Monday, December 30, 2019

Break of 0 - 2 Trend Line

U.S. Debt Clock: $23.16 Trillion; prev $23.15
ES Daily Candle: Lower High, Lower Low, Lower Close: Follow-through Candle
Market Posture: Neutral
Daily Swing Line: Neutral
Daily Bias: Up (Settle Above 18-day SMA)
Resistance: Upper Daily Bollinger Band

ES futures prices were about 5 points higher overnight, but by 4 AM they began selling off. Stocks traded lower after the open.

ES Futures - 4 Hr - Break of Trend Line

By the close, the cash market came down to 90% of low, but didn't break it. As a result, we can only count three-waves-down. A gap-down open and lower low are needed to count five-waves-down. While we will watch for that, because that didn't happen today, we note that price did get down to the 23.6% x wave ((3)) Fibonacci retracement. If it can make the 'five-down' then it has one of two chances to get down to the 38.2% retracement of wave ((3)).

The first way is to make that lower low, and form an impulse 'a' wave for a zigzag. Then there would be a retracement 'b' wave, and a 'c' wave lower - probably to the 38.2% level at around 3,200.

The second way to extend the decline to that level, and close a larger cash gap, is to form a double zigzag. Today would count as the first zigzag, and then perhaps tomorrow would be a gap up instead for an 'x' wave, to be followed by another zigzag downward.

But, if the 'Smart Money' is done with their window-dressing today, and they can't stand the thought of missing out on the 'first trading day of the month' gains, then perhaps they will begin forming a triangle upward, with today as the (a) wave down of that triangle. If so, such a triangle could start from this level. The Elliott Wave Oscillator, above, is acceptably close to zero (+10% to -40% of the wave three peak).

It is not for me to say which happens: it's The Fourth Wave Conundrum that I have written about before - and it occurs at every degree of trend. By not making a new low today, the Powers-that-Be saved the daily slow stochastic from losing its embedded status. Price is still over the 18-day SMA which neutralizes for the time being a daily swing line that has made a lower low bar.

Over the weekend, we looked at the last (B) wave in the U.S. Stock Market in 2002 - 2007. If you were Holiday-Busy, and did not see that post, you are encouraged to review it now.

Have a good start to the evening.
TraderJoe

16 comments:

  1. Just another curiosity I just spotted, a Gann square low cycle. Interestingly, I just read on Twitter that the buyback blackout period peaks within this period too.

    https://www.tradingview.com/x/wA39MCa9/

    My other fib time curiosity may have nailed the top in SPX, we shall see:

    https://www.tradingview.com/x/cO4H9rje/

    May I wish Joe a happy and healthy 2020, and the regular commenters too.

    PS, crazy thought I had, really crazy, that Trump announces he's not going to run in 2020. Crazy eh?

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    Replies
    1. It is interrsting to think about how waves can correlate with news. The Trump administration is getting ready to take down some exceedingly slimy swamp creatures and they are certainly not going to go quietly.
      This could correlate quite nicely with a furious C wave down that takes out last December's lows...

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  2. Cash opened with the gap down lower low.

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    Replies
    1. Here's an updated chart ...

      https://invst.ly/pbid5

      TJ

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    2. Looks like a DZZ underway...interesting how the cash session seems to be trailing ES price action...

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  3. Happy new year Joe and readers. Again, thanks a lot for yours posts. Will be 2020 the year of the book of the degrees ?

    Anyway, I hope to continue reading your observations on elliott waves.

    Take care !

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  4. Looks like gold has completed impulse on one hour.

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    1. This comment has been removed by the author.

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    2. I was thinking the same thing. Problem with GLD five up that has wave three as the shortest...not sure what to make of it....

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    3. This is what GOLD looks like to me on the daily.

      https://www.tradingview.com/x/ehSX7GiK/

      TJ

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    4. ..also, there is no confirmation yet that wave ((3)), up in Gold is done. Therefore, measure to 1.618 in my humble opinion.

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  5. Futures chart looks even more corrective with lots of over-lap, and also lacks the typical fifth wave vigor...maybe TJ can chime in on what might be going on there...

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  6. After looking at Silver, looks like fourth waves, with Gold displaying an extended third...just my two cents...

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

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