash Index - 15 min - Triangle Wave iv

As a reminder, triangles often precede the last wave up in a count. We should also note that, even though APPL came out with a spate of new products, so far, the Nasdaq Futures (NQ) did not make a higher high.

During the comments for yesterday, we noted that if the SP500 hourly cash prints two full candles under the hourly channel, then it is possible we had the highest high yesterday on September 9th, and are already counting down in that index (i.e. it might be slightly out-of-sync with the Dow).

The ES daily slow stochastic is over 80 for either a third or fourth day (I have seen discrepant calculations) and it embedded.

The odds remain about 50:50 between the two daily scenarios that were presented. It got increasingly harder to count a fifth wave up today in the ES futures in a nice clean manner. It's not impossible but the market has thrown a money-wrench into it on a short term basis. So, for that reason we remain flexible, calm and patient and hope you do, as well.

Have a good start to the evening.

TraderJoe

Narrow Day

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

The ES daily futures traded mostly higher in the overnight. They went up to hit the upper daily Bollinger Band and they began to fall off as the market opened. Declines were very limited and settlement was near the day's open making for another Doji candle. Of note, the volume was relatively light and the daily slow stochastic did embed with both the %K, and %D lines over the 80% level for the third consecutive day. 

ES Futures - Daily Embedded

Because of the limited declines and hesitant price movement, today "felt" very much like part of a fourth wave, as below.

ES Futures - Hourly Close - Possible iv

If today was a 'c' wave of a fourth wave, the market really hesitated to make a fifth wave, lower of 'c', and by the close one could not be claimed. So, such a fourth wave may not be entirely over yet. There are, of course, a lot of wave patterns that could be fourth waves. The key is that this wave iv - with it's higher b wave in the overnight - would seem to provide good enough alternation for the simple and sharp wave ii.

Nothing has changed overall, and probability of a downward count remains only 50:50. Keep in mind the alternate at this time is the large daily triangle shown previously, and if a significant downward wave occurs and primarily only overlaps ((w)) and a, then that wave could be part of a large pre-FED triangle. The FOMC meets next week, as a reminder.

Have a good start to the evening and to the week.

TraderJoe

Waiting on Minor 2 to Wrap

Published in the comments earlier today, this count honors R.N. Elliott who primarily had hourly close data to work with in the early days, although this one is on the futures.

ES - Hourly Close - Minor 2

It's still the same count until it isn't. The Minor wave 1 is an expanding leading diagonal, and Minor 2 is the > 78.6% "deep retrace" until it isn't. The channels may be telling. Within the double-zigzag wave Minor 2, the minute ((x)) is a flat wave, with it's b:3 wave retracing more than 90% of wave minute ((w)) which is a three-wave sequence. Within wave a of minute ((y)) the fifth wave ((5)) is the extended wave and is shown with a small x.

Again, the alternate is the triangle shown yesterday with about a 50:50 probability until a new low is made below the low of Minor 1.

Have a good start to the weekend.
TraderJoe

Different Day, Same Drill - 2

I simply can not keep repeating myself over & over. These are the best two counts with about equal odds. The first one is that Minor 2, upward, is nearly completed.

ES - Daily - Minor 2

The above count is based on 1) trend lines and back-test of trend lines, 2) the waves as I counted them internally at the time, and 3) nearness to the upper resistance level.

But, because the Intermediate (B) wave did not reach 1.382 x the Intermediate (A) wave, there is still a chance it could. See the weekend video if you have questions about why we are looking for the Intermediate (B) wave.

ES - Daily - Triangle X

This count suggests a "pre-terminal triangle" as an X wave, and allows Intermediate (B) to attain 1.382 x Intermediate (A) if it so wishes. It would be great to see a triangle to identify clearly where we are. I have only a slight preference for the first count over the second. Both are valid or could be. The triangle's minute ((e)) wave would be only required to cross over the Minor W wave to confirm that the running triangle is corrective to the Minor W wave, and then price must break out of the triangle.

Please, please, please do not ask me to re-explain these scenarios. If you don't understand them, please refer to video posted this past Sunday. And, please, like some, don't say I didn't see either one coming.

Thanks and have a good evening,

TraderJoe

Different Day, Same Drill

U.S. Debt Clock: $22.53 Trillion
ES Daily Candle: Lower High, Lower Low, Lower 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)

Over the holiday weekend the overnight futures were lower on the implementation of tariffs, protests in Hong Kong, and dislocations due to the hurricane. As a result stocks opened with a gap lower, and then further pulsed lower when the a weak ISM Manufacturing Index came out at 49.1 (less than the critical 50 level) at 10 am ET.

S&P500 Cash Index - Daily - Gap Lower

The long term view was explained in the weekend video, and the chart above is consistent with it. Prices gapped lower, traded lower, and closed lower. Such a candle can be considered confirmation of the spinning top candle or inverted hammer candle referred to in Friday's blog post. The low of the day was near the dotted orange line which is represents the support provided by the highs of the green candles in the lower half of the range. It is also near the 18-day SMA. The battle at the 18-day SMA rages on.

Today was the first gap downward since mid-August. Once again, in order to increase the likelihood of a third wave lower, then price should respect the dotted magenta down trend line shown. The daily MACD is still below the zero line.

Have a good start to the week.

TraderJoe

Weekend Video - Getting Close?

In light of the long weekend, this weekend video is a bit longer (about ~20 minutes) and goes into a little more rationale than some others. I hope you enjoy it.

This is the second posting for the weekend, so if you did not see the first post, you may wish to review it, too.

Have an excellent rest of the weekend.
TraderJoe