Mag 7 Weekly

In the last couple of posts, I showed some of the differences between indexes that have less influence from the Mag 7 stocks and their capitalization weighting in an index, notably the NY Composite Index (NYA), and the RSP (or Equal Weight S&P500). Today we return to the world of the Mag 7, specifically the ES roll-over futures on the weekly chart, which is below. You should take some time to look over the features of this chart. Your criticisms are welcome.

ES Futures - Weekly - x(5) Count

First, I developed The Eight-Fold-Path-Method in an effort to eliminate guessing, using one consistent time scale (120 - 160 candles) and one consistent indicator, the Elliott Wave Oscillator, developed by Bill Williams which was built by him using Supercomputer analysis for this purpose. Look, the Method has some shortcomings. It works best on extended third waves, and there is still a lot of flexibility needed as to the timeframe to analyze. But it is time to put it to the test. The first thing we see is that the weekly chart from the low has 118 candles, very, very close to the effective range for the method.

So, in the wild world of, "just where are we on the chart?", the answer would seem to be able to be located as "within Minor 4, but it is too short, yet".

This is arrived at primarily by considering Minor 2 (that "Problem-Child" wave I previously wrote about) as the longest correction in price and time. That means that Minor x1, before it, was a 3-3-3-3-3 Leading Expanding Diagonal. As such, it is the extended wave in the sequence.

We almost all counted some kind of Impulse for Minor 3, and it is, but it is on a clear divergence. It has now topped and formed a potential parallel channel, the bottom of which has not been tested yet. And neither has the Elliott Wave Oscillator returned to near the or under the zero line to indicate a fourth wave. And, so far, we have only had an a,b,c down at some degree.

Given the reality of The Fourth Wave Conundrum that I have documented which occurs at every degree of trend, this wave could be a real stinker, as there are literally 13 varieties it could take. One factor that might eliminate some possibilities if we look at it is alternation. The minute ⓧwave in wave Minor 2 went over the top. So, some possibilities that don't include a higher ⓑ wave might be, a double-zigzag, a triple zigzag - like one in the form of an expanding diagonal - and then there are contracting triangles and expanding triangles.

Let me be clear, any triangle in a fourth wave position provides alternation. So, while one could get a contracting triangle, one could also get a very long-in-time expanding triangle that looks like this, and still have the needed alternation provided.

ES Futures - Daily - Expanding Triangle Idea

Clearly, this is labeled as a "Speculative Idea" and might help outline a path of just increased algo volatility as they absorb the news and try to decide direction. Again, the expanding triangle would provide the needed alternation. But, so, too would the expanding triple-zigzag or double-zigzag outlined below. But, if the expanding triangle idea plays out, it's legs "by rule" are limited to 150% of the prior leg. Try to keep that in mind because it can help set some invalidation levels.

ES Futures - Daily - Expanding Dzz or Tzz Idea

The triple-zigzag is shown. In the case of the double-zigzag just end the pattern at the ⓨ wave. Again, another speculative idea. But both of these might line up with the positions of the Daily Bollinger Bands which seems to be the current "brain" behind the algo market movements.

So, thanks for the chicken-soup, all. I drank a lot of it. But I noticed that Kool-Aid was not on your list of remedies, so I still haven't drunk that yet.

Have an excellent start to the week,

TraderJoe