The ES 4-hr chart (close-only) is below. This is just so the form of the wave can be studied. At present, the lack of a retrace beyond 38% suggests the wave is a zigzag being counted as a,b,c.
The count remains in place until/unless there is evidence of a fourth and fifth wave higher. On the daily chart, the slow stochastic remains embedded, and price has touched the upper daily Bollinger Band. A reminder than the PPI report is tomorrow.
Have an excellent start to the evening.
TraderJoe
In a previous post, (13 August 2023 at this LINK) we noted that according to The Eight-Fold-Path Method on the weekly chart, the US 10-Yr Yield had likely made its minor wave 4, now at the lower left, and started its wave Minor 5, up. We said, it would be a question of when the fifth wave ends. Now, with 135 candles on the daily chart, the Elliott Wave Oscillator has again gone below the zero-line indicating a fourth wave at the one lower degree, minute-iv (or circle-iv). Here is the daily chart.
Some points to note follow.
As you know, my position has been that if we are making a zigzag upward, then the b wave overall might be 38% of the a wave. Does that have to happen? No. Nothing has to happen in financial markets, but it is a typical (..and in this case one of the least typical) expectation of a b wave. In the ES 4-hr chart, below, you can see where the 38.2% level is located using the Fibonacci ruler on the left side of the image.
If the a wave ended in the diagonal this Thursday on the fourth RSI divergence, then the true diagonal was retraced in 'less time' than the diagonal took to form. But we could only count Thursday's wave down as a three-wave sequence and it was well-short of even the 23% retrace. And, so far, Friday's wave up is 150% of the length of Ⓐ wave down. This is well inside Ⓑ wave parameters.
We know that after the close, Moody's downgraded the outlook for the U.S.A. to negative (see story at this LINK) and price only started to fall off. But a "spinning top" candle was made. We also know that a new debt deal must be passed by Friday 17th November. Could these be responsible for the Ⓒ wave down?
A measurement for a potential supporting argument is that if the b wave turns out to be an expanded flat, then the Fibonacci ruler on the right shows 2.618 x Ⓐ subtracted from Ⓑ is just longer than 38.2% of the a wave - and this measurement confluence seems fairly compelling. This is not proof - just an argument in favor. A second argument is that the AAII survey of mom & pop investors just took one of the largest weekly jumps I have ever seen. The percent bullishness in this group jumped to 42.6% from 24.3% last week. Staggering.
Well, we'll have to see. As always, I just urge patience, calm and flexibility until various confirmations are obtained. For example, the "spinning top" candle needs a large lower closing candle. And one should draw a revised up-trend line from the low through the Ⓐ wave low. Then, this trend line should be breached lower, be back tested, and proven to fail lower for improved confidence a down move is starting. Let's see how it goes.
Have an excellent rest of the weekend.
TraderJoe
As an outside day down, today's high should not be taken out within two trading days or it might become a trap for the bears. Today may have finished the a wave, up. Here is the ES 4-Hr chart.
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| ES Futures - 4 Hr - Possibly into b wave down |
As noted before I'd like to see between a 38% and 87% wave down. In the event the support areas do not hold and the low is exceeded first, the alternate has to be that the up wave is a more-difficult-to-count zigzag to be all of the fourth wave (iv), up, of the downward expanding diagonal. The primary count tries to recognize that this fourth wave can take much more time in an expanding diagonal than the second wave.
Note above that the wave ④ low has been exceeded lower in the first step of the confirmation process. The next two steps would be a lower high, followed by a low below today's low.
Have an excellent start to the evening.
TraderJoe
From a counting perspective, the a wave up might be close to finishing up. But there is a way it could extend a tad. The SPY cash 15-min chart is below. There might be a contracting diagonal in progress.
The alternative is that perhaps a (b) wave of the larger b wave is in progress. The issue right now is that only increased downward length will begin to let us know. I, for one, would like to confirm that the a wave up is completed. It would be great to see a b wave that is between 32 - 87% of the a wave upward.
Have an excellent start to the evening,
TraderJoe
US equity prices, as measured by the ES futures contract, retraced back to the lower channel line of the weekly up channel shown previously, and again in the chart below. Remember when we showed how prices were sticking to the channel before they initially collapsed lower? Well, after the gap up on Sunday night, prices rose every day this week and settled back under the underside of the channel.
As shown, prices bounced at the prior support and when the daily chart had two daily closes in-a-row below the lower daily Bollinger Band reducing the odds of the next close being outside of the band to roughly 3 - 5%, small odds. In the course of the week, as readers noted, the nested count invalidated as this wave up is too large to be a smaller degree second wave. It's good to see our blog followers are really beginning to get a handle on degree labeling. It makes writing about it worthwhile.
So, to get to the current wave count, the best valid downward count is this expanding diagonal which would be of the 3-3-3-3-3 variety as shown on the daily chart.
The price rise was very sharp, and on the daily chart the wave looks unsubdivided. So, the suspicion is that the rise is the a wave of this leg of minute-iv (circle-iv). And this wave seems to have ended - so far- at the prior support/resistance noted by the minute-i wave, the prior b wave, and the underside of the weekly channel. If so, that means a b wave lower could occur this week.
And it would be possible for such a b wave to be any of these structures: a) zigzag, b) flat, c) triangle, d) multiple zigzags, e) combination. I cover those again to indicate how much whippy trading might occur in the upcoming week. The only thing the b wave cannot do is travel below minute-iii (circle-iii).
Given the above, can prices move higher? Yes, in two ways: if the a wave is not fully complete yet or if the b wave forms as a Flat wave.
Given the above, can prices break the minute-iii (circle-iii) low? Yes, but not as the b wave. If the current low is broken it would just mean that this week's up wave is all of minute-iv (circle-iv), and the new daily low would be part of minute-v (circle-v).
In terms of minute-iv, the one thing it is not allowed to do is cross the high of minute-ii (circle-ii). This should be checked on an OHLC chart.
Because expanding diagonals tend to expand in time as well as in price, we are giving this wave much more time to develop. It could be a slog.
Have an excellent rest of the weekend.
TraderJoe
Here's a two-block of the ES 2-Hr futures showing two ways to measure the current up move. One contains a cut-off by the channel, the other does not.
There is not a good way to decide unless/until the market decides to add more bars and we see how much higher it goes. At the time of this writing, there is not a good solid turning bar (hammer, doji, engulfing candle, etc.) to assist with a decision. We wait and watch carefully.
After the above post, this plausible count was developed looking at the weekly line chart. This count is good to 4,340 and it represents all one wave, the (a) wave of wave minute-iv, circle-iv of a larger diagonal.
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| ES Futures - Hourly - All One Wave? |
The count starts with a leading contracting diagonal wave.
Have a good start to the day.
TraderJoe
