Above 78.6%

Because today's up wave went beyond the 78.6% Fibonacci retracement level of the prior down swing - labeled as minute ((a)) on the chart, below - it appears we are making a flat wave.

ES Futures - 4 Hr - Likely Flat

I am still looking for a Minor B wave to become more proportional in length and time to the Minor A wave. That's all. It's happening internally on the shorter-term intraday charts. It just hasn't happened on the 4-Hr or Daily charts yet.

The upward Minor A wave count has been modified only slightly to give the greatest amount of time possible to the A wave, and have it agree with the 4-Hr MACD.

The minute ((b)) wave could have a little more upwards length to it. However, it should not become longer in length or time than any of Minor A waves sub-waves or a degree violation might result. I am still examining this issue. The ((b)) wave appears to be crawling the mid-channel line higher, finding some resistance at it.

Note the futures gap is at the 62% retracement precisely from this Minor A wave location. That could be an eventual target.

Have a good start to your weekend.

TraderJoe

Three Waves in Two Directions

From the ES hourly chart below, so far we have only three waves in the down direction and three waves in the up direction. These are completely compatible with either the triangle count or the diagonal count.

ES Futures - Hourly - Three Wave Patterns

Today's up wave made a slightly better attack on the 62% retracement level, and it is taking longer in time than the downward wave. The marginally higher high seems to be on a likely divergence with the hourly MACD, as well. The up trend was stopped (at least temporarily) by an up trend line from the origin of the a wave up through the trough of the first three waves down of the b wave.

So, the game tonight and tomorrow into the payroll employment report is to monitor the high and see if it is exceeded (i.e. IFF today was just the first wave of the c wave). And, if not, a better confirmation of a trend lower might come by drawing a line from the start of the a wave through the bottom of the b wave, and seeing if that line breaks substantially and survives a retest.

IFF today's high is not exceeded tomorrow, the b wave 'should be' exceeded lower. At the end of the day, we could count five-waves off the top, including a 1.618 third wave.

Have a good start to your evening.

TraderJoe

Direction Still Needed

Here are the two short term paths that seem to have a probability of success. Both of them have a bit of a problem, too. The first is the recent triangle count for Minor B.

SP500 Cash Index - 2 Hr - Triangle for Minor B

The problem is we would like to not see the minute ((e)) wave of a triangle land directly on the minute ((a)) to ((c)) trend line.

The second count is a potential diagonal downward for a longer minute ((c)) wave of Minor B.

SP500 Cash Index - 2 Hr -Diagonal or Impulse for Minute ((c)) of Minor B

The clear problem with this count is that there just are insufficient waves to begin to call either a diagonal or an impulse downward. They might happen in the overnight or on the open tomorrow. But, they are not in sight at this time. The benefit of the second count would be that it would give the B wave better proportions to the A wave.

So, let's see what tomorrow's payroll numbers say, and perhaps there will be more clarity. Again flexibility, patience and calmness are needed.

Have a good start to your evening.

TraderJoe

In A Hurry

The market was in a hurry to get back to the 62% retracement of the down wave. It did that, then stalled for much of the mid-day, then sold off. So far, this wave action is consistent with two counts in a couple of forms. The first count is that of this potential triangle in the cash S&P500 index.

SP500 Cash Index - 2 Hr - Potential Triangle

This is the first form of a potential triangle, the second form would have a slightly larger minute wave ((d)).

The second count that is currently compatible with these waves are that after making the minute wave ((b)), up, and the recent a-b-c waves down into yesterday morning, we could be making a larger (probably expanding) diagonal down for a larger and deeper minute ((c)) wave lower.

Because there are two very good options (actually three if you consider both forms of the triangle) the potential triangle pattern is shown with dotted lines only.

One of the problems is that yesterday & today's up pattern in the futures is completely ambiguous. It can be counted as fives-waves-up (to a in black), or it can be counted as three waves up, as a-b-c in red, both without degree violations. Here is the chart.

ES Futures - 15 Min - Three Waves or Five

The explanation for the above chart can be found in the prior post and comments. It is essential in the futures that the overnight wave at 03:30 ET to the 2,865 level be viewed as the first or the "a" wave or else degree violations result. Please note that the cash market at ((5)) or c did exceed the prior high.

Obviously, from the first chart the triangle would invalidate with any movement below the minute ((a)) wave. But, the expanding diagonal almost certainly must travel below that ((a)) wave.

Clearly, the market-making algorithms want their freedom to swing prices around in the high volatility and try to vacuum up the retail customer's accounts. So, more than ever, this is a time for high flexibility, calmness and patience.

Although I personally prefer the downward diagonal because it would give more downward length to the Minor B wave, I have to be flexible, too. So we'll try to update this situation as it becomes clearer.

Have a very good start to your evening.

TraderJoe

Interim Post - Possible Triangle

The chart below cites the facts as they have been counted out using The Eight Fold Path Method. We said in previous posts that Minor wave B 'could be any corrective structure including a triangle'. In particular, see the specific wave relationships cited in the chart notes.

S&P500 Cash - 2 H - Possible Triangle

The up wave from the low of ((c)) has some 2.618 proportions in it, which 'may' make it part of a triangle. There are no guarantees, but a triangle 'might' precede the last wave set up.

Be cautious, flexible, and open-minded.

Have a good day.

Here is the ES 15-minute count upward. It is likely again an 'extended first wave'. It did contain a leading diagonal - followed by a short flat wave. Note that wave ((2)) up near the top is the "longest correction in price". As far as I can tell, any other count results in degree violations. Wave ((5)), up does not have to be finished, but it could be,

ES Futures - 15 min - x ((1))

This was a sun-of-a-gun of a count because the bottom was potentially so confusing, but it may represent the (a) wave of the minute ((d)) leg, up, of a triangle for Minor B. The diagonal stops where the red arrow is, and then the brief wave ii flat takes over,

TraderJoe

Gap and Grind

Last week on Friday - in the last post - we showed a daily chart of the ES futures, and showed how the daily slow stochastic lost its embedded status. We showed that "price and the 18-day" moving average often try to come together when these two things occur: The first is the ES daily slow stochastic must be embedded, with three days or more with both the %D line and the %K line above the 80 level in an up trend. The second is that this embedded status is lost by the %D line of the daily slow stochastic traveling below that 80 level. Here is a repeat of Friday's daily chart.

ES Futures - 1 D - Price meets the 18 D SMA

So, this expectation was met. How was it met? Well, initially on Sunday night prices gapped down substantially - from approximately 2,820 to 2,770. So, they gapped below the 18-day SMA. Then, they rebounded up through it to possibly begin the famous "battle at the 18-day SMA". Here is a fifteen minute chart of the ES below.

ES Futures - 15 Min - Gap and Grind

The main purposes of this second chart are to show that even though the market ground higher after approximately 21:00, it did so in a parallel channel. Further, it is rare that one sees this exceptional level of adherence to the daily pivot points. When the market gapped down, it opened at the S1 pivot, and traded down exactly to the S2 pivot. After reaching the daily central pivot P, the market sold off a bit in the immediate post-cash-closing 15-minutes.

Although according to Elliott wave 'rules' nothing has invalidated about this being a fourth wave in progress, in either cash or futures, it needs to be watched closely as too much further upside would give a warning with the EWO going above the 20 level.

One of the detractors of this site last night said, "According to this post the market will go either up or down. What a joke!" To which I responded, that he must be such a poor trader or market analyst that he has never seen a market do both at the same time.

Well, here is one example. Keep the above chart in mind. Overnight the S&P went down by -40 or more points. Then, it turned around and did exactly the opposite and a tad more. So which is it? Did he want me to say "up" and be wrong for the first 40+ points? Or did he want me to say "down", and be right for the first 40+ points, and then wrong for the next 50+ points?!! 

The fact is that people like him want only one thing. They want to feed their EGO. They want only themselves to be correct. BOTH camps - bears and bulls - were correct today. Take it as a lesson. Take this stuff easily and flexibly. Right now, until or unless there is a new wave down tomorrow - with a lower low on the futures, then we only have three waves down - as follows from The Eight Fold Path Method.

ES Futures - 15Min - Only Three Waves Down So Far

I'll say it again. 1,2,3 is the same as a,b,c until it is not. Right now, one only has a c = 0.62 x a wave, lower. Whether, I like it or not, any other count breaks "degree labeling requirements" in one manner or another.

IF this wave down is over and completed, could it be an X wave? Yes it could. Could it be part of a triangle or diagonal? Possibly. But, the key is FIRST one must establish that the down wave is over. So, keep one eye temporarily on the overnight futures if you like.

In the meanwhile, be kind to others, and have a very good start to your evening.

TraderJoe

Second Down Day

There are several ways to describe the price movements today. The first, and simplest way, is to say that - as a lower low day was made on the ES daily chart - the daily slow stochastic lost its embedded status, and price and the 18-day SMA tried to come together. That chart is shown below.

ES - Daily - Lost of Embedded Slow Stochastic

Unfortunately, these two events often happen nearly simultaneously, and so it was a good thing that yesterday, we were working on an impulse down pattern. The 18-day SMA was actually located at 2,809 to 2,807 - depending on which software package you believe (some show the Sunday night session separately which can account for some differences), so price didn't make it exactly there. It stopped around 2,812. But, that is so close that the description of the two "trying to come together" is really apt.

The second way to view what occurred today is using this two-hourly chart of the ES futures where the minute ((b)) wave is shown at the top.

ES Futures - 2-Hr - 62% Retrace

Price movement lower, today, stopped precisely at the 62% retracement level of the up move. Are we done going down? Maybe, maybe not, but it doesn't look like it so far. There is no clear reversal candle signal yet.

A third way to view what happened today is through the lens of an Elliott Wave count. This third chart shows that "if you wish", you can view the entire move down as one impulse wave. The count is shown in this ES 30-minute chart.

ES Futures - 30 Minute - One Impulse

If you examine the wave lengths you will find that they are correct, and the ((E)) wave of the running triangle exactly overlaps wave iii as it is required to do. There would be nothing wrong and the chart might predict there would be a seriously good announcement Sunday night or Monday morning which might allow a larger second wave upward to begin.

But, yet another version says, "hold on there bud, wave ii is very, very short in time compared to wave i." Therefore, what looks like a triangle, might be a running second wave with the needed overlap like the following chart.

ES Futures - 30 Min - Impulse Still Forming

This count version makes wave ii almost precisely as long in time as wave i. This chart might predict that wave iii is yet to develop, and Sunday night would have a gap lower. In this case, the "running second wave", legal because of the overlap, would be highly bearish. This might coincide with price getting below the 18-day SMA. In the case of this chart, then all of wave iii should stay below the trend line drawn from the top, as shown.

Let's see how it goes.

Have a good start to your weekend.
TraderJoe