Today, for the first time, we were able to count 'five-waves-up' to a new high. As such, the recent up move 'might' be over. See the second chart, below. This first chart however, shows a rather unprecedented "no" gaps above the market with today's new all-time-high, but fully nine hourly gaps below today's price in the cash market.
 |
| S&P500 Cash Index - 1 Hr - Open Gaps |
Considering the hourly divergence shown, the gap-and-grind nature of the wave now is even more apparent. Major markets made new all-time highs together (correlated markets). These include ES, YM, NQ, and TF (or RTY).
As noted, 'five-waves-up' can be counted in the last sequence after the triangle or the Minor C wave, shown below.
It is not necessary that wave minute ((v)) of C has ended. Given the length of wave minute ((i)) of C, it is possible for minute ((v)) to make 3,800, say. However, as the third chart showed in yesterday's post, market sentiment is at a new extreme with both the 10-day and the 50-day moving averages of the put-to-call ratio at the lowest lows in the last several years. This, and the facts of 1) five-waves up, 2) correlated markets, and 3) that there are no gaps above the market because of the new all-time-high, yet, fully nine unfilled hourly gaps below the market makes me negative on the current environment - even if 3,800 should be attained.
A reminder that the ECB rate decision, and the U.S. unemployment claims will both be on Thursday of this week (tomorrow being Wednesday), and announcements yay or nay on a new Covid Stimulus package in the U.S. could be made at any time. Patience, flexibility and calm are still warranted in this environment.
Have a good start to your evening.
TraderJoe
Thanks TJ. Speaking of gaps, all Vix gaps get filled. I would like to see that Vix gap get filled below lower BB. and then reverse sharply. Now if the market will only cooperate. 🙂
ReplyDeleteYou bring up a good point, but maybe it doesn't have to if we are truly in bear market still. Something else I like watching is SPX/VIX ratio, also the VIX curve steepness
DeleteI believe we are in a bull market and probably last until the fed inverts the yield curve again many years down the road. I’ve noticed Vix doesn’t trade below 15 in bear markets and the Vix is not confirming Spx ATH.
ReplyDeleteIs a "B" wave that "goes over the top" a bull market? I.e. was 2002-2007 also a "bull market"?
DeleteI don’t think so. The current bull market started in ‘09 IMHO.
DeleteLikely not, due to the degree of the Feb decline. That decline even 'overlaps' in some indexes.
DeleteConfirmation of 5th wave up complete will be to break below 3655?
ReplyDeleteactually, 3664, but yes, otherwise.
DeleteTJ
Daily ES-mini still has an embedded ss. Taking out the 12/8/20 outside day low of 3664.25 in the next day or two might be a warning sign that some type of top could be in.
ReplyDeleteagree, JC ..
DeleteTJ
Trend remains up. Market has overcome resistance levels now acting as support. Multiple closes above 3700 now means 3800 is a magnet. Extreme market conditions can and sometimes do persist for some time.I imagine we may have yet another wave extension so far as EWT goes.
ReplyDeleteUpdate to yesterday's 30min -
ReplyDeletehttps://funkyimg.com/i/39fbr.png
Basis this chart, RSI now reaching 20 level. A logical place for possible bounce of some degree.
DeleteHere is the intraday wave counting screen with updated Pivot Points (Classic Calculation). Objectively, the up fractal at 3,711 must be exceeded higher to resume the up trend.
ReplyDeletehttps://invst.ly/t2qri
A new down fractal has not yet formed on this time frame.
TJ
ES/SPX, RUT, new low-of-day down to Daily Pivot and 50% retrace. Not NQ as of yet.
DeleteTJ
The faux exhaustion gaps are now becoming a regular feature of markets of late...never seen anything quite like it!
ReplyDeleteES 30-min, now down to 62% retrace, and 5 (possibly 6 closes) outside of lower Bollinger Bands, dropping odds to 0 - 1% of staying outside of band further. Not impossible - just very, very low odds.
ReplyDeletehttps://invst.ly/t2sld
TJ
fyi - SPX cash has taken out yesterday's low; not so 'faux' on the exhaustion gap in cash.
ReplyDeletefyi - cash has also overlapped it's minuet (i)st wave of minute ((iii)), ruling out a minuet fourth wave of minute ((iii)). This is either a 'last chance' minute ((iv)) as a Flat on the hourly chart or the up trend has ended.
DeleteCash has the potential to form a Bearish Engulfing candle on the daily chart. It would take a little more decline for the futures to do the same.
ReplyDeleteES 30-min, hits 78.6% retrace of the prior up wave.
ReplyDeleteES 30-min; outside day, down (so far).
ReplyDeleteES 30-min eight (8) consecutive closes outside the lower band, so far.
Delete..here is an updated chart, with the S2 location shown - if needed.
Deletehttps://invst.ly/t2tne
TJ
Updated look at the 4hr -
ReplyDeletehttps://funkyimg.com/i/39frr.png
On the S&P E-mini Dec future, I can count eight candles outside the BB in 30 min chart.
ReplyDeleteThis breaks the theory. Can that be taken as a very bear signal?
Delete@6Q .. it does nothing to break what you are calling a 'theory'. Low probability events do happen with unexpected frequency in markets: it is just called 'tail risk' is all - and shows definitively that the markets do not following the Normal (Bell) Curve or Gaussian distribution. I have spoken of this in the past. The number of bars outside of a band is a 'Rule of Thumb' only. It 'can not be elevated to a 'theory' precisely because markets do not follow the Normal (or Bell) Curve, or the Gaussian distribution.
DeleteNo, it can only be taken for what it is, now, an outside key reversal day, down (currently). The high must hold, with a lower low first.
TJ
P.S. Edited for clarity.
..yw 6Q ..
DeleteOk. We crossed answers. Again, thank you very much for that clear explanation.
Delete..no worries .. also, see below at 14:31 EST if you haven't already.
DeleteTJ
For those who follow the T-Line (8 EMA): Both the cash and futures are sitting right on it on the daily chart. Will it act as support or will it break and confirm the end of the up trend as Joe is discussing? Tomorrows action will be key.
ReplyDeleteES 30-min, after (8) eight consecutive closes outside of the lower band, prices have closed inside of the band, thereby resetting the number of consecutive closes to zero (0).
ReplyDeleteTJ
SPY 5-min; in the cash market this would be the best shot for 'five-down' since there us greater than a 1.618 wave, downward. Wave ((2)) would be a w-x-y failure. A new low would be needed. In this case, because there are less than 120 candles on the 5-minute chart, the EWO 'would not' be expected to come back to zero for the fourth wave.
ReplyDeletehttps://invst.ly/t2tzy
TJ
ES 30-min and SPY 5-min have made the needed lower low for five-waves down.
DeleteA new post is started for the next day.
ReplyDelete