From Shorter-Term to Longer

The prior post shows the shorter-term daily count on the Dow (YM) futures. Today's post reviews two long term charts, the counts of which have been outlined in previous posts. I'll keep the commentary short as it is the count which is the most salient. Each chart is still in an effort to "count five waves until we can not". Here is the annual close-only chart with degree labeling shown. This is my own count and recognizes a "Running Second Wave" for SuperCycle [II] which augurs in the great strength of the following SuperCycle [III]'d wave.

We likely haven't seen a good sign yet of SuperCycle wave [IV] as there has not yet been a clear five waves down to start a trend reversal. Note the likely divergence on the PPO indicator from the high of Wave Cycle III to Cycle V.

And here is that wave Cycle IV to Cycle V - which may not be done just yet. Again, this is still in an effort to "count in fives" this time on the monthly close-only chart.

There are still higher highs, but yesterday's post shows a reasonable way for Intermediate (3) of Primary wave ⑤ of Cycle V to end, before beginning Intermediate wave (4) down. Cycle V appears to be one heck of wave at least partly induced by the accompanying $25 Trillion in debt added to the books of the United States Treasury - just since 2010.

Have an excellent rest of the weekend.

TraderJoe

Dow (YM) Futures - Expanding Diagonal

The daily Dow futures timeframe just happens to correspond to 111 candles on the chart - in the range for using The Eight-Fold-Method for Counting an Expanding Diagonal. The chart is below please look it over closely. This pattern is for a 3-3-3-3-3 Expanding Diagonal so it 'must be' terminal - according to the published 'rules'.

Note how the Elliott Wave Oscillator clearly shows the expanding pattern. The EWO for wave (iv) is deeper than that for wave (ii), and the EWO for wave (iii) is higher than for wave (i). Further, every numbered wave is on an opposite side of the EMA-34 showing good form and balance.

Since the pattern must be composed of zigzags, we know that wave (ii) is a slightly truncated zigzag which augurs for the large upward wave sequences that follows. But - in any event - wave (iv) does not exceed the low of even the truncated zigzag.

Whenever we count, we try to count by 'fives' first. And what is the overall pattern shown above? It is a 'five'. This is likely minute ⓒ of Minor Y of Intermediate (3), upward. Why? Because we are 'also' attempting to count five waves up to Intermediate (5) of a Primary ⑤ wave of a Cycle V wave. And, if we can't count by 'fives' usually because of overlaps that would break the rules, then we count by 'threes'. But this pattern overall results from the fact that we are trying to count by fives in the first place!

The Eight-Fold-Path-Method is an aid to doing this because the possible patterns begin to emerge as the number of candles approach 120 - 160, and as price begins to wind back & forth around the EMA-34.

Do we know that the count above is over? We do not. 'Often' Expanding Diagonals end slightly before their upper rising trend line. Sometimes they cross it a bit. There is an inverted hammer candle at the high, but that's all it is. It is not even a red candle. Confirming lower close candles would have to occur. They are not in evidence yet, but we'll be looking for any such signs.

Have an excellent rest of the weekend,

TraderJoe

Local Count - SPX Hourly

The overall count of Intermediate (3) from the prior post in monthly and weekly time frames continues unabated. There is nothing amiss with it yet. This chart is the local hourly count in the S&P500 cash index, given that the wave ii to wave iv trend line has been broken.

This count is only possible because a new high in this index was made today. It should be noted that futures and cash SPY did not make the new high yet. Further, I do not know that wave ③ shown is completely done. There could be overnight news or a gap that will move it higher in price, and perhaps remove the seeming anomalies of the SPY and the futures not having made a higher high yet.

Note that in contracting diagonals the usual expectation is that waves ① and ③ will express their motive character by being over their prior wave highs, so this count shows them reflected this way.

There can be a fifth wave up over the high, and it could travel a bit. It 'could' also fail, but we expect the pattern to complete - until or unless it doesn't.

Have an excellent start to the evening,

TraderJoe

Same Count until Otherwise Noted

The monthly Dow futures (YM) remain in this count until measurements require otherwise: still in an Intermediate (3)rd wave, possibly of a contracting diagonal. Right now, things have progressed to the point where the Intermediate wave (4) is becoming more likely.

 

DOW (YM) Futures - Monthly - Intermediate (3)

And within Intermediate (3), the following count appears to fit the data best on the weekly time scale.

DOW (YM) Futures - Weekly - Intermediate (3) Internals

On the daily time scale, it looks like an expanding diagonal may end the minute ⓒ wave of the Minor Y wave. The daily chart is below.

The time now is to assess when the minuet (v)th wave is completed. It is currently longer than minuet wave (iii), as required by the pattern. But sometimes these waves run on to make a further Fibonacci relationship. The "c" wave within (v) could extend more to be more equal to the "a" wave at 43,167, or it can go longer if it wants. In any event, the usual overlap warning is noted should the pattern give way in the coming days or weeks.

The best alternate count remains that this is a "B" wave top, either at Intermediate degree, (B), or at Primary degree Ⓑ, but there is no point in invoking the alternate count until/unless the length of a (4)th wave should invalidate in the future.

Have an excellent rest of the weekend,

TraderJoe

Surprising September

It's not every day you get to see a count like this one on the ES 2-Hr chart (September futures only), so it is worth studying. Look at that fourth wave! It is something to remember.

Note: the roll-over contract looks even uglier than this one, but it is what it is. There's a good probability that wave v, up, is over, but confirmation does not come until the low of wave iv is exceeded lower. And it would be nice to see how the overnight fares. So, let's see how it goes.  Due to how high up in the wave count we are, an exceptional amount of patience, calm and flexibility are needed in counting these sequences.

It is interesting how all the 'seasonal' players have so far been incorrect. September is currently an up month and not a down one. Maybe that will change in the last week(s).

Have a good start to the evening,

TraderJoe

It's a Mess

Today the ES futures roll-over contract made a new all-time high, as in the chart below, on the FOMC cutting interest rates by 50 basis points. However, neither the September nor the December contracts by themselves made new all-time highs. In the cash markets the SPY and the SPX did make higher all-time highs, but promptly fell off as well.

And while the Dow (YM) futures also did put in the new highs, the NDX (NQ) and the Russell (RTY) futures did not.

To keep things simple, today was also an outside key reversal day, down, but on very choppy trading.  So, we must monitor the high of today's bar for the next two sessions in case all we did was take more time for a fourth internal wave per yesterday's post.

Yes, the choppy and non-confirming action may point to triangles being made - such as a barrier triangle at the high or possibly a diagonal, but structures like that remains to be fully formed. So, to keep it simple - for now - let's watch the high for two days while we wait to see if further downside develops.

Have an excellent start to the evening.

TraderJoe

The Next Task - 2

The chart below is the SPY 30-min timeframe. The update is prior to the results of the FOMC update scheduled for Wednesday at 14:00 ET.

Possible for a fourth wave to be a triangle, to be a failure swing at this location, or to drop lower in a flat. The Elliott Wave Oscillator (EWO or AO) is below zero indicating a fourth wave.

Have an excellent rest of the evening,

TraderJoe

The Next Task

As bewildering as the daily, weekly and monthly counts might be, the next task before us is much simpler and more straightforward. According to The Eight-Fold-Path Method for counting an impulse wave, the SPY 15-minute chart currently has about 136 candles for 'the wave of interest', as shown below. Note that the Elliott Wave Oscillator (EWO/AO) is already near the location where a fourth wave can be valid (+10% to -40%) of the peak of wave iii/c. 

SPY Cash - 15min - The Eight-Fold-Path Method

So, if the whole wave sequence in the channel is to form an impulse wave, then a potential ivth wave should hold the 38 - 50% retracement level as given by the Fibonacci ruler. As you can see, this is also the area of a prior ④th wave of one lower degree. If this level (or above) holds for a fourth wave, even if it is a triangle, then the potential is to make the vth wave higher. If not, we simply accept a,b,c up and look for either a larger triangle or diagonal, upward or downward, that these three waves can be a part of.

As it stands, wave iii/c is just inside of a 2.618 extension and is realistic for that reason. We'll also note that wave ii/b is a Flat wave, and so wave iv - if it forms with alternation - would likely be in the zigzag or triangle category. We have also shown the clear overlap level on wave a/i, up.

And that is about the extent of what the method provides. If you are not familiar with it, The Eight-Fold-Path Method is a link in the Featured Post in the upper right-hand corner of the main blog page.

Have an excellent rest of the weekend.

TraderJoe

Nothing Happening Yet

There's nothing happening yet except for continual whipping, grinding, and wedging. So, looking at the weekly count with 100 candles, one also sees that the Elliott Wave Oscillator is not yet near the zero line. It is, however, diverging. So, in the impulse version of the count for the ES, this could indicate we are still in a triangle or some other fourth wave, as follows.

In the corrective version of the count, prices would have to start down lower pretty quickly. Again, the corrective version of the count might fit with the diagonal, but the time is getting quite long for that to occur.

Have an excellent start to the evening,

TraderJoe

What's Up With Noon ?

In the last two days the ES hourly has had a turn either exactly at noon or on the candle next. What's going on here? Yes, I get that this is the time for news media to make an impassioned plea that stocks are either falling out of bed or shooting to the moon. Here is the current hourly count for the ES futures off of the recent low.

So far, it looks like a/i up, and b/ii flat and then the up wave that started at noon today. It's all gappy and grindy. It doesn't mean it can't go up, but it doesn't seem like true impulsivity in this channel shown.

Have an excellent start to the evening and the CPI report scheduled for tomorrow.

TraderJoe

Inside Day

    Today was a slightly lower volume inside day compared to the prior down candle. This post serves only to be a reminder of one of Ira Epstein's key guidelines. Here is the daily chart of the ES futures.

ES Futures - Daily - Back Inside the Band

    On Friday, price had gotten down to the combination of the lower Bollinger Band and the 100-day SMA (green crosses), while the daily slow stochastic was over-sold only. As you know if you have watched any of Ira's videos or read some of the material here, this is a location where Ira would say, "This is not likely a place to make new shorts because the Smart Money is likely taking profits at the lower band. Price is only likely to close outside of the upper or lower band ~5% of the time." (Again, this is not trading or investment advice, just a paraphrase of a broker's guidelines.)

    So, the nice thing about this chart is that it shows this guideline in action on the daily chart. The reason for the guideline is that those Smart Money players that follow and use Bollinger Bands on the daily chart, can likely find a better entry for a short position - back inside the band. And that is where prices ended up today. Can price go back higher inside the band? It can. Must it? It doesn't have to. But often prices sometimes retreat to or near the 18-day SMA to figure out where to go next. They could do that. They just don't have to.

    From a wave-counting perspective, we said on the SPY hourly we could only count three waves down from the high. So, once again, if we're proceeding lower, then it will likely be by diagonal, but it is way too early to conclude that. And is it possible to go over the top again? It is - just with slightly lower odds because price is still closing below the 18-day SMA and still has downside bias. 

    Have an excellent start to the evening,

    TraderJoe

Two Things to Watch in GOLD (GC)

The 4-Hr chart of Gold Futures (GC) is below. There are two items to watch based on the upper left-hand side of the chart being a Minor 3 wave as per daily and weekly studies. So far on the left, the chart looks like three waves down to an a-3 wave, then three-waves up to a b-3 wave precisely at the 90% level for a Flat. This level is shown by the Fibonacci ruler. Then, there are five waves down for the potential c-5 wave to finish the flat. Next, there appear to be five waves up for another a wave, up, then a b wave down in three-waves to form an upwardly sloping parallel channel. The whole mess looks very, very sideways, and it is intriguing that the b-3 wave up made exactly the 90% level.

GOLD (GC) Futures - 4 Hr - Flat ?

So, if we are getting a flat, we may be building a much larger wave Minor 4, which, itself could be a larger Flat or Expanded Flat. So, the two items two watch are these:

• Does price go up over the a wave to make a new high, possibly in the (b)-3 wave of a larger Flat or Expanded Flat starting from the (a)-3 wave? Or,
• Does price crack below the down (red) fractal at the c-5/(a)-3 low?

Once again - as we stated earlier - we are following Gold's parallels higher until we can no longer. But as of this time there are much larger parallels that can play out on Gold's upward drift.

P.S. There is likely not overlap of waves ④ & ① in the c-5 wave. It is very, very difficult to say where wave ① ended its downward travel, and there may be a flat wave after it. This is the second post this weekend and if you have not read the first one, you may wish to read it now.

Have an excellent rest of the weekend,

TraderJoe

Count Works in the DJIA

As you know I have long been a proponent of "counting every different stock index on its own terms". That is because of the great differences between both the number of and types of stocks in each index. Nowhen is that truer than now. Readers of this blog will note that both the NQ and RTY stock index futures have overlapped downward as of this Friday. The Dow (or YM futures) and the S&P (or ES futures) have not as of this time. That doesn't mean they won't. Still Elliott used the Dow Jones Industrial Average to represent the best of the U.S. economy. So, we will show that count below and see what it looks like at this time.

DJIA (YM) Futures - Weekly - In Channel

Overall, so far, prices remain in a pretty strict channel. This is often a sign that the move is corrective in nature. So, let's deal with the elephant in the room first: with a corrective channel upward, the Principle of Equivalence says we must consider two counts as roughly equivalent. Those two counts are these. First, Cycle V top in 2021, then Intermediate (A), down and Intermediate (B), up. Then would come a large Intermediate (C) down, below the low of wave (A). This is shown in red because it is currently the best alternate count.

Second, Intermediate (1) at the top in 2021. Then, Intermediate (2) down in 2022, and this would be Intermediate (3), up, in 2024. This would be followed by an Intermediate (4), down, that would not exceed the low of Intermediate (2) and likely would not exceed it in length either. This is currently the preferred count as Intermediate (1) did not count well as a 'five'. It counted best as a 'three'. And, if this wave is a 'three' also, then, since it is now also shorter in price than Intermediate (1), then it could be the third wave of a very large terminal ending contracting diagonal. This suggests that Intermediate (4) will at least overlap Intermediate (2) downward, but not become longer than it.

Another reason for preferring the above count is that stock market tops are often a diagonal of some type. In fact, look at the waves above from April through August 2024. These waves can be counted as an expanding diagonal in their own right. And, if that count is correct, it suggests both a terminal move, and a retrace to the start of the diagonal in less time than the diagonal took too build. At least this portion of the count makes a prediction. Whether that prediction comes true depends largely on if we have that count correct or not.

Here are some notes on the degree relationships.

• Within Minor W minute ⓐ and ⓒ are both less than W.
• Within Minor Y minute ⓐ is less than Minor W - just by a fraction, but it is (see Fibo ruler).
• Within Minor Y minute ⓑ is less than Minor X.
• Within Minor Y minute ⓒ is less than W.
• By contrast the down waves as a flat from 2022 to 2023 would be longer in time than the entire down wave counted as either (2) or (B). And this would seem to be a violation of degree labels.

We note that the ES likely does not count in exactly this same way, as the time relationships in some of the waves appear different. And we also note the NQ futures - as we have already explained - have a longer wave up in 2024 than they did in 2021. Further, we will note the Dow futures did have a 'perfect' top last week with a higher all-time high, including a nice divergence on the EWO/AO. Other index futures may not have.

So, the best we can say at this time is that we likely will start down on Intermediate (4) or (C), and then we need to see what the wave lengths look like as we approach sentiment lows.

Have an excellent rest of the weekend,

TraderJoe

Still in an Area

Yesterday's down move was bold and dramatic - and not all that unanticipated. People being themselves called the up move over one day into September - and it could well be, but this is just one outcome with about a 50-50% odds. That is because by measurement the down move in the futures still hasn't exceeded the level of 38% x wave iii. Here is the ES 4-Hr chart showing the current measurements.

ES Futures - 4 Hr - Last Chance wave iv ?

Note, too, at this location the EWO is red again, and below the zero line. Note a wave iv - in this area would be longer in time than wave iii. But notice also the EWO is about -66% x wave iii max. That is stretching the limit quite a bit. And, so, we would agree - the market could have topped in a contracting ending diagonal. And so, we have indicated that, too.

With this count there may be a way for the market to make a cleaner C wave up, although that is not required.

Still, with about even odds, caution patience and flexibility are the key words here.

Have an excellent start to the day.

TraderJoe

Problem Child

Every family has one (or two ..).  Let's see if we can deal with ours. From a degree standpoint the chart below shows the problem wave on the ES weekly timeframe. As you can clearly see, the recent July/August down wave is longer in price than the down wave that ended the week of 23 Oct 2023 as shown by the Fibonacci ruler. This was the wave of the 2024 Japanese Yen debacle.

The reason it is a problem is that impulse waves expand by 'smaller degree sub-waves'. This one is too large to be 'smaller' and it overlaps the prior wave high made the week of 1 Apr 2024. So, what do we do with this messy wave count now? Well, a long-considered degree analysis shows that this degree labeling does, in fact, work.

There is, in fact, a table included in the chart of the key smaller degree relationships found. It could stand some scrutiny from the readers of this blog. But one would read the above chart like this. Starting in the lower left from Intermediate wave (2).

1. There is an expanding leading diagonal Minor A wave in the form of 3-3-3-3-3, which is allowed under the rules.
2. That the expanding diagonal truly was 'leading' is borne out by the fact that there is a higher wave, at ⓑ, which terminated over the end of the diagonal.
3. After Minor wave A, there is an ⓐ wave down - which is much longer in price than the prior (b) wave down. Therefore, it is likely of a higher degree than the (b) wave and it is shown as such. Minute ⓐ is larger than minuet (b), and so it stands.
4. Next, that minute ⓑ wave, up, while very large to the eye, is still smaller than the Minor A wave up. So, there just isn't a degree violation. Oh, it isn't pretty, but then the ⓒ wave down is a failure wave, just as predicted by a ⓑ wave that is more than 1.618 times its ⓐ wave. This would make the Minor B wave, down.
5. Now, we appear to be working on an impulse C wave, up as given previously on the four- hour chart. And thus, this might provide the alternation being looked for in a corrective structure: diagonal A, flat B, impulse C.

I would also mention, the other alternation would be Long A, short C within the whole wave up. If it comes to pass, it would be one of the more bizarre counts I have ever encountered, but that's why I do this. I am here to learn, too.

Have an excellent rest of the long weekend and holiday if you are celebrating it. Remember, many cash markets are closed on Monday.

TraderJoe