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

I Need More ..

Today was a down day. After the last few days of horrible grind into the upper daily Bollinger Band on the ES futures contract - shown below - a down day when everyone is going gaga for higher prices is to be expected. We got one. So what? Was it interesting to see? Sure. But, if one is going to be "calm, patient, and flexible" on the way up, then the same must apply to down days. So, what are the measurements?

As of the cash close, the futures had only made an "equal low" to yesterday's bar. I don't want to be greedy but for a good down sequence to start we need to see much more than that. As you can see from the chart, the bar was not even a full-on "outside reversal candle". It didn't have a higher high, nor a lower low, yet (the futures are still trading as this is written).

Further, price is not below the 18-day SMA, "the-line-in-the-sand" and the daily slow stochastic is now embedded (using the classic calculation). The swing-line indicator still has a higher high. Now I realize the NQ and YM futures did have a lower daily low. Okey-Dokey. But they too are still above their respective 18-day SMAs also. The YM & NQ futures at least overlapped their prior high - making certain wave counts less possible. But the ES has not yet. Further, the advance-decline statistics were only about "dead-even" today - nowhere near kick-off or even impulsive territory. So, don't blame me if we are forming a larger triangle or diagonal (more about those, if needed, in later posts).

For now, if the 18-day SMAs are lost, and/or the slow stochastic loses the embedded status, then things might get a bit more definitive. Until then, as I suggested yesterday, new highs are getting much less dependable - merely because of where we are in the wave counts - and the overhead positions of the daily Bollinger Bands.

Have an excellent start to your evening,

TraderJoe

Grind, Grind, Grind ..

This count in the SP500 2-hr cash close-only chart seems to provide alternation with a sharp second wave, shown as 2, and a very sideways fourth wave, shown as 4. (The wave degrees are relative and are just for illustration at this point.

Price is up against the daily Bollinger Band. Higher highs are possible but it's getting risky to depend on them. I want to see what the Equity Put-Call Ratio is tonight, and if there is a "turn on Tuesday".

Have an excellent start to the evening,

TraderJoe

Simple .. but Not Easy

Some traders say trading is "easy" but not simple. It's easy because all you do is press a buy or sell button. But the complexity in making a profit is knowing "when" and at "what price" to buy or sell. Hopefully, the Elliott Wave Principle helps one make those decisions. I'm showing some long-term charts today to show you that there is currently nothing wrong with the Elliott Wave, at least as I'm counting it. First, the yearly chart of the Dow.

DJIA Cash - Yearly - Close Only

The wave is nicely in a parallel, with the "running second wave" the omen of the great upward strength that followed. (Not recognizing this by-the-way may be the single largest mistake Elliott counters have made). The RSI diverges on this Vth wave, and as long as wave III is greater than wave I, then "by the rules" wave V can be "any length". Any top will likely be SuperCycle [III]. Now on to the Monthly.

DJIA Cash - Monthly Close - In a Channel

Again, nothing too wrong here. The wave is nicely in a channel, and it has not left the channel to the downside yet. Primary ④ "might be" a triangle, but it might also just be a Flat. The Flat is shown. IFF wave ④ was a triangle then wave ⑤ "might be" over already. But, again, with higher prices there is just nothing to make that conclusive and there are other options. So, as long as prices are higher, we continue to explore other options. In this wave since Primary ④ we note there is not currently a confirmed triangle or diagonal. And we note that since wave ③ is longer than wave ①, then wave ⑤ "by-the-rules" can be any length. You'll note the RSI divergence has busted above.

So, we began the counting of Primary ⑤ looking potentially for a contracting ending diagonal wave. In that wave, wave Intermediate (3) simply must be shorter than wave Intermediate (1). So far, it is, so we don't want to get off track. That remains the current count - especially in the Dow. 

Now, we know that the NDX has 'exceeded' its length of Intermediate (1). What if the ES/SPX does that too? Students of Elliott Wave likely know that the options are few - making life somewhat simpler than guessing at random: here are two of them.

ES Futures - Monthly Continuous Close - Two Patterns

IFF wave Intermediate (3) becomes longer than Intermediate (1), then one case can be made for the non-overlapping impulse upward. In that case, wave (3) might tend towards 1.27 or 1.62 x wave (1). It has not done so yet. There is no requirement that wave Primary ⑤ contain a diagonal, but given the extent of the rise it certainly is likely. So, what I am saying is this wave could end with an impulse. In this case, maybe wave (4) would be a triangle or wave (5) would be a diagonal - still within the larger impulse on the left. All of that is completely possible.

But the other - more ugly - case is simply for the expanding diagonal.  This case would become more likely the more overheated sentiment and upward price targets get as we head into the election. And it is starting to get there already. It would still be a way to end Cycle V with a diagonal! Note that the Dow is showing some signs of an expanding diagonal already, but at a lower degree. And also note that daily Bollinger Bands are not too far overhead. Further, either of these two patterns would explain why Intermediate (3) is now longer-in-time than Intermediate (1).

The thing is that patience is needed. And a stopping point (or terminal) of this upward wave and reversal is needed for any decision-making at all. So, we are keen on the lookout for the latter and urging with all intensity the former. Let's not lose sight of the basic measurements, the parallels, the basic patterns and the rules.

Have an excellent rest of the weekend,

TraderJoe

Three Measurements - And then some..

The ES (continuous futures) contract have 120 candles on the two-weekly timeframe shown below. The three measurements we'd like to refer to are below the chart.

The three measurements are these:

1. Price is beyond the 1.618 external retrace of (2)/(B) on the left.
2. Price is beyond 78.6% of (1)/(A) in the middle and may be nearing equality.
3. The EWO made a higher high of 711 in this wave compared to 695 previously.

Therefore, price is beginning to lose the measurements of both a contracting diagonal and a (B) wave in this cycle. Nothing is impossible. They both could still occur, but the odds are getting lower and lower with each passing marginal new high. The "and then some" is that the up wave since Oct 2022 is also longer in time than the wave up to the Jan 2022 high.

Therefore, The Principle of Equivalence takes over, and the wave labels for the three-wave sequence are now (1)/(A), (2)/(B) and (3)/(C). Yes, it is possible an even larger diagonal fifth wave will form from this mess, but there would likely be a 62% or greater retrace of these waves if that were to occur. But, for now, we are working on the channel count until we can not.

Once again, nothing to the downside will surprise us, but the grind continues until it doesn't. There is a lot of room for pullbacks but, at the moment, there is no daily or weekly signal candle. So, we'll continue count following the rules and The Eight-Fold-Path-Method until there is some downward length to work with.

Have an excellent start to the evening and the weekend,

TraderJoe

Larger Daily Wedge - No daily signal

Here is the larger daily wedge on the SPY cash index. There is no daily signal candle or confirmation at this time.

There is a also a very, very good chance that we are only in the third wave, ③, as well. These two counts should be considered equivalent until they are not. The alternate might allow the wedge to expand once more - which is something that has been occurring a lot lately.

Have a good start to the evening,

TraderJoe

It's the Fourth Wave Conundrum (at every degree of trend)

In the comments for the last two posts, we were discussing a smaller triangle, a larger triangle, and a potential expanding diagonal downward. The smaller triangle was already valid. The larger triangle potentially became valid today, as in the ES 4-hr chart, below. So, new higher highs would be needed to confirm these triangles.

ES Futures - 4 Hr - Potential Larger Triangle

The downward diagonal would be counted as below, but it needs to form a larger wave 5 than the current wave 3 shown on the ES 2-hr chart, below.

ES Futures - 2 Hr - Potential Expanding Diagonal

This is an illustration of The Fourth Wave Conundrum that does occur at every degree of trend. For example, even if there is an expanding diagonal, we don't know if it will be leading or ending (to end a larger fourth wave). So, caution, calm and patience are still very much needed.

Have an excellent rest of the day & evening,

TraderJoe

Weekly Count in Gold (GC)

With 100 candles on the Gold (GC) futures weekly chart, we said we are still trying to count by parallels until we can no longer. The Elliott Wave Oscillator on this time frame indicates a maximum on a third of a third, and a divergence on minute ⓥ of Minor 3.

Wave 3 is a 1.618 extension, plus, and the question is whether a fourth wave is underway. IF so, then at some point a retrace back down to the prior fourth minute wave might occur. And IF this is wave Intermediate (5), up, then it is possible this correction might take the form of a triangle. In any event, it would be expected for the EWO to track down towards the zero line so that it meets the usual guideline of +10% to -40% of the maximum in wave 3.

Have an excellent rest of the weekend.

TraderJoe

Something Odd Going On

Maybe it's an election, and someone wants the futures pinned to 5,800. Maybe not. In any event, here are some observations.

The overlap is only good on the front month futures contract. The SPY and the roll-over contract do not show the overlap. Counting is dreadful, but that is expected as we appear to be in one heck of a wedge. Note than an alternate is clearly indicated as red ③, as we do not want to assume upward movement is over - as whippy as it is.

Have a good start to the evening and the weekend,

TraderJoe

From Longer-Term to Shorter-Term

From the prior long-term chart to this shorter-term one on SPY (cash) hourly. This up wave is a very, very tortured one.

SPY Cash - 1 Hr - Very Difficult Count

The count works in cash and may have had a failure in cash. The RSI diverges and diverges. Momentum trend lines are broken, as shown. A potential wave ④ has been broken lower. In the ES futures, a fourth wave with a difficult shape may have been made yesterday, and a failure fifth made in the overnight. There are 'five-waves-up" to finish yesterday night's futures up wave.

Still, downward length is needed, along with breaking of prior lower key levels (iv and ii).

Also, one chart on sentiment. The five-day-average of the Equity-only Put-Call Ratio is now down in the zone of speculation as of yesterday and the prior Friday. For the first time in over a year, the five-day average of the equity put-call ratio is down in the zone of speculation again.

CBOE $CPCE Equity Only Put-Call Ratio - 5 Day Average - Speculation

Have an excellent start to the evening,

TraderJoe