Unparalleled 100+ Year Fractal Catalog

In his books, Ralph Nelson Elliott essentially laid out a theory of "parallel" market movements. He gave explicit instructions for how to draw them: what tools to use to construct them, which points to connect as parallel & when, and whether to use log format or arithmetic format if inflation was involved. As you can see from the first chart of the catalog, a parallel has not fully formed yet.

DJIA Cash Index - Yearly - Larger Parallel

Here you can see it is possible to construct a large parallel the lower extreme of which has not been tested yet. This chart is at the SuperCycle and Cycle Degree Level. In the lower left is a "running second wave" which I think the failure to recognize is the downfall of most professional Elliott analysts. First, the "running wave" is an omen of the very, very large SuperCycle wave x[III] to follow.

This shows the upward bias of the market following the depression, and it is the only way that the Cycle wave corrections are shorter-in-time than the next larger degree correction in the same direction. For example, Cycle IV is a full nine-years in length from 2000 to 2009. So, the correction of the larger SuperCycle [II] must be longer in time to meet degree definitions. I have written about this at length before and I have written Elliott Wave International about it to no avail. So now, the chart suggests we are in the SuperCycle [III]'d wave: the wonder-to-behold, the extended third wave, and, although we are still above the EMA-34, this wave is diverging on the PPO Oscillator, the equivalent of the MACD for very long-term charts.

The parallel is rising. It is currently at a level above the high of SuperCycle [I], and therefore one might expect that if prices head lower, they will not overlap wave [I]. Further, there has been no wave yet to come back and test the fourth wave of one prior degree. IF SuperCycle wave [IV] forms, then it might come back to the parallel to test the level of Cycle wave IV, one degree lower.

The next chart in the catalog is the quarterly wave set from 2000, as below. It shows the construction of Cycle wave IV as a Flat wave, and the subsequent Cycle wave V in five waves, with alternation. 

Here you can see also the five primary waves from the 2009 low. And that each primary wave lies on an opposite side of the EMA-34 for form & balance. Note, too, the third wave is the extended wave in the sequence. There is also some recent divergence on the PPO. This wave is also in a parallel, but one that expanded to capture the 2009 low and the 2020 low. It was a smaller parallel before the extent of Primary ④ was known.

The next chart in the catalog is the monthly chart from the 2018 top of Primary ③ to the present. The construction of Primary ④ as a Flat can be seen. Then one can loosely sketch in a parallel. (Warning: this wave has alternates). So far, to the best of my ability, I think it is an extended fifth wave under construction, and it may be at or nearing completion. If this numbering does not satisfy the count, then the next most likely would be an expanding diagonal. We'll deal with that later.

DJIA Cash - Monthly - Primary ⑤

These waves are at Intermediate degree. At present, the rationale for this count was the extraordinary "FED pivot" for the Covid-19 episode and this shortened the duration of wave Intermediate (2) and lengthened the time of Intermediate (4) when interest rates were increased in an unprecedented manner. Price is now down to the mid-channel line.

Next, the chart below is the two-weekly chart from the 2021 top to present. It shows the current Minor degree waves from the Intermediate wave (4), low. Again, this is an attempt to count-by-five with alternation. Here there is a long Minor 2 and short Minor 4, alternating in time and depth. And the chart ends with an expanding diagonal for Minor wave 5. Here, too, a loose parallel has been drawn around the waves. It is likely that if this parallel breaks it will signal something important.

DJIA Cash Index - 2 Wk - Intermediate (5)

Finally, the last chart is the weekly chart, down one level lower and showing the construction of the waves down to minute degree.

Here the expanding diagonal - which a couple of us noted in the blog - is shown in its simplicity. But perhaps that simple megaphone shape is ultimately the most ominous. Currently, there is weekly divergence and a turn down in PPO. If the lower diagonal trend line gives way, it could signal the entire diagonal will be retraced in less time than the diagonal took to build. IF that occurs, it could signal a top for many, many years.

We thought you'd be interested to see a logical progression of the wave degrees from SuperCycle to Minute degree. Whether the market tops here or not is up to the market. The charts suggest it has a higher likelihood than ever. IF it tops, it might occur in such a short amount of time that the FED is caught off-guard, and rate decreases would be next-to-useless given the trillions of dollars in capital lost merely due to market price declines and the reversal of leverage in the system.

Regardless, the attempt to count the waves by five, with alternation, will continue until the market makes its message clearer.

Have an excellent rest of the weekend, and holiday week if you are celebrating.

TraderJoe

A Yen for Yen ?

How come no one is talking about the Yen carry-trade now? Why have all the news stories gone now about how this will disrupt the stock market? Yet back in my Aug18th post which you can view at this LINK, I said it was possible the Japanese Yen was making a contracting ending diagonal, and it may not have finished yet. Here is an update of that chart.

Yen (6J) Futures - Two-Weekly - Contracting Diagonal

As you can see, a wave 4 did form that remained less in price than the corresponding wave 2.  And now the only questions are: 1) will a new low form to perfect the diagonal, and 2) will it travel low enough to make a new low without becoming longer than the length of wave 3 in price? Certainly, with over 100 candles on the chart, the Elliott Wave Oscillator (EWO) is sketching out the typical diverging bottom waves. That is wonderful to see.

Time will tell, but the title of this post really refers to the fact that the currencies tend to trend well, and if a diagonal forms, it like means that an upward break may trend for quite a while. So, interested wave students should become familiar with measurements: how far is too far? What needs to break to consider the diagonal done?

Good questions for those interested.

Have an excellent start to the evening,

TraderJoe

A Compelling Case - Two Charts

With 170 candles on the daily chart (nicely meeting the guideline of 120 - 160 candles), the Elliott Wave Oscillator (EWO, or AO) paints the expanding diagonal pattern below on the DJI and its YM futures. We have commented on it here before. The EWO is currently red and declining. That doesn't mean there can't be more bounces. Yet price is still under the EMA-34.

Dow (YM) Futures - Daily - Pattern at 170 Candles

The chart, if correct, shows 3-3-3-3-3 ending diagonals at two degrees of trend. Overall, Minor wave 5 in its entirety would be an expanding ending diagonal. The trend lines and the apparent three-wave structures are just very compelling, even though, overall, the wave gives a 'five-count' in this configuration. It is just an overlapping one. Then, wave (c) of Ⓥ would also be an overlapping contracting diagonal five-wave-structure. Further notice, according to The Eight-Fold-Path Method that every significant numbered wave is on an opposite site of the EMA-34 for form and balance.

And continuing to count by "fives" here is how the Minor wave 5 would fit into the weekly picture.

Once again, this is a best attempt to count-by-five with alternation. The alternation from the bottom would be "short two, long four" at the minute level, and - just the opposite - "long two, short four" at the Minor level with the ending expanding diagonal as the Minor 5.

Additionally, I have done everything possible and literally bent-over-backwards to make the first wave off the bottom an impulse that fits with degree definitions. It works in the futures, where all the price excursions and open trading hours are available for examination. And only one modification is needed in the DJIA cash to make it work - wave circle-iv, ((iv)), off the bottom becomes a barrier triangle instead with a non-overlapping (e) wave.

Wave 3 is just longer than Wave 1. And wave 5 is just about as long as wave 3 but not quite. But that is of little significance because wave 3 is not the shortest wave.

Would I have liked a longer wave 4 in time? I personally would have, but the wave principle and the markets haven't provided as much, as yet.

You will note that wave Minor 5 is longer-in-time that Minor 3, so it likely should not be considered a lower degree "b" wave of a Flat, or it would again break degree labeling definitions. The two waves should likely be considered as the same degree.

In addition, this entire wave is a herky-jerky mishmash of overlaps off the bottom and overlaps near the top. It gives the impression that something is going on with the wave-count other than making impulses more characteristic of the middle of the trend. Is it the end of the trend? Time will tell, but the evidence is very compelling.

Have an excellent rest of the weekend,

TraderJoe

Relatively Simple

At this writing there is still no deal on whether the government will be open over the weekend or not. This is an important issue and may have an influence on whether prices go over the high again or not. Still, from a chart perspective our task is relatively simplified. We were able to count five-wave-up today with an extended first wave. So, the task now is to use The Principle of Equivalence to simply determine if we get three-waves up or five-waves up.

SPY Cash - 15 Minute - The Principle of Equivalence

I recommend using the SPY cash 15-min chart for this purpose, as above. The first item up for grabs is to see where the b/ii wave winds up on Monday morning. If price gets above and stays above the EMA-34, then it likely has more of a positive bias, temporarily.

The concern for a simple a,b,c wave, up, is that it would likely be shorter in time than the down wave. Not impossible, but then not the best corrective wave. One way to extend the time of the correction is to see if the c wave would become a diagonal, alternating with an a wave impulse. Another way to extend the time & frustration of a correction would be to make a double-zigzag. None of that is in evidence, yet.

If, on the other hand, this up wave in a channel becomes a five-wave sequence instead of remaining as a three then we need to question whether price will go over the high again as part of a larger diagonal that we showed at this LINK, before (see alternate red line). The down wave is just over 62%, and there is one way to count it as a-b-c down, but it is very non-proportional and is quite quick to be a larger diagonal second wave. Still, it might fit in a larger diagonal as a second wave.

So, just take it step-by-by step and see if we get a clear five-waves-up, Or, if this up wave remains a three or even a double zigzag. That's enough work to do over the holidays!

Have a good start to the evening and the weekend,

TraderJoe

Just a thought ...

It has been vexing over the last few hours to determine what the wave count is primarily because the ES futures gives a longer wave up from the 2022 high, while the cash provides still a shorter wave up. Clearly, this could be rectified if cash turned up and made a higher high. This is still possible by-the-way with an extended form of the contracting ending diagonal that I posted at this LINK as an alternate. See the red count. 

But what if the situation does not rectify itself? Is there a count that could explain both of these phenomena at this time? I submit there is. That count is below as the Extended Fifth Count (x5). Right now, this count is an alternate, but a viable one.

The reason this count is an alternate is that there is no conclusive evidence - such as an unquestioned overlap - that requires this count. 

Still, the Fibonacci ratios are intriguing: wave (3) is 1.272 x wave (1). Wave (4) is a very deep retrace on wave (3), and it does overlap wave (2) in this configuration, but not wave (1). And then the magic happens in this last wave up from Sep/Oct 2022. The wave x5 is 1.618 x wave (3), a very common relationship when the fifth wave is the extended wave. Note, too, there is good alternation between the second and the fourth waves, both in shape and in time.

If this is an extended fifth wave, as the top of a major sentiment peak, it could well represent the end of the Cycle, and the end of the SuperCycle. And such a wave can be retraced 62%, or fully, or more! However, the way wave patterns are best developed is by using the hard evidence that compels the pattern. There are still ways the downward waves could fail to form overlaps with consequence. And if they do not, we will use that evidence.

Note one other item, the above count preserves the move from March 2020 to Jan 2022 as a three-wave sequence, as we have in either the contracting or expanding diagonal count. All it does is raise the degree one level of the first wave sequence (1), up. I have not seen this count anywhere else. As far as I can tell, it is original with the author.

Have an excellent rest of the day,

TraderJoe

Gap Filler

Today's down wave in the ES March contract filled a number of gaps in the SPY cash index and the ES roll-over contract. The roll-over contract is shown in the chart below, unadjusted. The lengths of the waves remained valid for the count below, even with the roll-over considered. If there was a 'true' ending diagonal at the all-time-high (which does have fairly significant odds), then the entire diagonal from the wave iv location should be retraced in less time than the diagonal took to build.

Today's down wave was too long to consider it 'by the rules' to still be inside of the contracting diagonal. So, it may be a first wave down, ① or i. For the moment the degrees are being left relative and there will be more to say about the degree labels on the weekend.

Retraces of this wave can occur at any time. The next targets lower include wave ② and wave iv. We need to see if the market has the downward strength to delineate a trend change. This is a process called "post-pattern confirmation". The first step of that occurred today in that the wave ② to ④ trend line was exceeded lower in 'less time' than wave ⑤ took to build. The next step requires a solid close under the wave ii to iv trend line which we touched today.

Have an excellent rest of the evening,

TraderJoe

Yukkie, awful, stinkeroo!

This is what is in front of our eyes when one considers the ES rollover contract as an extension of the current December contract.

This is not the same as cash, but one has to wonder if there isn't a way (such as the triangle under consideration) by which the counts will synch up. 

In the roll-over contract, by passing through the 6,136.25 level, this wave up is now 'longer' in futures than the wave up from 2020 to 2021. This wavelength is also sufficient to activate the expanding diagonal count shown in the second chart in this November post. Again, IN FUTURES. Cash needs to be verified.

Elliott_Trader: Whether or Not ...

Have an excellent start to the day.

TraderJoe

Chart Only

ES Futures - Daily - EW Count

Have an excellent rest of the weekend,

TraderJoe

To Keep Us Guessing...

Today's down wave in the SPY cash 30-min chart, along with last night's stub of a down wave reached just over the 62.8% retrace level of yesterday's up wave as the Fibonacci ruler on the chart shows.

With this information and knowledge of the likely FOMC meeting next week these are the scenarios that one has to evaluate.

1. Down wave goes beyond wave a to make wave c of the larger ④th wave zigzag. 35%
2. A much larger in time b wave triangle forms waiting on the FOMC output. 35%
3. A new higher high immediately forms on fearless Friday. 15%
4. The down wave collapses to invalidate wave ④. 15%

I'd personally rate the probabilities of the first two options as slightly better than the last two options. Some suggested probabilities follow the bullet items. For the triangle, it would likely best form if the downward retrace stopped around the 78 - 85% level.

Between yesterday and today, there do look like five waves down in cash. So, that means five - or more - waves could easily follow lower. What complicates the analysis is the speed of these five waves is quite slow and did not themselves result in the new low below wave a. So, like a bad murder mystery, the market will have its way with our curiosity for the time being.

Have an excellent start to the evening,

TraderJoe

Overlap

The overlap needed to make the ES 8-hr chart below more intriguing as a contracting diagonal occurred today. We were finally able to count five-waves-down today with the new low and it appears to be just an a wave. 

On this time scale the MACD is still pointed lower after a divergence with the higher high. Today's wave stopped - at least temporarily - at the dotted iv-to-② trend line shown. This trend line should be adjusted within reason to become the ②-to-④ trend line, once the end of the wave ④ is known. Note that the invalidation of wave ④ in a contracting diagonal would occur below 5,913. Price is not close yet.

If a fourth wave forms successfully, then a fifth wave up must remain shorter than wave ③ in price length. While wave ③ was required to go over the high again, wave ⑤ is not required to, but is very likely to.

Have an excellent start to the evening,

TraderJoe

Three Waves Down (Could Extend)

Again, largely just for something more colorful and fun, the ES hourly chart below is presented in Ichimoku format. The price bars were skating along the combination of the Tenkan-sen (green line) and the Kijun-sen (blue line) until the cash opening this morning. At that time price broke down through a very thin cloud accompanied by a T-K cross (Tenkan-sen green crosses below Kijun-sen blue line).

ES Futures - Hourly - Ichimoku format

This price action also drove the brown lagging-line (the Chikou-span) below the candles which is a bearish indication. Further, after days of a green cloud, the price action has at least temporarily flipped the future cloud to red (though it is quite thin). Both the hourly MACD line and the signal line dropped below zero for now.

From an Elliott Wave perspective - if we hide the Ichimoku - it looks like there are only three waves down in a channel where the third wave is >2.0 x the first wave lower. The three waves down are either i,ii,iii or a,b,c to be counted equivalently until there is more information, like - for example - a fourth wave that does not overlap upward. See chart below.

ES Futures - Hourly - Three Waves in Channel

Time will tell, but the Ichimoku and MACD indications are weakly bearish at this time. So, we watch the channel and mind the high until there is more information.

Have a good start to the evening,

TraderJoe

No Clear Sign Yet

The count similar to the one below has already been shown for the daily ES futures roll-contract, and it has no conflicts or length violations. Today, I decided to look at the cash S&P500 to see if it fits the same bill. Bottom line: because of length differences, I think the cash index has to be counted as below because otherwise wave iii would become too short.

Given that the Neely 0 - ii trend line shows where the likely wave iv is, then there is no clear sign such as a triangle or diagonal that the count is definitely over. If a fifth wave, ⑤, does appear, then we'd have to see if wave ④ overlaps in diagonal fashion or not. Nothing requires it to. Yet, it could overlap and is even likely to overlap at this stage in the wave count. If it does overlap and forms a diagonal, then the target would be that wave iv would be exceeded lower in less time than the potential diagonal took to build.

So, the wave count currently remains on track in both cash & futures with this adjustment in cash, and we'll look to see what next week brings. Right now, the up wave from iv has a very three-wave look to it, and it suggests that a dip and then a new high remain possible. In any event, the same question as asked before remains: "is the large risk to the downside worth the likely minor upside gain?"

Have an excellent rest of the weekend.

TraderJoe

Whippy

The futures overnight started out lower. Then, by about 10 AM, they turned in a higher high. Then they turned around and made another one of those "two-tick" hourly bottoms which saw them turn around again to make a further higher high. Interestingly, this hourly higher high was a "two tick" top, instead of bottoming this time. Something really odd is going on there. And, you guessed it, they turned around lower again, to make a lower low. 

All-in-all the futures created the candle pattern known as a red "spinning top". This candle is a candle of indecision and is shown in the daily chart below.

Much like the green Doji day on 11 Nov, which also required a confirming candle lower, this indecision pattern too requires a confirming candle lower - or a new higher high to void it.

Tomorrow is the monthly Payroll Report at 08:30 AM ET, followed by the Consumer Sentiment Survey from the University of Michigan at 10:00 AM ET as they are currently scheduled. Unfortunately for me, tomorrow is a travel day, and I won't be able to follow markets except intermittently via the radio until I get home. Still, a lot of volatility might be created by the reports.

So, best wishes to each of you. The Elliott Wave count remains as it has been shown. Have an excellent evening, Friday, and start to the weekend.

TraderJoe

Things Remain on Track

The saying goes, "Bear markets die in a panic, bull markets die of boredom." Each day brings successive marginal highs with little-to-no reversal. This can generate a lot of complacency. The Elliott Wave count currently remains on track.

Some things to note on the above chart are:

1. The pattern includes a parallel channel, and the Neely 0 - ii trend line.
2. The pattern includes alternation between waves ii and iv
3. The oscillator goes below zero for waves ii and iv
4. The oscillator is currently diverging
5. The larger numbered waves are on opposite sides of the EMA-34 for form & balance

The market is taking its time. We'll have to see if capital-gains selling or tax-loss selling figures into the picture shortly, and then whether there is a year-end rally.

Have an excellent start to the evening.

TraderJoe

You Can't Count 'Zero' ..

In Elliott Wave analysis, one likes to think they can identify the starting and ending of wave terminals cleanly, so they can indicate the potential wave structure. But something has been increasingly happening in today's markets that makes that more & more difficult. A one-hour chart of the ES futures in Ichimoku format - just for some color and to show the overall hourly trend - is below.

Notice the number of times that a wave bottom has varied by zero, one or two ticks. This to me seems statistically highly unlikely at random and instead hints at some mechanism involved. What's operating might be as simple as "traders try to buy a double-bottom or sell a double-top". Maybe so.  Maybe not. It might be more nefarious, or it might be an artifact of machine trading.

This situation is not confined to the ES futures. It has been happening a lot in Crude Oil (CL) futures, too. And serious students might take some time to examine those instances as well.

Regardless, this situation creates a higher degree of uncertainty of the wave counts around the points indicated. Will price drop through the former low? Will it exceed an equal high? Who can say. But more importantly look at the sizes of either the second or third candle in the sequence for those noted. That upward candle is no slouch. Someone is playing this double-bottom game for real-zies. They appear to be using it as a trap & turn, so it seemed worthy of pointing it out.

From a wave counting perspective, of course, it makes it very difficult to say if the prior wave is truncated (as in a truncated 'c' wave), or whether the new equal or one/two tick higher low is actually the start of a new sequence.

In any event, the phenomenon is clearly leaving its tracks on the price charts, and it is likely significant turns will be noted by busting levels like that.

Have an excellent rest of the evening,

TraderJoe

Friday Did It ..

Friday finally allowed both the cash SPY and the ES futures to synch up with a new all-time higher high. This was the minimum requirement for suggesting a potential diagonal upward, as in the daily ES chart below.

This count can have some marginal extensions but doesn't need to. Regardless, with a near complete count - including alternation - the risks are getting quite high for further continuation to the upside. Meanwhile, the downside risks are increasingly dramatic.

Have an excellent rest of the weekend and start to the new week,

TraderJoe

Waiting on ES to Catch Up?

Price has been playing cat & mouse with the prior highs. The SPY (cash) hourly has twice peeked above its prior high, as in the chart below.

The ES has not yet exceeded the early November high. If it does, we can continue to consider the diagonal wave count. Perhaps it will on Friday or early next week.

Meanwhile the SPY, above might be making a diagonal or a barrier triangle which might signal the end/near-end of this particular up wave, which - again - might be the wave ③ of a larger diagonal or up wave.

Bottom line? There might be some whippy action in the vicinity of the overhead resistance from the prior high.

Have an excellent rest of the week.

TraderJoe

Whether or Not ...

The ES Monthly Chart is below. We have been counting this wave up as Intermediate (3), and it remains so. But, interested Elliott analysts need to ask the question, "what IF this wave exceeds equality with wave Intermediate (1), up? We'll, if this wave up is a Cycle V wave, we have been expecting a diagonal, up. That could still happen as a contracting diagonal if wave (3) remains less than wave (1). 

Usually, in contracting diagonals, the third wave doesn't much exceed 78 - 80% of the prior first wave. But what if it does exceed equality? Then, we would simply propose that the count - while remaining the same - would simply trace out the expanding diagonal option below.

There are a couple of clues already. The first clue is that this wave (3) is longer in time than the prior wave (1). We noted this earlier in posts and comments. This fits with the expanding nature of an expanding diagonal. Second, the Elliott Wave Oscillator has lost the contracting divergence on the two-weekly timeframe. We noted this in comments.

But first, to switch to the red count, we would need to see that longer wave up. It hasn't happened yet, and like today, the market has really been playing chicken with us collapsing when it might impulse for this count.

Still, the grinding, overlapping nature of the counts suggest that a diagonal of some type is in progress. So, we'll stay with a diagonal count unless/until price dictates otherwise.

The contracting diagonal is actually the more conservative count in the short run, as it requires a much shorter wave (4) overlap. But we will still just simply follow the rules and do as measurements require. If the count requires a more dramatic dip - then so be it!

Have an excellent start to the evening, and to the holiday week if you are starting it already.

TraderJoe

ES Daily - The Alternation Option

The ES Daily futures chart is below. If there was an alternating wave iv, that was a Flat sideways compared to a sharp second wave, ii, then it is possible that a high might form as an overlapping diagonal, sketched in below. Such a diagonal would invalidate above 6,160 however.

We did sketch out a diagonal yesterday on the ES 15-min chart. It currently looks like that diagonal is leading or is still in progress (as more contracting waves, with the first diagonal as an 'a' wave of a first wave). But the count remains murky and compressed. If a diagonal is forming on the daily chart, then at least wave ③ should make a new higher high over wave ①. Wave ① has already made a higher high above wave iii to express its character as a motive wave.

Have a great start to the evening and to the weekend.

TraderJoe

ES 15-min: now a diagonal ?

With this afternoon's higher high, there is now a likely diagonal possibility on the ES 15-minute chart, as below.

ES Futures - 15 Minute - Potential Diagonal

The questions now are: 1) will it maintain diagonal measurements, and/or 2) will it be leading or ending? Only time will tell.

Have an excellent rest of the afternoon,

TraderJoe

SPY 1Hr - Consolidation Below Gap

In a fairly tame day, the hourly SPY cash index just consolidated below the gap level shown. Today was not a very impulsive day. There is possibly an up channel forming, but the down count is indeterminate at this point.

A lower low might have a five-wave look, but it is not on the chart yet. Some days you can't make more of a count than what's there. Let's see what the week brings in terms of news events.

Have an excellent start to the evening,

TraderJoe

SPY 1-Hr Two Options

Two options are shown on this SPY hourly chart. The blue option is for a contracting triangle followed by a new higher high. The second option is that the triangle breaks down and a green c wave forms for green wave (ii) of a diagonal.

One concern is that not all of red wave 3 is above a line from 0 - 2, so those waves from 04 Nov through 11 Nov might only be green a,b,c of green (i) of a larger diagonal wave. Another concern is that red wave a 'can be' counted as a five-wave expanding diagonal in cash. A third concern is that usually, not always, the first down leg of a contracting triangle is the most violent. This one is very slow and halting.

Have an excellent start to the evening,

TraderJoe

Monthly (Weekly) Remains (1), (2), (3) ..

Until there is any significant difference in prices, three of the major U.S. equity indexes and their futures remain in the Intermediate (1), (2) and (3) count, as below.

One can imagine, hope, suggest or suppose something different, but until there is price movement downward of significant amount, or even overlap, the count remains the same. And, yes, diagonals remain possible but there is unclear evidence for them at this time.

I'll also be watching to see if the Dow Transports can make a new high or not. If not, they might be in a (B) wave higher.

Have an excellent rest of the weekend,

TraderJoe

Impulse, alt diagonal

According to the SPY 10-min chart shown in the prior comments, we were expecting a fifth wave up, and that occurred for most of the day today with the exception of a 20-point sell-off into the close which may be just profit-taking at the end of the week. And, of course, that's a very short-term chart. It is likely that wave, if ended, is only part of a longer wave in time. Now backing off to the ES 1-Hr chart, granted it is still quite short term, we can see this wave structure which may be the extended first wave type-structure.

The primary count shown in black with circled numbers is of an impulse with an extended first wave. We do not know for a fact that up movement ended - even temporarily - at today's high, but there is a non-overlapping five-wave-structure from ② to that point. If the channel holds (roughly), and there is no overlap, then maybe an impulse will complete.

If not, the alternate count - shown in red - is that maybe we only have the first three waves a,b,c of wave ① of an ending diagonal that might be accompanied by some stiff retraces.

Let's see how it goes early next week. Have a good start to the evening,

TraderJoe

Faster than a speeding bullet...

...more powerful than a locomotive...able to leap tall buildings in a single bound. The opening of the original version of the Superman TV program (Adventures of Superman) reminds us of the movement of equity prices of the last few days. Prices did not even really pause much to interact with the 18-day SMA before they headed for the upper daily Bollinger Band.

Still in all, it looks like a fairly typical Elliott Wave with alternation between waves ii and iv, with the second wave as a sharp and the fourth wave as a longer-in-time sideways sequence. Nothing says the up wave is entirely over, yet, and tomorrow is Friday. But, how much more news can one pack into a week? Tomorrow has Preliminary Consumer Sentiment, mortgage delinquency information, and some FED speakers.

Let's see what it brings. Have an excellent start to the evening,

TraderJoe

Pre-election Rally

On the daily chart of the ES futures, yesterday we said price was in a risky area for new naked shorts based on the position of price relative to the lower daily Bollinger Band, and the daily slow stochastic being in over-sold territory. Today illustrates why that guideline exists. Whether just a 'snap-back rally' or heading toward a reversal of the daily down trend, prices headed higher and stayed there most of the day. This price action, with a higher high, also - at least temporarily - reversed the swing-line indicator to the upward direction as shown below.

Perhaps the objective is to fill the yawning cash gap left on the SPY index, or perhaps it is to fill the overnight futures gap shown above as the red circle. In either case, price has overlapped upward (overlap warning L#1). And what remains to be seen is whether the two up (green) fractals at the high hold or break. As of this time price has not yet recaptured the 18-day SMA on the upside (see yesterday's chart).

If both of the up (green) fractals break it will end the down trend temporarily. Based on the length of time of the 3rd wave to the September high, we said this wave down could be the 'c' wave of a Flat and showed the possibility of red wave 4 at a non-overlapping location.

One of the difficulties of counting Elliott Waves is one often has to wait for a wave that does not go over a local high, and then wait for a wave that breaks a recent low. This is all part of The Fourth Wave Conundrum that happens at every degree of trend.

Let's see what information the election results and the FED meeting, reported on Thursday this week instead of Wednesday, delayed because of the election, provide.

Have an excellent rest of the evening,

TraderJoe

ES Futures LL, LH, LC

Today was a lower low, lower high and lower close making a swing-line down trend continuation for the time being, as per the ES futures daily chart, below.

ES Futures - Daily - LL LH LC

Today was also the third consecutive daily close below the lower Bollinger Band. This does tend to lower the odds to about 2-4% of the next close being below the band (not impossible - just lower odds).

Price is currently pushing the lower band down which might start or continue a more impulsive movement. And if this occurs the next target would be the combination of the roll-over contract gap and the 100-day MA (green crosses) which are in nearby locations.

Typically, with price along the lower band, it will either break down decisively, ride the band lower for several days or quickly decide to reverse to back inside the band. With such uncertainty of being under the band typically only 5% of the time, it is no wonder that the Smart Money often takes at least some profits here on their short positions from under the 18-day MA (red line), even if they decide to let some ride. 

But make no mistake, there is nothing bullish on the chart until/unless price closes back above the 18-day MA again. Taking profits is not the same as going long for the large sums involved in Smart Money positions.

The daily slow stochastic is over-sold and so it is a warning to the retail not to initiate naked new shorts here. If the daily slow stochastic is to embed it might start with a breakdown bar, but that - and its follow though bar - are not in evidence yet. This is not trading or investment advice. It is just a different way of saying what broker Ira Epstein says as follows: "Would I ever tell a client to put on a new short under a daily Bollinger Band? The answer is a plain, 'No. Not ever'."

You may have also noticed that some futures brokers are tightening up margin requirements ahead of the election and possibly the FED meeting. This is also likely thinning out volume a bit.

Have an excellent start to the evening,

TraderJoe

The Dow is the one to worry about

From a wave-counting perspective, the Dow is the one showing the most stretched wave count, and it is the one to worry about going forward. Still within the context of an Intermediate wave (3), the count for an overall contracting diagonal is just about as full as it can get. Let's go over some reasons why below the weekly chart that follows of the Dow (YM) futures.

First of all, we said that if wave W wasn't divided into two waves, ⓐ and ⓒ, then current wave X (or alternative wave 2) would be longer in time than the prior higher degree wave in the same direction - Intermediate wave (2). This would seem to be a violation of degree definitions.

Second, within Y, minute ⓐ is equal to the minute ⓐ within W. And, still within Y, minute ⓒ equals its minute ⓐ at present.

Third, Minor Y is longer in time than Minor W. So, either the two waves are of the same degree or Y is one degree higher. Right now, I contend they are of the same degree.

Fourth, Minor Y is within 1.618 times Minor W. This is really up against the limits of a double zigzag in terms of price length.

And Fibonacci Fifth, the alternation pattern within the corrective sequence would be ⓒ of Y is an expanding diagonal whereas ⓒ of W is a contracting diagonal.

Yes, this is a bit of a bizarre pattern, but - make no mistake - it represents continued fiscal and monetary expansion pushing asset prices higher and higher.

Price has currently returned to the parallel shown. It is possible we can construct one bounce higher towards 44,000, but the risks are considerably more in relying on that than the reverse - that the current expanding diagonal higher will be retraced in less time than the diagonal took to form. And should price return to trading inside of the parallel, it will tend to indicate that the up move is expiring.

Have an excellent rest of the weekend.

TraderJoe

Lower Low Day

Unless you checked really closely you might not recognize that today in the daily ES futures was actually a lower low day. This keeps the swingline headed in the downward direction for the present.

Today's close was also lower than the lower daily Bollinger Band, making two consecutive days in a row and lowering the odds of the next close below the band to about 3 - 5%. The daily slow stochastic is in over-sold territory currently. However, not too much is impossible with prices and it they do decide to give way, lower, the next interim targets are the futures roll-over gap on 16 Sep and the 100-SMA which are just about at the same location.

We'll have more on the Elliott Wave count on the weekend. For now, have an excellent start to your evening.

TraderJoe

Lower BB Target Met

Earlier today we wrote that the first target of the lower daily Bollinger Band was met this morning and that there were lower targets, as well. Price did pretty well bust the 78.6% retracement level for a potential triangle, but a triangle can't be ruled out definitively just yet. Price did come quite close to the second target of the 08 Oct lows.

It looks like the EWO/AO is trying to make a fourth wave signature (or worse), lower. This is possible still maybe as a Flat wave (or 'just barely' as a triangle until we can rule it out). The approximate equal odds alternate is that we have topped in the wedge-shaped 5 count shown previously.

The Fibonacci ruler is shown, and anything below the 38.2% retrace also would rule out the triangle. Also, the overlap warning is showing overlap of the first up wave in the sequence. So, exceeding that lower would be highly suspect. Interesting the futures roll-over gap is right at that 50% retrace level, too.

Let's see how the night goes with AMZN and APPL earnings after the bell. 

Have a good start to the evening,

TraderJoe

Nothing in Stone - 3

The ES daily futures today had their first close in a while below the 18-day SMA, closing at 5852 vs 5,857. This changes the closing bias to lower. It ups the odds that price is making a triangle, a flat, or something more lower. Note, the daily chart automatically adjusts for the 4 PM settlement, and not the trading close. More on this below the chart.

Meanwhile, the ES 30-min intraday wave-counting-screen analog below shows that price was hugging the lower intraday Bollinger Band in the late afternoon. The result so far being that neither GOOG, MSFT or META earnings really jacked up prices today except for a few hours.

Also notice late in the day price closed the trading session at 5,845, below where the official settle is shown. Price closed at the S1 daily pivot slightly below the lower band, and there was a cross of the 18-period SMA under the 100-period on this time scale.

We suggested one intraday count on cash in the comments for the prior post, and it may be a part analog of what this structure may be morphing in to. More bars are needed to see if a complete structure forms.

Have an excellent start to the evening,

TraderJoe

Nothing in Stone - 2

The ES futures had an inside day up, on a gap, with a higher close than Friday, but closing below the high to possibly make a Doji candle. The Doji would require a confirming candle lower, even for the c wave of a potential triangle or Flat.

ES Futures - Daily - Inside Day Up

There were no intraday counts from me today because there were no contributions from others. I'm perfectly happy just trading my own account. 

Have an excellent start to the evening,

TraderJoe

Nothing in Stone

IF some things are carved in stone, this wave count is carved in butter. Although a look at the current lower trend line is amazingly pinpoint, and although today's close amazes with its again close approach on or near the 18-day SMA, the wave count itself has a couple of options that we are suggesting. The ES December futures lead-month contract daily chart is below.

ESZ2024 Futures - Daily - Wedge

The completion count is shown in magenta. It is possible with about 40% odds. The other option shown is a triangle. The one shown in green would be a contracting triangle - on a daily basis to possibly take price into the election near the high. The invalidation for the contracting triangle is shown. But that just brings to mind the other possibilities that include an expanding triangle or a diagonal. They make up the other 60%.

Once again, there is nothing indicated here but the need for calm, patience and flexibility as the potential topping patterns play out and/or the market makes a downward wave long enough to be more unequivocal in its interpretation.

Until then have an excellent start to the evening and the weekend.

TraderJoe

Time, Time, Time .. Consuming a lot of it (2)

On the ES daily futures, today was an inside day and represented "the battle at the 18-day SMA" with the daily slow stochastic still in over-bought territory. Another inside day with a higher high could occur tomorrow.

Although the swing line indicator has lower highs and lower lows, price remains above the 18-day SMA as of this time, and that is a neutral condition.

Yes, a higher all-time high could result from here, too. It just depends on whether the market is trying to maintain a wedge or break down into a channel (which would likely take prices to the lower daily Bollinger Band). The situation requires a lot of patience and flexibility and a bit more attention to the hourly internal counts.

Have an excellent rest of the evening,

TraderJoe

Time, Time, Time .. Consuming a lot of it

The ES futures situation has not changed much in the last two days. Either we've topped, or we are making a time-wasting triangle as shown below. Either is acceptable in the overall Elliott Wave count.

Last night's down wave is greater than 62% of the prior up wave make for an increased likelihood of a triangle's symmetry. But if it morphs lower and breaks the invalidation - well, we have seen that before. If a triangle does form properly - just remember that triangles often precede the last motive wave in the direction of travel. The goal may be to get the NQ to catch up with the ES and make a new high, but that is not for certain.

Have an excellent start to the day.

TraderJoe

Time, Time, Time .. See What's Become of Me

With apologies to the Simon & Garfunkel lyric, the monthly SP500 chart below speaks volumes about some monthly Fibonacci time relationships.

Like the rest of technical analysis, time relationships (i.e. natural cycles) don't ever guarantee anything. But they are suggestive that this up run may be getting stretched. Sometimes they work +/- 1 or 2. 

Have an excellent rest of the weekend,

TraderJoe

Probably Never Again on This Scale

In the Dow (YM) futures, we have been counting the expanding diagonal pattern upward. In this count, the internal waves would be 3-3-3-3-3 which are all zigzags. With 126 candles on the daily chart, the EWO has the perfect signature for the expanding pattern with wave (iv) deeper than wave (ii) and wave (iii) greater than wave (i). I do not know if I will ever get to see such a pattern on this scale in the rest of my life. It is truly amazing.

Prechter previously wrote that 'often' these patterns end before reaching the upper trend line. Sometimes they throw-over that line. We'll have to see what this one does but the pattern currently meets the rules for the expanding diagonal with (v) > (iii) > (i) and (iv) > (ii) with (iv) overlapping wave (i) without traveling beyond the end of (ii). And, as the pattern currently stands, within (v), c is only a little longer than equality with a.

Once the pattern ends - if it is a true diagonal - the start of the diagonal should be exceeded lower in less time than the diagonal took to form. This one took about six months to form. If we've got the structure correct that the pattern is a true 3-3-3-3-3 composition of zigzags, the rules state that it almost certainly is an ending diagonal. I may never see anything like the size of it again in my lifetime.

That said, can it go a bit higher? It can. I'm just wondering if the contracting waves at the end - with an overlap in the futures - are finishing the c wave.

P.S. Here is a diagram of this wave form from Neely, Mastering Elliott Wave, page 5-14, showing the minimum retracement as 100%. See pattern in the lower right.

Have an excellent rest of the evening,

TraderJoe