One Day Takes Out a Month

Pens will be flying. YouTube and other videos will say you were warned. CNBC will say it's not even a 5% correction, and "who cares if there's a 10% correction" (heard recently). Meanwhile, we just counted waves and suggested it was an extended first wave count. The first chart of the S&P500 Cash Index, below, shows that count. From our measurements in the futures today, one day, today, took out all of the trading from the prior month!

S&P500 Cash Index - Daily Close - Back to EMA-34

And the Fibonacci retrace ruler shows it's not even a 23.6% retrace on the up wave-set from April, yet.

We certainly did warn appropriately: that the downside risks were high, that sentiment was highly bullish, that put-call-ratios were speculative, that rare Elliott Wave patterns were showing up right & left. All of that. And so here we are.

In our experience the extremely small retrace nature of the internal waves & the lack of pullbacks after the April lows suggested to us that the wave personality is that of an "A" wave. And we think the Minor B wave is underway.

Now in the second chart is an open-high-low-close format version of the ES daily futures. I post this chart for one specific reason.

ES Futures - Daily - KCT Failure

I like Jeffery Kennedy personally. He seems like a sincere analyst. But I need to point out the first part of this wave sequence in April. If you were relying on the KCT (Kennedy Channeling Technique) to deliver the third wave breakout above the channel, it clearly did not happen in this case. Of course, we have stated that is more likely when the third wave is the extended wave. Because it didn't happen this time is why we think the first wave was the extended wave in this sequence. Those extended first waves just grind and turn to the right rather than turning to the left as the extended third waves do. His information should point out the circumstances where it is most likely to work, and where it is least likely to work. In that regard we agree with Neely that "the analyst needs to know which wave is the extended wave in the sequence".

Personally, I think this wave shows the folly of letting machines set the pricing of securities. They grind and grind and grind on every tick for six months, based on the original tariff news story. And then they have a day like today with little let-up in selling all day long, based on another tariff news story. Yes, there will be rebounds, but people work or put stop orders in, and they might not be able to assess things until after the close or they might have elsewhere lost a bunch otherwise. Meanwhile, machines assessed the story nanoseconds after it came out, and the rest is history.

So, others can strut their bravado, accumulate incredible wealth, publish cavalier television stories that somewhat mislead their audiences, or worry publicly in on-line videos. No, for our part, we'll just take the opportunity to learn. I truly hope your losses were small if you had them. Losses are no fun. And if you made a few pennies, great. For our part, we are just trying to sort out what really does and does not work with the Elliott Wave Principle - calmly and clearly.

Have an excellent start to the evening,

TraderJoe