Tuesday, October 8, 2019

Correction - So Far

U.S. Debt Clock: $22.81 Trillion; prev $22.81
ES Daily Candle: Lower High, Lower Low, Lower Close: Trend Candle
Market Posture: Neutral and Probing
Daily Swing Line: Lower (Lower High, Lower Low)
Daily Bias: Down (Settle Below 18-day SMA)

After showing five-waves up yesterday (see left side of chart below), overnight the hourly ES futures were up about 16 points before turning lower. The cash market opened with a gap and traded much lower.

ES Futures - 1 Hr - Five Waves Up & Down

As per the chart above, we were able to count a non-overlapping 'five-waves-down' in the futures market by the cash close. There is the possibility this is the a wave of a correction, as the low of 3 October has not been exceeded lower, yet.

If so, an upward b wave should break above the upper channel boundary to slow things down a bit, and then there should be a c wave lower. As it was, prices hit the 62% retracement level and exceeded it somewhat. 

For any continued up trend, it would be best to see prices hold above the 2,855 low - even if this correction should travel a bit further lower.  At this point in time, the corrective downward movement has not taken as much time as the upward movement. It may just be that the market is trying to elongate the correction so it takes more time.

Can price movement just break lower, tomorrow, and keep on going? Yes, that is a risk to a corrective wave count at this point. But, until or unless we see evidence of that happening, then we will use the count as it seems at present. But, the $VIX now being often above 20, it should appear to most that things are quite a bit different then they had been when the $VIX would trade for days and weeks between 8 - 15.

Have a very good start to your evening.
TraderJoe

18 comments:

  1. Because of the upward overlap, is it possible for this entire sequence off the top to be a leading expanding diagonal that itself began with a leading diagonal?

    ReplyDelete
    Replies
    1. That's my main count now. Can become leading or contracting. Next couple days should decide which.

      Delete
    2. It can not 'unless' there is another five wave sequence upward to make a zigzag.

      Delete
  2. Joe,

    Do you follow the DJT? I searched this page's history and found a few mentions but no concentrated analysis. A break of 9676 would open the door to revising the Dec lows. The RUT appears to be leading to the downside as well.

    ReplyDelete
  3. A clean 5 waves. VIX also put one in today. Speaking of which, check this VXX chart. Coiling for b/o over the purple line:

    https://finviz.com/quote.ashx?t=VXX

    ReplyDelete
  4. If Im thinking correctly, if our move down yesterday was an "a", overnight retrace (.618 so far) is "b", and "c" then exceeds the Oct 3rd low. Question:
    Would this not raise a question as to the move up from Oct 3rd being 5 waves? And if this would cause a relabeling of that move up, could that not be done now as well?
    Thanks.

    ReplyDelete
    Replies
    1. I don't see why it would. The move down yesterday could be part of a bigger b wave.

      Even if it takes out the Oct 3 from here the move up from Oct 3 could still be 5 waves. Nothing ruled out afaics.

      Delete
    2. C -
      We had 5 waves down from Sept 19th (exp diag). Then 5 waves down to Oct 3rd. That could be 3/C. So, what would the ensuing 5 waves up be? "a" of 4, w1 of some degree?
      Thanks

      Delete
  5. I think when we try to surmise what the current count might be, we have to take into account what the immediate trend is. So far as I can tell, what we have so far is a series of lower highs and lower lows...

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  6. ET, thanks for answering all my degree questions, so here's another one maybe more important:https://invst.ly/iry41

    As you see the with the current count the smaller degree A of (X):2 is bigger than all of X:1, to avoid this I believe all legs in middle have to be same degree? ABCDE-> triangle?

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  7. Here is a short term pattern I am watching today. Remember, the pattern could have three upward zigzags, and just be a 'b' wave, also.

    https://invst.ly/is170

    TJ

    ReplyDelete
    Replies
    1. Now over wave ((3)).

      https://invst.ly/is955

      TJ

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    2. I'm counting that 3 wave structure prior to today's price action as the b of a flat. Should be finishing the ed c now.

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    3. Here's the result, so far.

      https://invst.ly/isokz

      TJ

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

    ReplyDelete