It's Summer 🔥

Readership is down as is usual at this time of the year. Everyone's hitting the beach or their camp to try to stay cool in the heat dome. The tried and true 'Wall Street' expressions of Sell May & Go Away did not work again as they have failed so often. So, we'll just chill and show you the same chart we have been showing for months and months, remembering that since there are so many years now involved, including years in which inflation was rampant, we have switched to log format as Elliott advises.

We have been counting this wave using 'degree labeling' the way it is defined: longer waves are higher degrees. Thus, Primary ④ down is longer in time than Intermediate wave (2), down and longer in 'log price' or percent change. And Minor A wave up of Intermediate (3) is shorter in price & time than all of Intermediate (1), up, the prior highest degree wave in the same direction.

So, if we have entered Intermediate (5) of Primary ⑤, as the new roll-over futures high suggests, then Minor A should remain shorter than all of the previous Intermediate (3), the prior higher degree wave in the same direction. We are looking to confirm its closure, now, along the upper diagonal trend line. And Minor B should remain shorter in log price than Intermediate (4) down - the prior higher degree wave in the same direction.

If and when Minor B gets under way, we just provide the reminder that it could be "any three". It could go over the high again in an expanded flat. Or, perhaps more likely, it could be any of several types of triangles. Those triangles could potentially take months if they occur.

So, drop another cube in the lemonade. It may have to last a while. Have an excellent rest of the weekend.

TraderJoe

Less Absurd

Today in the comments for the prior posts I posted links to two charts I labeled as "Patently absurd" but still following the Elliott Wave rules. By the end of the day those counts had busted by narrow margins as I expected they might. Part of the reason for posting the links was to show what wild things are possible under the wave rules unless a good measure of adherence to the guidelines of wave formation is also thrown in the mix. So, below on the ES daily chart is the best interpretation of the current state of the waves given the extent of today's up movement. The key is not to let the truncation in the lower left be ignored.

ES Futures - Daily - To Minor A

I tried counting without the truncation, meh, I wasn't happy with the results and measurements have since likely busted. I did suggest in prior posts I could see a way we were still in the Minor A wave, but it needed new highs. Today provided them. And there is no sign the up wave is over. A clear reversal candle set, and a break of the new trend line is needed along with a back-test that fails. So far, we haven't had that. The truncation at the low, and the "running fourth wave" both spell strong conditions. 

And, the ES 2-hr chart which is its analog is shown below. The two waves are so self-similar (i.e. fractal) on different time scales it gives one goose bumps to consider it.

Yes, this sure is a weird wave minuette (v) of minute ⓥ. It is hugging the rail along the lower parallel line and keeps threatening - like a summer rainstorm that doesn't happen. But at some point, in the not-too-distant future, it should have a clear turn. The lack of fourth waves that don't make their downside targets is a learning experience to have up here at these extraordinarily high prices and against the daily Bollinger Bands.

Have an excellent rest of the evening,

TraderJoe

Don't Swear

I can't swear to it, but I think this is how it goes in the hourly ES futures. The expanding diagonal off of the low meets the correct length requirements for each of the segments and is deeply retraced.

ES Futures - 1 Hr - Channel

That is i/a and ii/b, the MACD indicates a strong third wave following, and for alternation, there may be a Flat wave following. The alternate is that there was an overnight wave as iv which is complete in a wedge count and the majority of today is the v, up, of the wedge.

So, the parallel is drawn in - as are the retrace waves off of wave iii/c - which ended at the location of a prior ④th wave. But because that was only a 23.6% retrace, the question is whether a deeper 38 - 50% retrace wave will be made possibly beginning in the overnight tonight.

The alternate is given as this is a possible minute ⓑ wave up of an expanded flat, after the minute ⓐ wave down, shown in prior posts, and 'B' waves can be very, very testy.

There are other alternates (such as locating all of the Minor B wave low where minute ⓐ is shown or locating minute ((iv)) of Minor A at the same location. If so, five waves up would end Minor A and we would try for a Minor B wave down, again!) But there is insufficient evidence for them at this time. So, we need to take it a step at a time and resolve a wave at a time.

Have an excellent start to the evening,

TraderJoe

One-bar Detour

We were expecting upward price movement today, and - eventually - that happened. But not before prices started out lower as the result of the war actions over the weekend. Those dropped the market on a futures gap, and the first four-hour bar of the overnight session was a lower low with a close in the upper 1/3rd of the bar as the ES 4-Hr futures chart, below, shows. See brown arrow. The drop was never seen on the opening bar in the cash market. This has often become a sign to me that the PPT (Plunge-Protection-Team) or duly authorized President's Working Group, as it is formally known, is active in the markets. Having a bit of a skirmish, are we? Let's make sure the markets are protected from it.

So, the overall count remains the same. What changed is that the contracting diagonal downward to the (c) wave morphed into an expanding diagonal to that same (c) wave where all the legs are still zigzag 'threes' but now the wave lengths are v > iii > i, and iv > ii with iv overlapping wave i, but with wave iv not traveling beyond the end of wave ii. In the prior post I commented on how the up wave 'ran into a brick wall' at wave ii. And now you know the significance of that. It was 'marking its turf' that wave iv could not exceed wave ii.

Thus, we still count three waves down to minute ⓐ, and that could allow a 90% or greater wave up as a minute ⓑ wave, or something else as a minute ⓧ wave that does not have the 90% requirement.

Note the MACD histogram is positive, and the MACD line is just now crawling above zero, although the signal line is not positive, yet.

From a daily Bollinger Band perspective, price had closed Friday under the 18-day SMA and so had negative bias. The futures followed-true and make a lower daily low bar but ran into the combination of the 200-day SMA and the lower daily Bollinger Band where they found support. Today's bar is an outside-day-up, which is to be respected until its low is exceeded lower.

Have an excellent start to the evening,

TraderJoe

Three-Ways (2)

The front month futures currently show the clearest, countable pattern in the four-hour time frame. As we said earlier the initial pattern is a 3-3-5 Flat pattern, as below.

ES Sep Futures - 4 Hr - Flat Pattern

This makes the low on the 19th either a minute-ⓐ or a minute-ⓦ wave. These down waves - and their hesitation and halting nature - likely represent the "battle for the 18-day average" back on the daily chart.

The current up wave seems unresolved currently because a slightly larger parallel can still be intact. The question is how high a minute-ⓑ or minute-ⓧ wave would go. For example, Friday's c wave stopped almost precisely at the level of the prior ii wave, up, of (c), down. There is a non-zero probability that the up wave is over, and, if so, because it did not reach the 90% level it would be the minute-ⓧ wave, as in the pattern known as a Flat-x-zigzag. The zigzag extends the wave lower. Otherwise, if the 90% or better level is reached, the multiple-flat (double-three or triple-three) pattern might be in play.

For those considering the structures shown, we note that the (c) wave is longer-in-time than the (a) wave down. This again means that the two waves should be of the same degree or else the (c) wave down would be of one-higher degree. For the moment, we see them as the same degree as their price extents are very, very similar.

Have an excellent rest of the weekend,

TraderJoe

Three-Ways

You've heard of "Freeways", right? Where traffic is supposed to zoom along like I-15 to Las Vegas, right? Not like the "405" that crawls you down to a crunch stop on the way from LA to San Diego, right? Well, today's market, so far, in front of the Federal Reserve announcement, dot-plots, and press conference is more like the latter, but what I have termed temporarily "Three-Ways".

ES/SPY/CFD - 2 Hr - Three-wave Sequences Only

As of this morning anyways, the two-hourly ES/SPY/CFD has only three-wave sequences. And last night's up wave was longer than the immediately prior b wave. Further, note the downward c wave stopped around that 78.6% level which could indicate a triangle.

So, the bottom line is that highs or lows need to be broken to get out of this mess. A triangle is possible, overall. A downward diagonal is possible for the most recent wave. Fittingly, the front-month ES contract is only down to the 18-day SMA as of last night with the daily slow stochastic in over-bought condition only (not embedded) - and this is where it often goes in front of major announcements.

ES Sep Futures - Daily - Bounce from 18-day SMA

So, be careful as whippy conditions could prevail. Lots of valid Elliott Wave structures are valid from here, so it is more a case now of ruling out what becomes not possible - or less possible - based on price lengths made today. On the first 2-hr chart, one might especially watch the 78.6% upward level in the triangle eventuality, or the low of the c wave in the downward diagonal eventuality.

Have an excellent rest of the day.

TraderJoe

Cash to 90%+

After three-waves down we noted over the weekend, the SPY cash index went to the 90% level, plus some, as below. The current front month (June) ES contract did also. The roll-over contract went to the level of 1.236 times the down wave.

The ES price is still over the 18-day SMA. The bulls are still in control. That being the case, a (b) wave of a Flat, Expanding Flat, running Flat or of some of the kinds of triangles is still possible, but no conclusions are reached as of this time.

Have an excellent rest of the evening.

TraderJoe