Thursday, February 13, 2020

Still Crazy After All These Years

With apologies to the song, we found one way we could count the SPY (4hr chart as completed). The chart below would still allow for a more proportional fourth wave than occurred today.

ES Futures - Daily - Complete or Need (iv) Yet

We'd prefer to see the diagonal as having better proportions, but, again, there is one way to count the up move as completed in a tighter wedge. You can see that count at this LINK.

One lesson learned from counting diagonals is that, as rough as they can be on the nerves, and we might prefer them to be over, is to give the market the time to make the typical proportions. The benefit is that the deeper retrace provides more time to diverge against the market internals.

Have an excellent start to your evening.
TraderJoe

33 comments:

  1. Notwithstanding the fickle nature of technical signals of late, VIX is giving no indication whatsoever that we have a top. That new possibility of a four and five yet to come is really interesting!

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    Replies
    1. It probably won't, too many hedging now.

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    2. Tachyon, I disagree, VIX had a significant bottom mid January. New SPX highs here are getting higher VIX lows. Topping is a process.

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    3. Tom E I am not sure exacly what you disagree with. The bromide about topping beeing a process I understand, an actual TOP is NOT a process and means the current high will not be exceeded. In my expereience reversal off a true market top is generally accompanied by very different price action in VIX. I am prepared to be proven incorrect on that score but until I am, my statement in this regards stands.

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    4. D-W I don't follow your post about hedging. If you mean that long positions are being hedged I don't see it. The move of VIX back below 15 is clear evidence that the risk/parity long trade remains intact. I just don't see much signs of any serious hedging with VIX at these levels.

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    5. Seriously, series of higher lows and multiple divergence is not a signal for a top????? Curious to hear what should happen?
      How did VIX signal the tops in 2018? What was so special?

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  2. TJ, in your link of an impulse, you have 1 at late Nov high. I would like to understand how you arrived at that. I have that section blown up on 2hr time frame which has 159 bars (at the extreme of your 160 bar limit). I have 2 0-2 trend lines, neither of which are exact. And the AO is highest way early on Oct 14. Here is my chart with two possible places for the third wave. Is any part of my chart correct in your opinion?

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  3. There is a strong history of the markets making historical turning points in the 1st quarter, since 2000. The Nasdaq topped March 10th, 2000 and crashed. In 2009, the all three markets bottomed March 9th. But, I clearly remember worrying about the continuous market decline almost everyday leading up to March. Now, I have the same feeling with the markets going up everyday. Now, what’s significant about March 9th and 10th? 🤔

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  4. By the use of ET's 0-2 guideline here's proof we can count 2019 bull leg as an impuls and therefore call it "A". The extended leading diagonal has abc legs because of the 0-2 break, and valid overlap btw iv and i inside the diagonal (red line).
    Also alternation btw bigger degree (i) and (iv) w/o overlap confirms impulse.

    https://invst.ly/puzqd

    So bigger chart should look like this with correct degree & labeling:

    https://invst.ly/puzsz

    This gives alternation btw A as an impulse and C as an ending diagonal. This also means X isn't a triangle but rather a "B" WXYXZ that allows C to form directly after as a diagonal.
    The idea came from internal work on some ETFs and stocks that have this exact count.

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    Replies
    1. Erik, please don't misuse a rule I post. Unfortunately in your first count, waves (i), (iii), and (v) are hopelessly out of proportion in your effort to 'back-prove' a count you have in your mind. The up wave counts better as a W wave, especially given the size of the waves that preceeded it.

      The triangle is X, and your ((a))-((b))-((c)), up is now Y.

      TJ

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  5. Nice work Erik, thanks for sharing!
    I have just basic knowledge of EW and please explain why wave A has all the (i,ii,iii,etc) waves at the very end: i is from Dec 27 to mid March and the other ones are all super short, that is ok?
    Also, why is there an a and b as part of wave (i)? shouldn't i be made of 5 waves since it is in the new market direction? Sorry if these are simple questions!

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  6. Here are some factors in cash, this morning (SPX 5-min), that should be watched.

    https://invst.ly/pv38h

    The market would have to prove the case that there is a baseline channel headed lower.

    TJ

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  7. There is now a lower local low, and we may conclude thusly that y of 2 is over. But any smaller degree wave ii, up, 'must' respect the base channel, or it is not an impulse count downward.

    https://invst.ly/pv3y1

    TJ

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    Replies
    1. 'X' wave low has just been broken lower.

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    2. IF, and only if, there is a new lower low, then look for an acceleration channel like this one. If not, expand the channel to accommodate ii, up to the limit of the base channel.

      https://invst.ly/pv4v9

      TJ

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    3. ..ok .. cash and futures have the new low; only minor expansion of acceleration channel was needed to accommodate wave ii.

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    4. ..wave ii is a failure wave

      https://invst.ly/pv4-8

      TJ

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    5. ..price has not broken the "base channel" lower, if this up wave exceeds the recent high, then possible to conclude a-b-c lower or first part of a diagonal..must wait and see.

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    6. ..or a longer wave ii in 'time'. Must wait and see.

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    7. ..ok .. with the high taken out, the market must tell us whether a base channel survives or not. Must wait and see.

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    8. keep your eyes peeled, because two flats would mean there is 'no alternation yet' and move might continue lower with a ii that is more proportional to i as it has more 'time' now.

      https://invst.ly/pv54n

      TJ

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  8. Joe
    What's the critical level to negate a bullish count

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  9. Buyers just popped the potential 'base channel' higher, objectively negating any 'impulse' lower. Any lower wave could only be a diagonal but not above 3,381. Sorry, it's just the way Elliott wave logic works, and works objectively.

    https://invst.ly/pv5iz

    TJ

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  10. ES futures in the after-hours popped 3,381: this ruled out a contracting diagonal completely. Therefore the 'only' remaining downward count from last night's high is objectively an expanding diagonal, and not above 3,386.25. Again, this is just objectively the way Elliott wave counting logic works, and why sometimes one takes a 'wait-n-see' until the count is better established.

    Here is that 'potential' pattern. And, it is 'just' that .. potential..

    https://invst.ly/pv5o9

    TJ

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  11. A new post is started for the next day.

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