Here is the monthly closing-only chart of the ES E-mini futures. The trend lines are still pretty interesting but even more-so are some of the monthly Fibonacci time relationships.
We don't know that the third time relationship will hold. The evidence currently pointing toward it are 1) the trend lines, 2) the RSI divergence, 3) divergence with new-high new lows shown yesterday, 4) divergence with percent of stocks above their 50-day MA, 5) divergence with McClellan Oscillator, 6) divergence with the DOW, the transports, 7) continued divergence with HYG, and 8) a third wave, (3), which is currently shorter in price than wave (1).
Some evidence which points against the relationship not holding is the following: 1) NYSE adv-dec line recently made a higher high, 15 May, 2) Quantitative Tightening level drops off to the $40 billion level beginning June 1, and 3) the 4-hr chart can survive a further higher high, yet.
In the short run, prices continue to grind around in both directions still requiring caution, patience, and flexibility.
Have an excellent rest of the weekend/holiday.
TraderJoe
I haven't verified this yet but i have seen very long term charts of the cash SPX trend line running from the 1929 high to just around the 5400 level. Caveat is are the charts adjusted correctly for inflation? Log or arithmetic. Also I saw that there is a diversion presently in the McClennan Oscillater.
ReplyDeleteYes, the ones I have seen are log charts and adjust for inflation as best as a log chart can do. TJ.
DeleteOk thanks TJ
DeleteP.S. The 'best' way to adjust a stock index for inflation is to divide it by PPI or GOLD. TJ.
DeleteOne other thing. The price action in Japan is interesting. Is that a 5 wave impulse off the high followed by a corrective bear flag? The ? should be answered soon.
ReplyDeleteThe Dow??
ReplyDeleteThings got muddier on gold.
ReplyDeleteLooks like a valid expanding diagonal off the bottom, maybe a of 4?
https://imgur.com/2LIpam5
edit: 5 of the ed needs more length, were probably in c of 5 now.
DeleteVix could could have bottomed?
ReplyDeleteAnd if correlation is correct than spx topped?
Doesn't seem to be that simple looking at history. VIX was at current level back in mid-December and the cash SPX was up 13% over the next 3 months or so. But it worked well in 2022. VIX is a measure of "expected" stock market volatility or uncertainty, so it's essentially a sentiment indicator. And of course sentiment can stay extreme for extended periods before reversion kicks in. I use a VIX moving average crossover to monitor for changes in risk on/risk off behavior. I'm interpreting the low VIX reading as a high degree of certainty in a soft landing. The upside of low VIX is that it's rarely this cheap to hedge.
Delete@Drew -- Thank you for an insightful comment.
DeleteLooks like clean 5 waves down for Dow Industrials from last Wednesday high to todays low. While other indexes look a mess with overlapping waves on top of overlapping waves, the industrials look like the start of an impulse move to me.
ReplyDelete@Kevin. -- Keep in mind that the ^DJI does not include GOOGL or NVDA.
Deletepossible gold ed.
ReplyDeletehttps://imgur.com/ILSaZO5
Still waiting to see how es gets to the channel.
ReplyDeletehttps://imgur.com/rxKMmU7
ES 1-hr: IF price gets below 5,294.50, then the overnight diagonal may have invalidated in less time than it took to build.
ReplyDeletehttps://www.tradingview.com/x/vU3Q3F7m/
TJ
Dow down again tonight
ReplyDeleteJapan and Europe too. Nobody rings a bell at a top and NVDA won't necessarily prevent a decline. There are a bunch of techs focased on this 5th wave up. We shall see.
Gold ED never developed.
ReplyDeleteHas a respected channel for the decline.
https://imgur.com/CW8jMtN
4hr ES channel might provide support for a deep retrace of the the diagonal TJ pointed out.
ReplyDeletehttps://imgur.com/UPMKQ6u
ES 1-hr: by trading below 5,294.75 (as noted yesterday), the upwardly sloping previous diagonal has been undercut in 'less time' than the diagonal took to build: i.e. a 'true' diagonal.
ReplyDeletehttps://www.tradingview.com/x/YjIZOJic/
Now, for a downwardly sloping diagonal, wave iii 'must' make a new lower low. If it doesn't then we are in some kind of triangle or combination. But the cash market isn't open yet. Let's see where she goes - with a real warning it can be whippy out there.
TJ
this is a good opportunity to test your theory of size of move has to be proportional to the degree. if market makes a new high then 2nd wave of the 3rd wave will be bigger than 2nd overall wave of this move
DeleteIt's not my 'theory'. It is just the definition of the term 'degree'. TJ.
DeleteThat potential ED is truly fascinating. Those are the kind of EW structures that in my opinion are truly predictive. If we see the typical rapidity of retrace of the entire structure...."something wicked this way comes..."
ReplyDeleteReminder: FED Beige book at the top of the hour. TJ
ReplyDeleteDJT Daily - the Dow Jones Transports just made another lower swing low, further reinforcing a Dow theory sell signal.
ReplyDeletehttps://www.tradingview.com/x/tuLjnay2/
TJ
Yes Sir!!!
DeleteOn the ES 4hr, I think we may be getting some 4th wave sneak here to set the trap.
ReplyDeletehttps://imgur.com/ovvK0rc
ES 1-hr: after hours. The ES has a just undercut the 09:45 am low. TJ.
ReplyDeleteA new post is started for the next day.
ReplyDeleteTJ