Just Thinking Out Loud

In the prior post I sketched in some tentative trend lines, labeled them as such, and said they could likely be modified. Part of the reason I did that for the pattern people is to show some of the silliness of trying to call waves in either The Fourth Wave Conundrum, or the (very similar) B wave position. Mostly all of those who have read up on their Elliott Wave know that triangles mostly occur in 4th, B or X wave positions, see more below the chart. So here are the modified trend lines the market suggested today on the SPY 4-hr chart, below.

SPY Cash - 4 Hr - Possible Expanding Triangle

Still in the category of thinking out loud, this pattern is one of the rarest triangles, it is the expanding form of the triangle. I have suggested it because The Elliott Wave Principle suggests that the legs (by rule) should not be more than 150% extensions. So far, they are not in the cash SPY market.

But the pattern is still a suggestion. If price proceeds too far, it may be the Expanded Flat we are dealing with or perhaps a last impulse. 

This may seem a little "loosey-goosey" but recall that I did suggest a contracting triangle was not likely because of the 90% legs. Those just aren't common in contracting triangles. Still, the bottom line is that price is above the 18-day SMA, and it is until it isn't. So, it has been saying the bias is up, and it has been.

Further, with today's action there just isn't a downside trend established yet - even though prices can pull back at any moment.

Two of the key observations Neely has made about expanding triangles - if this is one - are that 1) they are very rarely in the fourth wave position. He has never seen one there. OK. This one would be in the B wave position, adhering to that observation, and 2) the up wave after a corrective expanding triangle can, and often does, fail.

So, let's see how it goes. It's Friday. Fridays often - not always - end on a high note that carries over into Monday and then follow with a Tuesday reversal. It's just a pattern. It may play out or not this time. But many here felt the whippy action is reminiscent of a triangle. Yet we couldn't find the proper way to count such. This may explain the feeling. It may not. Regardless, the whippy and gappy action is downright silly, and often does reflect what happens in a true triangle. So, don't be discouraged. Reversals may come, have come, and though it doesn't seem like it on certain days, they can be sharp. So, use the regular technical-analysis until the count comes along that makes sense. Keep this one in one back-pocket, and the expanded flat in another back pocket.

Stay calm, patient and flexible. And have a good start to the evening and the weekend.

TraderJoe

P.S. The other places triangles show up in an Elliott Wave count is in the Y wave position of W-X-Y and in the Z wave position in a W-X-Y-X-Z, if the triangles are not in the any of the X waves.