Range Expansion

As the last trading day of the month, quarter and year a number of milestones were hit on the daily chart of the ES (Mar 26 only) futures, as below. The key points are summarized below the chart.

ES (Mar) Futures - Daily - Close Lower

The key points observable are these:

1. A trend lower was established. Whether it continues or not will be a critical observation. There are lower highs and lower lows on the swing-line indicator.
2. A close below the 18-day SMA occurred as of the cash close, with a larger bar than yesterday. So the daily bias has - at least temporarily - switched to lower.
3. A close of the daily gap from 19 Dec occurred today,
4. The embedded slow stochastic reading was lost today.
5. A critical level for daily overlap was established.

Friday (Jan 2) is the only day the slow stochastic can re-embed. It would take quite a significant rally for that to occur. Not impossible, just lower odds.

In Elliott Wave terms, the up wave can still be counted as a minute ⓑ wave or minute ⓧ wave. The objective is still to see if we get a deeper Minor B wave.

If all goes well, I hope to have more on the weekend. Have a good start to the evening and the New Year!

TraderJoe

Immaculate Compression

With every possible Christmas pun intended (hopefully L'Enfant has a birthday sense of humor), today swung back & forth, wildly at times but going nowhere at other times. This gives the appearance on the SPY cash 30-minute chart of a quasi-triangle.

SPY Cash - 30 min - Quasi Triangle or w-x-y

Not even the FOMC minutes could get things headed in the direction of a breakout. Towards the close, it looks like it wanted to break down but that needs to be watched yet. It could be that people are just backing away in front of the New Year's Eve holiday.

Of course, compression is one of the surest ways for the algos to create losses, so it may just be that Optimal Prime just needed his fill from our piggybanks. Oh, wait, we don't have those anymore - pennies not losses - because there aren't any more pennies being printed (er, or something). Yet, they still have the sense to bill us in hundredths. In case you're wondering, I actually didn't have any losses today as I saw the sideways bands early, pointed it out, and went into 'range mode' rather than 'trend' mode. But the monotony was still annoying.

Along with the great saving-grace of penny elimination, I sure hope the New Year doesn't see too many more needless inventions like the electrified roadway in FL for charging EV's, when no commercial EV's have induction coils for charging yet. Or another type of vehicle other than high-speed intercity trains that actually connect people to places they want to be. Or, like another needless social media platform - like Tic-Tock that keeps time during the market day and metronomes endlessly until the close. Or yet another outlet for someone to spout their half-baked political views.

One can only hope, as the mind turns to mush on days like today - perhaps indicating a stiff pre-NYE cocktail is needed! Indeed. Lol!

Have fun,

TraderJoe

GOLD - Weekly & Daily

In the prior post (LINK here), I said that it was very difficult on the long-term chart to keep degree labels making sense and to get reasonable Fibonacci ratios unless a triangle was considered for the Cycle IVth wave, after the 2012 top. I also said for that reason I was still counting "by parallels" until that was no longer possible. But where are (is) that parallel, and what is the count? The chart below shows the likely parallel at present.

GOLD (GC) Futures - Weekly - Degree Analysis

The parallel is based on the fact that the largest and longest correction should be the larger degree correction by degree labeling. So, it is given the label of Primary ②. And it is much less than a 38% correction, so that means that the prior wave was highly likely an extended first wave, x①. So far, that is holding true as Primary ③ is shorter than Primary ①. Further, the Elliott Wave Oscillator is near a high, so this agrees with a large third wave at this position. As another sign of this count, there are no significant overlaps at this point, and the most likely overlap warning level is shown. So, IF a Primary ④th wave can hold the parallel, then the wave has a good chance of finishing like an impulse. Remember that a ④th wave can be one of several types of triangles if it wishes. This may make trading very tricky & whippy. Keep in mind the ④ and ⑤ shown on the chart are placeholders only - just to keep track of the count, not to indicate the levels price should reach or when it should reach them.

And what about wave Intermediate (5) of Primary ③, how is that finishing? The daily chart shows that wave below.

GOLD (GC) Futures - Daily - Local Count

So far, from the Intermediate (4)th wave on the daily chart, with its EWO signature at or below the zero line, there appears to be an expanded diagonal fifth wave which has already made a new high. So, if there is to be a Primary ④th wave, then it might come back down to the level of the prior fourth wave, which would be the Intermediate (4)th in this case. So far, this wave is on a daily divergence with the EWO, which is often the case for fifth waves. So, the indications are that the technicals are working at this point, and there is still some wiggle room at the high.

Again, while this is not trading or investment advice, be prepared for highly whippy and volatile price movement, or very tough compression or whippy action if a triangle forms.

This is the second post since Thursday. Have an excellent rest of the day and weekend.

TraderJoe

Long-Term GOLD

When Gold is reviewed on a long-term-basis, problems arise with degree labeling, especially in the most recent weekly waves, unless the center section is seen as a long-in-time fourth-wave triangle as seen in the 3-monthly log chart, below.

Notice that after the 2012 peak in Cycle III, the Elliott Wave Oscillator, EWO, did take on fourth wave characteristics by traveling under the zero line again. Also note three items.

• The triangle would be in a 'typical' fourth wave position. It 'may be' a non-limiting triangle, and it would alternate with the sharp Cycle II wave.
• The recent extremely impulsive action looks like the 'thrust from a triangle'.
• The typical technical analysis measurement of the "widest-width-of-the-triangle added to the breakout point" is coming up ahead.

This measurement is one of the few measurements that make sense, whereas other Fibonacci ratios in the recent rise would be extremely out of proportion. For this reason, we are counting the current impulse up in parallels until we can no longer.

Have an excellent rest of the day and start to the weekend,

TraderJoe

Two Options - The Principle of Equivalence

With the ES roll-over futures now at a new all-time high, the Principle of Equivalence tells us to be on the lookout for these possibilities. The first is "Minor A is done" and an Expanding Triangle Minor B is in progress.

ES Futures - Daily - Minor A is Done

What this count has going for it is that it meets the rules, and from a timing standpoint each leg is 'longer in time' than the prior leg in the same direction. For this count to really emerge, then cash should (must) also make a higher high. But, then the minute ⓓ wave should approximate a 150% extension.  Notice there is also a way for the expanding triangle to be in a fourth wave position, minute ((iv)), as shown secondarily, but that is a rarer situation.

The second count is "Minor A is Not Over", and either an impulse for minute ((v)) is underway or a diagonal wave is underway.

ES Futures - Daily - Minor A Still to Complete

In the above chart, the diagonal is sketched out. But then its wave (i) and (iii) would most likely make new highs.

At these lofty heights, the Principle of Equivalence is really saying, "Be absolutely prepared for large down drafts, but look for a pattern than can be counted." Be calm, patient, and flexible and we head towards the end of the year. I'm absolutely ok with either pattern. One implication of the second pattern is that a deeper wave would form for Minor B. One implication of the first pattern is that Neely says that the thrust up out of an expanded triangle sometimes fails.

Have an excellent rest of the day & Holiday upcoming if you are celebrating. I know I am!

TraderJoe

Absurd Futures Rollovers

As a sanity check, I went back through several years of on-line historical data to look at the differences in the futures roll-overs from the lead contract to the next contract using the ES E-mini futures. The sample of data is listed in the table below. To conduct this study, I used the closing prices on the date which was the fifth day prior to the expiration of the lead contract and compared it to the roll-over contract on the same date. The differences are shown in the right-hand column.

Having followed futures trading for most of the 2000's, it was my observation that the futures roll-overs being a premium of -6 points to +6 points just wasn't much of a problem. It was seemingly pretty much at random, and it was a fairly small percentage of the price level. For example, at 6 points of 1,770 points it was about 0.33% of the price level at the time.

But, after the Covid years, the futures premiums have absolutely exploded. Not only are the numerical levels much larger in absolute value, but in terms of the price level the premiums are now 0.85% to 1.20% of the notional price.

This situation is absurd. First, why does it cost one much, much more to roll a contract now than it did before? As shown above, this is not just a function of the price level. Second, one now needs to consider how this extremely absurd amount of roll-over will affect chart structures (triangles or diagonals in progress, for example) when using the roll-over contracts (typically /ES in ThinkorSwim, or ES1! in TradingView).

I have highlighted this matter before. The point is that the roll-over used to be largely a non-event. And now it has become a major event that has to be managed for some reason. And that reason simply is not clear.

This is the second post since Thursday. Have an excellent rest of the weekend. 

TraderJoe

Simplest Is Best - Right Now

On the intraday chart of the ES 30-min (March 2026) futures, simplest is best right now. As the chart shows, two parallels can be drawn around current price action. They should be respected until they should break, if either does.

The overnight pounding action from above on the 6,820 level tends to indicate a triangle, but that is not locked in stone. If it is a triangle, the up wave can be an a / b sequence as shown. But, if the structure is some kind of quasi-structure, or a w-x-y, then the up wave could evolve as an impulse sequence shown as the alternate i / ii. The Principle of Equivalence still tells us to mind our p's and q's until we get some waves with more definitive lengths to the upside or the downside and potential channel breaks.

The daily count options have not changed. To the upside is perhaps the potential daily expanding triangle. And to the downside is still the potential daily expanded flat.

Yes, one could bring in a lot of other considerations: the Santa Rally, the 'holiday effect', ending the year and the quarter on a high for both political gains and capital gains purposes, the typical holiday low volume, etc. But in an Elliott Wave blog, the main consideration is whether the price pattern is an impulse or not. So far, there are three-waves-up. The Smart Money can do a lot of things: gap up, grind up, gap down, etc. Try to use the parallels to check what path best fits and accept the results.

Keep it simple. Have an excellent start to the evening and the weekend.

TraderJoe

Trend Day

Today's lower low and lower close below the 18-day SMA has firmly set a down trending wave in motion as per the March 2026 ES Daily chart, below. This occurred after prices initially rose overnight to the underside of the line-in-the-sand before falling off.

The next target on the chart would be the combination of the lower Bollinger Band and the 100-day SMA. The daily slow stochastic has quickly moved from embedded higher, to over-sold. The hourly count looks like this at present.

It's a bit too early to say whether an impulse is forming or not.

Have an excellent start to the evening,

TraderJoe

Back to the Line-In-The-Sand

US equity prices, as measured by ES futures had an inside day today. This temporarily (at least) turns the swingline indicator up. With prices not making a new daily low today, the 18-day SMA rose up enough to cause prices to contact it as shown in the chart, below.

Meanwhile, a new up (green) fractal formed at the prior high, and the regular calculation of the daily slow stochastic lost its embedded status. The only day it can get it back is the next day (tomorrow) without going through the whole rebuilding process again. Because of the prior day's lower low and potential lower high, IF a follow-through down bar occurs tomorrow and there is a close below the 18-day SMA, it could start a trend lower. It hasn't happened yet, but we'll be on the lookout for it. 

For the moment things are dead-neutral. From a wave count perspective, the downward count remains the expanded flat, while the upward count remains a potential expanded triangle.  Again, keep an eye on the local technicals until the situation clears. 

Have an excellent rest of the evening,

TraderJoe

Some Clarity in the Dow Futures - The Benefit of the Doubt

As most readers here know, the Dow and its futures have been making two new highs (along with the Russell 2000) while the ES and NQ futures have made only one new high. When the first new Dow high was made, we commented on the likely presence of the triangle also seen below between the blue lines in the middle left of the chart.

Based on actual measurements of all waves, and where there are five-wave-sequences, and where there are not, this is the only way we can legitimately count the Dow futures and still follow the rules and guidelines of Elliott Wave, along with the degree definitions.

So, after the running triangle - which is still bullish because of the higher 'b' wave - a thrust out of the triangle occurs. This should end a wave, and we think it does end the Minor A wave at the tail end of October. But anything upward is likely not a diagonal, as the low of wave (iv) has not been undercut yet.

Then, there appears to be three waves down to minuette (a) of minute ⓐ, and a minuette (b) wave, up, followed by a minuette (c) wave, down to make a minute ⓐ wave down in three waves as an expanded flat. Then, a similar three-waves-up occurs to make a minute ⓑ wave, up.

Again, based on measurement, and how high typical 'b' waves go, this is about the only way we can read the chart. The suggestion from this chart is that there will be, or should be, a strong minute ⓒ wave down in five waves to below the level of (iv), and even possibly below the level of the prior wave iv. This should make the Minor B wave down. And yes, there might be more of the minute ⓑ wave to go, but it looks nearly completed.

In any event, the Fibonacci ruler shows some downside targets in the event a slide begins before the holiday. The 2.618 target - which is very common - is below the chart border. Readers of this blog should replicate the measurement if they are interested.

We also ask you to carefully review the degree labeling. Note that (a) of ⓐ is larger than 'e' of (iv). Also note that (c) of ⓐ is also longer than 'c' of (iv). Note, too, on the way up, that (a) of ⓑ is about the same size as (v) of ⓥ of Minor A. Then, ⓐ down, is longer than all of (iv), down. So, the degree definitions appear to work well, too.

Then why do we call this labeling 'The Benefit of the Doubt' count? Because it is possible that this last wave up in the Dow is the last wave up as a C wave. But we simply will not label that option until and unless the minute ⓐ wave down is exceeded lower. Right now, the degrees of the waves don't require it.

Meanwhile one item of confusion to check out this weekend is whether the SPY (cash) made a new high this week. TradingView says, "No, on the daily. Yes, on the 4-hr." How does this figure? But Barchart says, "No, on both the daily and the 4 hour". I do understand there are some after-hours considerations here which is why I tend to use the futures a bit more.

This is the second post since Thursday. Have an excellent rest of the weekend,

TraderJoe

Discount Double Deceit

Wednesday in the ES daily futures was an outside day up. The low of an outside day up should not be taken out within the next two sessions, or it can be a trap for the bulls. The next day took out the low, potentially setting the trap, but on that Thursday bar the high of the prior bar was also taken out, creating another outside day higher. The first outside day up on Wednesday just plain lied. Then, the low of that Thursday bar should not be taken out within the next two sessions, or it can create a trap for the bulls. The low of Friday's bar took out the low of Thursday's bar - again potentially springing the trap. The Thursday bar lied, too.

ES Futures - Daily - High Made 90% Level

In the process, price left a gap at the local daily high and got down to within about ten points of the 18-day SMA but didn't quite hit it. At the end of the session, the daily slow stochastic remained embedded.

The Fibonacci ruler is shown so that you can see that the highest high, so far in December has reached the 90% level which, by rule, can define a flat wave.

Meanwhile the Dow did make a new higher high over both the late October and early November high. Again - for the intermediate term - the count remains indeterminate for a bit. For the shorter term, yesterday we showed the chart at this LINK and said a larger flat wave certainly could result in the whippiness. So far, it appears to have although we would like to see a finish to this down wave on Monday or Tuesday to more firmly conclude that.

I know most readers would like more clarity than I am providing here: so would I. Still, we have said the risks are high and to expect a whippy, volatile market and that's what we are getting, so far. 

Hopefully, there will be some additional thoughts over the weekend. Have an excellent start to the evening.

TraderJoe

Local Count

Yesterday we said much of the current wave count was indeterminate and we needed to wait for some clarity. Today's movements offered a bit of a look into the local count, particularly if we use the ES 4hr chart, and the zigzag indicator - which we have often used to mimic the method Glenn Neely uses to examine wave points.

So, in the above chart, the terminals of the waves are accurate (right up until the last one which may still be under development).  But at least it shows part or all of the up movement in the after-hours session to the new higher high.

So, we have the five-waves-up ending with the expanding diagonal which is by The Principle of Equivalence can be an a/i wave. Then, we have a flat 3-3-5 sequence with only the marginal new highs. The substructure of the :3 on the FED meeting rise is not observable here, but I could not count it as a 'five' of any type on the OHLC chart down to the 15-minute level. So, now the question is, "is that b/ii done and over, or will it make a larger Flat wave?". I don't know the answer to that question, as that is where more uncertainty comes in. I'm showing you what I do know about the current count. I'm not guessing what comes next. Yes, it could be that even a larger b wave is in the offing. This is where topping structures get nasty.

Again, in the bigger picture, the expanding triangle is still on the table. IF so, this would be part of the ⓓ wave, up. Or we could still be making a much more complex flat with this as some kind of ⓧ wave. That remains to be seen.

So, let's take it step-by-step and observe how things develop. Clearly, this remains a time for caution, calm and flexibility. Throw in a good mixture of developing holiday spirit and patience as well.

For now, have an excellent rest of the evening,

TraderJoe

Outside Day - Up

Today's FOMC meeting provided the impetus for an outside day up, candle, in the ES daily futures shown below. This was not so much for the expected one-quarter percent interest rate cut, but also for the $40 billion surprise announcement of cash-management T-bills to be purchased ahead of schedule. Of course, the banks can figure out a way to use that money, and stock prices rose. This was not much of a surprise as prices were still over the 18-day SMA and the daily slow stochastic was still embedded.

ES Futures - Daily - Outside Day Up

In the process, the prior up (green) fractal was exceeded higher. As with all outside day ups, the low of the day should not be taken out lower within two days or it would be a trap for the bulls.

The wave count is almost entirely indeterminate at this point. A new all-time high is needed for the expanding triangle option we presented which can be seen at this LINK, and it is still a valid possibility. But a compound Flat is also possible - whether the high is exceeded or not. And, that count, too, can make a lot of sense. There are just times in a wave count when one has to be patient until the count clears. This is one of them, and so we need to pay attention to the local technicals.

IF the market continues higher, then the upper Bollinger Band becomes the next target. Still, stiff retraces are possible at any time.

Have an excellent start to the evening,

TraderJoe

Candle Confirmation

Friday's "spinning top" or "doji" candle was given a candle confirmation today as shown by the daily chart of the SPY cash ETF, below. In the process, the latest "three-touch" trend line was broken to the downside.

This could mean that the 'c' wave of an expanded flat correction since 18 Nov is complete, but the evidence is only preliminary in the fact that Friday's higher high occurred on a divergence with the EWO as shown. Also, the swing line has a lower low but is still above the 18-day SMA, so the two cancel each other out. Again, price is still above the 18-day SMA, and the daily slow stochastic is still embedded. As a brief reminder, we showed the expanded flat potential in the post at this LINK.

So, IF the expanded flat count is correct, the market should start down in a really substantial way over the next couple of days. And, if it is not correct, the alternate count is that an expanding diagonal ended at the low on 21 Nov.

There should be lots of news to ponder over in the course of the next week, including an FOMC decision and press conference on Wednesday. Because of the conflict in the local technicals (they are all not in gear) calm, patience, and a high degree of flexibility are still required - both in wave counting and in trading.

Have an excellent start to the evening,

TraderJoe

Spinning Top Candle - Of Course, Requires Confirmation

U.S. equity prices early on as measured by the ES daily futures made a higher high day and then faded somewhat by the close. We are showing the OHLC version of the chart below, but the bar translates into a weak spinning-top candle formation as the body would still be green.

The swing-line indicator indicates there is a higher high after a lower low above the 18-day SMA and the daily slow stochastic obtained embedded status for a second day. So, the bias is up until prices again close below the 'line-in-the-sand'.

Today's higher high exceeded the second up (green) fractal back from 12 Nov. And although we have shown a way to count a completed wave, candle confirmation is needed in the form of a substantial closing-lower candle. Absent that, there is not much on the chart yet.

The wave action is whippy intraday (as shown by today's 30-min candles) and this is interesting given a $VIX which is down in the 15 - 16 level. We should note today that the $VIX closed a cash gap from way back on 26 SEP 2025. Interesting, but nothing dispositive yet.

There are lots of ways to see that a minimum of a pullback is due, even just considering the waves since the late November low. And, although nothing to the downside will surprise us, we must be patient until the market decides the time is right. As we all know, next week is an FOMC meeting week. Perhaps the market will decide that time is the right time.

Have an excellent start to the weekend.

TraderJoe

Grinding, Stalling & Swinging

The wave counts are really getting strained. One almost has to look at the structures with one eye closed and the other one squinting to see what the machines are doing to the market - grinding for hours and swinging leisurely at other times to make waves that waste a lot of time and make little progress. For our part, it looks like we called the internal structure properly in the prior post.

We had no idea that such a lengthy diagonal would form in the wave structure. But, it apparently has. I say apparently for three reasons, 1) we don't know upward movement is over yet, though the odds are getting better and better, 2) we do not have diagonal confirmation yet, in the form the of the start of the diagonal being exceeded lower in less time, and 3) one could put the label iii at the high close on Friday 28 Dec, and label all but today's breakout as a triangle. I have no qualms with doing that. It would be in line with The Principle of Equivalence. However, because wave iii was not on the exterior of the parallel it would not have been as predictive as this original labeling. 

Further, we said the diagonal could still extend until or unless 6,812 were exceeded lower. It hasn't been yet. That statement is still operative, and it explains the timing of some of the retracement waves. There was not much interesting in the wave structure until about 3 pm today when a very, very modest decline began. However, we do now have the SPY cash and the ES futures making new highs on the same day - today. That was not the case yesterday.

Should the market start downward in earnest (which it is not obliged to do, given the internal machinery) the next questions for a wave count are 1) whether either of the cash gaps fills, and/or 2) whether a low under the start of wave i is made or not.

Have an excellent rest of the evening,

TraderJoe