Waiting on the Dow? - 2

Overnight, the ES futures were up by about +15 points. This roughly corresponded with the daily R1 pivot point shown in the intraday wave-counting screen, below. By the open, the futures had lost all of that and then continued slightly lower. The pop in the ES futures, however, did little for the Dow futures, and they did not make a new all-time-high as yet.

ES Futures - 30 Minutes - Neutral to Positive

During the session, the futures got down to the lower intraday Bollinger Band and got into over-bought territory on the intraday slow stochastic. In doing so, they did overlap a prior 4,513 peak, and we noted that. Then, after the opening candle of the cash session, the algo's kicked in and back-and-forth it was for the remainder of the session.

Remember, we said today could see sloppiness due to end-of-the-month 'window dressing'. And it did. Yet, the 18-period SMA (red) did not yet get below the 100-period SMA (green), and price is currently above it so both the daily and the intraday bias are currently up.

Again, Wednesday, as the first of the month, often (not always) sees inflows from the usual sources like pension funds, 401k's, company bonus plans, dividend reinvestment plans and the like. So, it is possible or even likely that another new high might be made. 

If the overnight wave was the (B) wave of a flat, then this morning's over-lapping low wave might be the (C) wave of an expanded flat for wave ((4)). So, we must be patient and see if the Dow wants to make it's new high on the inflows.

As far as I can tell, from the perspective of a contracting diagonal in the S&P and the Dow the count is otherwise full. The higher high can certainly occur. But it might be one of the last in the set IF a diagonal is being made. By-the-way, the resulting daily candle is a relatively narrow range doji, so the usual candlestick pattern rules apply to it (meaning a significant confirming lower close candle is needed to activate the pattern).

Let's see how it goes. Have an excellent start to your evening.

TraderJoe

Waiting on the Dow?

On Friday, the ES futures made a new all-time high. The Dow - so far - has not. This has been the raggedy situation almost all-along as the tech stocks have led the rally, and the Dow has lagged & caught up, lagged & caught up. Several weeks back we noted how the Dow needed a new all-time-high to claim a diagonal might be in progress in that index. It got it. Here is the two-day chart below.

The question now seems to be is the Dow waiting on the final waves to complete a diagonal? We don't know for sure. In favor of the count, there are unquestionably the required overlapping waves typical of a diagonal. Also, the time signatures are reasonably favorable.

Arguing a bit against the diagonal are the relatively shallow retrace of wave of wave minute ((ii)), circle-ii.

So in longer-term diagonals wave minute ((v)), circle-v, can fail. It has not yet. But it can. So just keep that in mind.

Meanwhile, in the ES 15-min chart below, after the downward diagonal for wave iv, which was called in timely fashion, the Elliott Wave Oscillator indicates this current up wave may have a bit left to finish the impulse up.

 

In this chart, there has been a 1.618 wave upward. The current wave micro-((3)) is on the first divergence of the Elliott Wave Oscillator. And a fourth wave can be in progress. Remember, wave ((4)) could be a triangle, or it could go over the top. So be very patient, yet. Even though this count is getting full, it is not there quite yet. And, keep in mind price is currently over the 18-day SMA so the daily price bias is up. Further, in the chart above, price is over the moving average shown, so the intraday bias is currently up, as well.

In terms of the calendar, Tuesday will be the last day of the month with its propensity for sloppiness due to 'window dressing'  and Wednesday is the first day of the month, which often sees the inflows we have written about so often.

Have an excellent rest of the weekend.

TraderJoe

Day Two

Today is the second daily close in which the daily slow stochastic can begin to qualify for embedded status. Both of the red line (%K) and blue line (%D) of the slow stochastic in the indicator panel of the chart below are over the 80 level for the second day in-a-row.

ES Futures - Daily - Stochastic Still Overbought

According to Ira's analysis, the indicator usually just swings from over-sold to over-bought and back again without embedding. Clearly from the chart - in strong up trends - embedding might be expected. And that is certainly what we've had - a strong up trend.

In the last two days we have warned that the so-called Smart Money - the brokers, bankers, mutual fund and hedge fund managers that have a LOT more money at their disposal than you and I do - would likely lighten up at the upper daily Bollinger Band. That appears to be the case, and prices backed off, closing near their lows.

Tomorrow is Fed Chair Powell's virtual Jackson Hole Symposium speech around 10 AM. Will he embed the slow stochastic? Will the market let him. We must wait and see.

Have an excellent start to the evening.

TraderJoe

 

Today, stocks closed near their lows.

Hugging Upper Band - 2

The daily chart, below, is the proposed contracting diagonal. It is now at 121 candles (not shown) with continued divergence on the Elliott Wave Oscillator (divergence shown as brown dashed line).

ES Futures - 1 D - Diagonal

So, if we are in the minuet (c) wave of the minute ((v)) wave, or circle-v, of Minor C, up, then this wave up should be an impulse. So far, it is. And it may have completed today. Here is the hourly chart as was shown in the comments from the prior post.

As you can see we counted out a very sideways micro-degree fourth wave triangle, iv, that alternates well with the sharply retracing wave ii. Each wave touches the EMA-34 so there is good form and proportion to the wave, and it fits in a channel. There is also a smaller five-minute wave upward which could be all of wave v of (c). But, we don't know that the wave is done. The fifth wave, v, could extend to become more in length like the length of wave i that has that awful truncation in it, but it does not have to. As you can see, there is now divergence on the hourly RSI, as well.

Such an extension might give the diagonal a better throw-over look to it. If so, fine. If not, then under no circumstances could the extended wave five travel below today's overnight low of 4,476.25 for any reason as that would break the rules. And, as we showed on Monday's chart, the potential diagonal may not exceed 4,579.25 in this configuration or it, too, would break the rules.

Only Elliott Wave analysis provides this exacting and specific price limits and potential targets. We hope you have been enjoying it.

Have a good start to the evening.

TraderJoe

Hugging Upper Band

ES daily futures made higher overnight highs. During the cash session the SPY eventually followed suit. The futures appear to have a gap up but from the hourly charts that may not be the case. Regardless, this was the second day that futures hit the upper daily Bollinger Band, then backed down a tad.

ES Futures - Daily - Over-bought Doji

 

They are doing this with the daily slow stochastic only in over-bought territory, not with it embedded at this time. Today's narrow-range candle formed a doji. And marginal higher highs can still result. From a wave-count perspective, the count is "near-full". But, price is over the 18-day SMA, and  therefore the price bias is still up. Yet, the swing-line indicator is technically neutral with a lower low and a higher high. This is definitely mixed signals, and, as you probably remember, Ira does not recommend buying new longs over an upper daily Bollinger Band - especially without an embedded reading. (This is not trading or investment advice; just a paraphrase of what one broker teaches on-line.)

And, once again, today's higher high diverges from the daily Elliott Wave Oscillator - likely indicating the fifth wave. The first item of significance would be trading back below the 18-day SMA. The next would be taking out this month's low.

Have an excellent start to the evening.

This chart was added for information after the close. The put-call ratio took a real dive today.

Put/Call Ratio - Daily - Lots of Calls Bought

 

TraderJoe

The 'Reason' for the Principle of Equivalence

From what looked & measured in the ES futures like a clear three-waves-up on Friday, overnight the Smart Money spun the futures up in an effort to get prices back to the upper daily Bollinger Band. In doing so, they hit & exceeded the band intraday, a minor new all-time high was created, the up wave was extended to a 1.618 Fibonacci relationship per the ruler on the left, below, and a new local up channel was formed in the chart, as shown.

ES Futures - 30-min - Tentative New Up Channel

Look at how small those overnight bars are! They ground & ground & ground & ground on price until the open, and with the gap up, prices headed higher at the open. (As an aside, it seems to me that this 'grinding action' might be analogous to - but not exactly the same as - mining cryptocurrency.) Anyway, this is why there is the Principle of Equivalence. Three waves up is a/i, b/ii, and c/iii until it is not. Last night and today shows exactly how and why this principle is included in The Eight Fold Path Method. There are other reasons, too - just too long to discuss here. Anyway, for now we should simply see if a valid wave iv forms in the channel above. Overlap on wave i would invalidate further up movement and indicate a top at the current high.

So, the daily chart is still working on this diagonal, with about 120 candles on the chart. And no rules have yet been broken.

ES Futures - Daily - Diagonal Count

Today's higher high occurred on continued daily divergences with the Elliott Wave Oscillator, and somewhat lower volume. Per the comments in the prior post, the diagonal that was called from October 2014 until May 2015 took fully 149 daily candles to form. And you think 'you' are tired of this, lol!!?? So this one is in the range. Patience is warranted. And keep in mind, the real serious drop after May, 2015 did not occur until August, even though there were mildly lower waves before then.

The upper limit for move is shown by the Fibonacci ruler in yellow at 4,579.25 - we are not there yet.

Have a good start to the evening.

TraderJoe

A Test?

Is this a test? The current characteristics of the up wave are 1) three waves up, 2) in a channel, 3) with a slight truncation in ((A)), 4) a slightly longer third wave ((C)) in time, and 5) a possible diagonal at the end of ((C)).  The interpretation is below.

ES Futures - 30 Min - Three Waves Up

Because the ((C)) wave is longer in time than the ((A)) wave, the two waves should be of the same degree - or else the latter wave is of one higher degree. Secondly, corrective waves often travel in a channel. For me, the eye-opener was the two-tick truncation in the ((A)) wave. It's almost as if the market is screaming "I'm only an ((A)) wave." A big question is this one: why didn't the market fully impulse? There was no particular economic news to stop a much larger rise on Friday. Yet, the market did not chose to fully impulse. Instead the market got to ((C)) = ((A)) about noon on Friday, and then just decided to sit there. Resistance? We should know a lot more Sunday into Monday.

Given the short-term up channel, trading below the mid-channel might be a warning, as it would likely result in overlap.

On a slightly different note, the daily number of new highs and new lows was beginning to switch around last week, as in the chart below.

NYSE Highs & Lows - Daily - Changing Places?

Have an excellent rest of the weekend.

TraderJoe

Back Towards the 18-day SMA

Overnight ES futures prices were lower. So low, in fact, they touched and went through the lower daily Bollinger Band - a real probability we had noted. The low was about +7 points away from the 50-day SMA in the futures. However, the down move was good enough to close the first gap, backwards on the ES daily futures themselves. Refer to the black circle on the daily chart of the futures, below.

ES Futures - Daily - Lower Band Hit and Gap Closed

 

Then, as the cash open started to near, the so-called Smart Money began covering their short positions - something which often happens at the lower Bollinger Band, and price recoiled to very near the 18-day SMA, or the 'line in the sand'.

Yet, in the process - near the end of the day - the daily bias is still down, but neither is the daily slow stochastic oversold just yet. The only item not bearish on the chart is the swing-line indicator which has a higher high and a lower low. So, it is neutral.

There are still many gaps in the futures themselves which are still open in the downward direction. One of them is circled in red on the chart above. The exact count lower remains pending a few more waves. We have posted some ideas in yesterdays comment section, but none of them yet has been fully activated. So, we will be patient.

Is it possible to go over the top again early next week? It is. Is it possible to get a truncation fifth wave upward? It is. Is it possible to get a downward diagonal? It is. So, we must be calm, patient and very, very flexible as we count waves, examine wave lengths & amounts of time taken, and do the work of an Elliott analyst.

Have a good start to your evening.

TraderJoe

Degree Labeling 'May Have' Done It Again

One of the reasons I was looking for upward count completion here is because of degree labeling. IF Minor A and Minor C of Intermediate (Y) were to be subwaves, then neither of them should have been longer than all of Intermediate (W), the prior larger degree wave in the same direction. See the ES weekly chart, below.

ES Futures - Weekly - Degree Labeling

So far, it has worked out to the day. However, if wave Minor B of (Y) is a triangle instead of the truncated flat, then there is a week to spare! So, if one further higher high is made - fine! But it is not required. The form of the decline will be discussed once a few more waves occur to get some needed measurements.

For the moment, we need to see if the lower Bollinger Band will be hit or not. As of the cash close, the ES futures daily slow stochastic has lost its embedded status and price closed below the 18-day SMA so the daily bias has turned down.

Have an excellent start to the evening!

TraderJoe

Still Possible - Not Proved - 2

Equity prices as measured by the ES E-Mini futures backed down from the high and the upper daily Bollinger Band today, and went straight down and through the 18-day SMA, "the line in the sand" as shown in the daily chart, below. (This was also near the S2 daily pivot level, which was called out at the time). In the process, another considerable downward overlap of the late July waves was created. Then, prices bounced.

ES Futures - 1 D - Down to 18-Day and Bounce

At the time this occurred, the daily slow stochastic had traveled below the 80 level. By the end of the day, the price bias was still up, and the slow stochastic was still embedded. 

Today, in the SPY we could only count three-waves-down. So, is it possible to go over the high again? Yes, it is. Is it possible to go down to the lower daily Bollinger Band? It is. However, if we go lower, with only three waves down, it would likely be by some form of diagonal.

Tomorrow is FED Meeting Minutes day. Because of the computer news-reading algorithms Ira recommends, (paraphrasing) "Sit on your hands until well after the release and you get a feel for what is going on."

Have an excellent start to the evening.

TraderJoe

Still Possible - Not Proved

No one else is counting this way. I kind of like that. Looks like we are into a bit of a throw-over. Just remember that minute ((v)) can not be longer in price than minute ((iii)).

Divergence with the advance-decline line is getting fairly prominent. Even so, slight new highs are still possible. Today, prices got up to the upper daily Bollinger Band, and traded over them. Price is still above the 18-day SMA so the daily bias is up, and the daily slow stochastic is still embedded. The daily wave fractal points are pretty clear and have been numbered or lettered.

Have an excellent start to your evening.

TraderJoe

'Possible' to Count an Impulse in SPY

This is just to say, the count works right now in SPY cash - as a fourth wave triangle (4) that alternates well with the flat wave (2).

Each wave is on an opposite side of the EMA-34 in this 10-minute time-frame, now with about 117 candles on the chart. There is still some possibility that the (4) wave can extend lower in the Sunday overnight and into Monday to make an expanded flat for a deeper fourth wave. But it is not required. It is also possible for wave (5) to put on a few more points.

Stocks ended the week at the high, and came within +/- 2 points of the upper daily Bollinger Band. Trading during the session was very gap filled in the SPY, indicative of light volume until the closing candle. Price is over the 18-day SMA (so the bias remains up), and the daily slow stochastic is still embedded.

Meanwhile, the DOW did not end on its high. The NQ futures did not end on an all time high. The preliminary figures for the NYSE have about 1,568 advancing stocks and 1,721 declining stocks, and today was quite whippy. It's bucking like a bronco, but I think we haven't seen anything yet.

 

I'll leave you with one final thought for today. It is Ira Epstein's Financial video from last night. Listen carefully from about three minutes to about six minutes in where Ira says about the Dow, "I think pro's are taking a substantial amount off their positions". Like it or not, Ira is an insider. He's been in the industry for years. He has contacts and hears what people are doing and how they work. Again, he doesn't recommend shorts (in futures) above the 18-day SMA. Neither does he recommend new longs above an upper daily Bollinger Band.

The above is not trading or investment advice, just a brief recap (in his own words) of what one broker thinks.

Have an excellent start to the evening and to the weekend.

TraderJoe

The Count Nears Equality

The count from the 23 March 2020 low remains the same. Price is nearing the point where wave Intermediate (Y) equals Intermediate (W). This is a clear Fibonacci relationship of 1:1.

ES Futures - 2 Day - (Y) nears equality with (W)

Remain calm, patient and flexible. Have an excellent rest of the evening.

TraderJoe

What We Know

Here are some things we know from the ES 2-Hr chart below. I am only using this time frame for visual chart clarity.

ES Futures - 2 Hr - What We Know

 

Last night, we know there was a lower futures low - and three waves down - that did not appear in cash. Looking at last night in the futures, there is still a way that lower low could fit into a very compressive triangle, and so dashed lines for the triangle are shown. Shown in this way, the ((C)) wave and the ((E)) wave of triangle iv just avoid overlap with wave i.

We know that - as drawn, wave iii is on a peak of the MACD indicator shown. We also know that wave iii is entirely above a line drawn from wave (b) to ii (i.e. from 0 to ii). Then, wave iv cuts off that line. We also know that each wave is on an opposite side of the EMA-34. Further, we know that wave iv alternates well with wave ii because its ((B)) wave goes over the high, and wave ii's does not. Further, wave ii appears to be a sharp, and wave iv appears to be a triangle. We also know that wave iv takes more time than wave ii. Wave ii takes more time than wave i, and wave iv takes more time than wave iii.

Further, we know that wave iii is shorter in price than wave i. So, if we are getting wave v now, then wave v must remain shorter in price than wave iii.

We don't know how wave v will end. We don't know if it will impulse or diagonal. Today, the internal down wave was greater than 62%. It was a funky down wave and very hard to count. But, we also know that price travel below 4,430 in the futures makes a diagonal v a much more difficult proposition.

We would also expect wave v - wherever it finishes - to diverge on the MACD. But, right now the MACD is pointing up until it doesn't. That is all.

Have a good start to your evening. And may your third waves (ahem) never be the shortest.

TJ

Turn on Tuesday ?

It's not for sure yet, but after the marginal higher high - which we said could happen either after a triangle or as part of an expanding diagonal fifth wave - prices staged a bit of a turn-around lower but, as of yet, have had a fairly mild decline. In the ES 4-hr chart, below, I would be watching for a significant break of the lower trend line, as well as a back-test - and then to see if that back test fails lower. 

ES Futures - 4 Hr - Hugging Lower Wedge Line

Yes, there is a way to count that we have temporarily topped in the SPY and the ES futures. That is all.

Have a good start to the evening.

TraderJoe

Messy Monday

The prior post cited a 'possible' truncation, and asked the question as to whether that truncation is real or not. As of 16:30 EDT, that truncation high has not been exceeded higher (yet). It could be. I can find three ways to end this (c) wave upward. One is an expanding diagonal that is posted in yesterday's comments. Another is this potential triangle sketched out below. A third is a truncation.

ES Futures - 30 Minutes - Fractals

The potential triangle might be a barrier triangle, or it might be a slightly contracting triangle, or it might be a failure triangle in which the high won't be exceeded. Or again, it might not be a triangle at all, and every thing since the overnight low might be an expanding diagonal, upward, for a fifth wave.

In my experience, the easier thing to do is to follow the fractal-breaks at this point. If it's a barrier triangle and the fractals break up, it might be a short pop to 4440. If it's a contracting triangle, then the thrust might be larger to 4,450-60. On the other hand, if the fractals break down, it might be a failure triangle ending the move, and one should not be surprised.

Again, patience! Calm .. and flexibility, too. Try to remember that the reason the big moves often come in the overnight is that - with the lighter volume - the market makers don't have to have so many people on board.

Have a good start to the evening.

TraderJoe

Interim Report: Question - Did ES futures just truncate at the High?

Gold is down another $60 tonight. Meanwhile, ES and Dow futures are down too. Here is the daily chart. In one wave count, the upward wave count can be seen as completed. After the triangle we were counting out on Friday, there was a 90% wave upward. The wave did not go over the high. Why not?

ES Futures - Daily - Possible Truncation

 

The ES half-hourly hourly futures chart is below, and would show the truncation after the triangle as follows.

 

I ask the question because the downside overlaps are getting rather tough to deal with from a wave counting perspective. Yet, there might be a way out of this when cash opens tomorrow and the algos get their way with prices. But, in the considerations of the moment, it is very hard to see how.

Be calm and patient, and see if a retrace wave goes over the high or not or prices start breaking down and make new lows.

Have an excellent rest of the evening.

TraderJoe

Follow-Up on GOLD

About a month ago, this proposal in GOLD was issued. You can find the original post at this LINK. A follow-up to the chart below appears later in the post.

GOLD Futures - 2 Day - July Proposal

 

We suggested that the count might be that of an expanding diagonal lower - as messy as it is. We could see that the minute ((b)) wave could have further to go on the upside, but said that by-the-rules wave ((b)) may not go over the high of wave 4. So far, it hasn't.

Friday's job data brought a significant decline in GOLD, down about -$45 per oz. That makes the daily chart looks like the following.

GOLD Futures - Daily - Follow Up

Based on this price action, it currently appears as if this proposal is playing out, even given the flack I received at the time for posting the proposal. Comments were made like, "I cannot understand why you would have a count for gold which cannot possibly work for silver or miners due to 4/1 overlap. Imho, you are way underestimating what is happening here." Meanwhile, the GOLD bulls certainly can't say they saw a nearly $50 three-day decline coming.

Yes, there will be backing-and-filling as price descends lower. And wave ((c)) must exceed the length of wave Minor 3, above, in price to indicate a diagonal, and it should also exceed the length of wave 3 in time, as well. Diagonal price action tends to be very, very choppy for long periods of time, and then lets go all of a sudden.

The next step in diagonal confirmation would be trading below the low of the prior minute ((a)) wave.

After several comments were posted, I added this chart which continues the discussion on SuperCycle IV in Gold. At this time, this is the best count I can derive that meets the principles of degree labeling. Please read the chart notes which not only better define the degrees of the labels involved, but the rationale for a triangle (including prior support levels) , but shows the unique role of a triangle in degree labeling.

As I stated when calling for the triangle as Minor 4 in S&P500 in February 2018 - this first down leg Cycle a is too long in price compared to SuperCycle II.  The only structure I know of that can correct such an issue with degree is a triangle, and this is because the "net distance traveled in a triangle is always measured to its 'e' wave, regardless of degree." If you have any question as to the rationale for my calling that triangle in the S&P500 Index, you can refer to this post from back in February 12th, 2018 at this LINK.

This is the second post since Friday. If you have not read the first one, yet, you might like to view it now. Have an excellent rest of the weekend.

TraderJoe

Marginal New High - 2

The count is still proceeding upward as there are no critical downward overlaps preventing such and there are no degree violations at this time. The SPY hourly chart is updated below.

After the employment report came out, prices rose to 4,430 - then backed off to 4,416, then rose again to 4,433, then formed a gravestone doji which was not confirmed lower. Based on this we said we may be in a triangle - with a flat as the alternate - and prices were whippy for the rest of the session. IFF either the flat or triangle turns out to be correct then that wave would likely be micro-((4)) in the futures, with a further higher high ahead in the form of sub-minuette, iii, ahead, as is shown above. 

Again, while an alternate of a larger (b) wave is still shown on the chart, we are counting upward until we can no longer. The most likely scenario for the alternate count would be that 'three-waves-up' ends at the wave iii location. But, again, the alternate will not be activated until or unless the low of ii is taken out lower.

Have a good start to the evening and the weekend.

TraderJoe

Marginal New High

Below we show what is thought (at this time) to be the most likely count on the SPY cash index, hourly.

SPY Cash - Hourly - Into (c) Wave?

Interestingly, neither an employment report pop (tomorrow morning), or a drop from the same affects the larger picture. We said several days ago the 3 AUG bottom 'could be' the bottom of the (b) wave. From today's price action, it appears to be. So, with the new high, we are counting upward until we can no longer.

The alternate red (b) wave would have a count of micro ((W))-((X))-((Y))-((X))-((Z)) should the market decide to do that. Right now, there is no suggestion that is occurring, until or unless the low of wave ii is taken out lower before five waves i-v complete to the upside.

Have an excellent start to the evening.

TraderJoe

Tech - Red & Declining EWO

It should pretty clear from the daily charts below, that some tech names have red and declining Elliott Wave Oscillators. (You are encouraged to explore others). Amazon actually appears to have overlapped downward waves.

Tech Stocks - Daily - Red and Declining EWO's

Keep the info in your back-pocket. Back in Dow/ES-land, there are still both down and up counts, being so close to the all-time-high. It is one of those times when a short-term new local high, or new local low, is needed to clarify the picture a bit. Today the Dow went down to a 78% retrace. The ES only about 50%.

Have a good start to your evening.

TraderJoe

Down to the LITS

It didn't take too much to figure out what was going on today. Prices - measured by the ES futures - went down to the 18-day SMA, "the line in the sand", and then bounced strongly in what we counted as five-waves-up. The daily chart is below.

 

As a result a downward local count has become 'strained'. As stated in the comments, whether we go lower or higher first seems to now depend on whether the high or low is exceeded first. There are an unusual number of double-bottoms, and double-tops now in the price structure. Today's double bottom could very well be the bottom of the (b) wave down - except if it is exceeded lower.

And, if the high is exceeded first, it could well be the (c) wave up. As of the close the odds are about 50:50. The slow stochastic is still embedded, and so Ira's observation that a trip down to the 18-day with an embedded stochastic is often, not always, met with buying is shown valid yet again. 

Have a good start to the evening.

TraderJoe

Triangle or Down Count

As we showed in comments to yesterday's post, a smaller triangle invalidated in the downwards direction late in the afternoon. However, a lower low in the ES futures lower than the 30 Jul low was not made. Therefore, a larger triangle count is plausible. But so is a downward count for the larger 'c' wave of a (b) wave downward. Both are shown on the chart of the 30-min SPY below.

SPY Cash - 30 Min - Larger Triangle or Down Count

 

While both counts are shown in the above chart, in order to activate the much deeper  'c' wave count lower, then the low of the 'a' wave on the SPY chart above must also be exceeded lower.

Have an excellent start to the evening.

TraderJoe

False Price Gap

This is the first time that I am really noticing this phenomenon, and I have never really heard of it mentioned before in the equity markets. But I have seen this phenomenon in the Gold market before, but sort of dismissed it as a quirk of the Gold settlement time being at 12:15 pm CT. But, for now, let's deal with the equity market. Below, let's look at this daily chart of the ES futures. As you can see, the latest bar shows a distinct price gap between the prior close and Friday's open. Even Friday's highest price did not close the apparent gap.

ES Futures - 1 Day - Price Gap ?

But, yet, I distinctly remembered monitoring the overnight 15-minute session and noticing no gap in the futures prices resembling the gap shown in the chart above. In fact, here is the ES 15-minute chart from Thursday into Friday.

As you can see from noon Thursday afternoon into Friday morning there is a continuous stream of prices lower - with no gaps. What is creating this 'false gap' is merely the time chosen for the 'closing price' by the CME at 16:00 (ET), and the next day's 'opening price' at 18:00 (ET) the same evening.

So, as prices do trade from the cash close to the beginning of the fifteen minute 'pause period" from 16:00-16:15, and then don't trade from 16:15 - 16:30, for the pause period, and then do trade again from 16:30 - 17:00 (ET), and then don't trade again through the maintenance period of 17:00 - 18:00 (ET), it creates the appearance of a gap on the chart when there is really none!

Again, I had noticed this phenomenon with Gold before - primarily because of the wacky settlement time of 12:15 CT. But I had never seen a false gap created before in equity futures, nor had I heard anyone mention it, so, since I could now demonstrate it, I thought I would bring it to your attention.

And, I have a very big question. Because of the difference in volume during the 'false gap' does it send a wink, wink, signal to the Smart Money computers to try to fill that gap, too? That is a question. We'll see if it gets answered. This is the third post this weekend, and if you have not seen the other two, yet, you may wish to view them now.

Have an excellent start to the evening.

TraderJoe