Golden Slumbers

With apologies to the Beatles lyric, I was asked back in July if I thought Gold had bottomed. At the time I said "not likely because of the three-wave sequences at the low". Practically the instant I said it, Gold, as measured by Gold futures (GC), went on a tear higher as the chart below shows - traveling about $700 higher. But a new all-time high was not made - nowhere near the $5,600 high - and this set up a huge bull trap, because, as the chart below shows, Gold for December has made a new contract low over those July lows.

Now to be fair, the November contract, and the roll-over contract have not made the new lows yet. But they might. That is to be determined. So, the question now is, "what is to be made of Gold, now?" Well, my original count was that we were making a contracting diagonal lower into July, as the weekly chart below shows. The five-wave contracting diagonal could easily be the Intermediate (A) wave of a zigzag, lower. This seems to be validated by the lower low just seen.

So, the new low in the December contract could be one of two things. First, it could be a stumpy (C) wave which may or may not be over. It can currently count as five-waves down, nearly complete. And remember, a 'C' wave could truncate. They certainly do happen. And the three-waves down, now, might start a larger Flat wave - but that is not required as the damage is being done.

So, with the five-waves-down now suggested when it ends it might start the larger upward move. We will have to watch closely to try to verify it, but an upward move would be confirmed over the (B) wave high. Other counts are possible, too, such as the start of a very, very large triangle. But there is insufficient evidence to begin a count like that at this time.

Have an excellent rest of the weekend,

TraderJoe

Someone Say "18-day"?

Prices in yesterday's daytime session pipped up over the 18-day SMA and tried to close strong-ish with a close above that average as the ES daily chart shows below. That seemingly would turn the bias up, but the swingline indicator had no up-trend. But, after the boring earnings conference calls from Meta and Tesla started - which were long on promises and short on details - prices began wavering. This morning they are falling off fairly sharply and are again below the 18-day SMA.

ES Futures - Daily - Intraday Lower

Prices could head back to the 100-SMA and/or the lower daily Bollinger Band, and a key question is whether or not a daily fractal will break lower or not. If so, then the next immediate target would be the up-gap fill from the daily close of 31 July. The daily slow stochastic is not yet in over-sold territory, and there is some chance it might start the process to embed lower, but we need to take that a step at a time. First, we need to watch the red (down) fractal to see if it is exceeded.

Again, no amount of down movement will surprise us. So far, the price action is consistent with my primary EW count and the potential truncation. Let's see if it holds. If you are a newer reader here, I will point you to my paraphrase of broker Ira Epstein's guidelines for trading here at this LINK that I have summarized from his publicly available videos back in 2015.

Have an excellent start to the day,

TraderJoe

Break-ie, Break-ee

Attached is the daily chart of the ES futures (rollover contract) with the steps for potential diagonal confirmation clearly shown. The chart uses the Zigzag indicator, so the wave terminals are accurate.

The first confirmation step may be checked (or tic'd, as they say in the UK) as complete. The remaining are yet to be seen.

What happens if confirmation is not obtained? Then, one must look for a different structure, such as a large Flat at the high, or possibly a triangle, or something similar - even a larger diagonal.

Let's see how it goes. Have an excellent rest of the weekend,

TraderJoe

Current Suggestion

Tops of any degree can be darn difficult. In our local case, we don't know for sure that a truncation has occurred. But, if it did occur, it could have happened in one of two places. Those are both shown in the SPX500 (CFD) 4-hr chart below, market with the red asterisk and question mark.

SPX500 (CFD) - 4 Hr - Channel

So, the best suggestion at this time is to draw the parallel, as shown and see if today's high is exceeded higher. If it is, then the A/B/C count lower may best pertain, especially if there should be upward overlap. Otherwise, it will be harder to claim a larger degree "five-down" until or unless there is a new low from here. Then, if there is, there could still be confusion with the nominal high made on 6 Oct. And that is why there is also a purple 1 & 2 shown in the count with purple 1 near the low.

If the market is to truly be weak, then it must show that character. If it is to be stronger, it could still wheeze upward into a larger diagonal. So far, the buying has persisted into yesterday. If the market can truly be perceived in a down trend at this time, that buying would seem a bit odd - unless the buyers are ignoring all the warnings (or those doing the buying have nothing to lose - like government officials, etc.)

So, caution, patience and flexibility are still highly recommended until the market speaks more clearly.

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

TraderJoe

Caution Flags Flying

Because today 'can' be currently counted as 'five-waves-down', there is some probability that, contrary to the 8,000 hype, the upward count is over. Note, this count, the truncation count, still requires better confirmation, but it should receive serious consideration because of the sloppy upward progress of the last several sessions.

The count is shown here in the ES rollover contract, but cash would be similar. There is no reason that a throw-over of the upper wedge is required, and those who think this must happen might be abandoned by price. The RSI hasn't quite broken a larger trend line from late July, yet. But it could.

We will have to wait and watch for both that and further confirmation signals in upcoming days.

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

TraderJoe

Nary A Touch Lower

Overnight the ES futures (and the SPX500 CFD, below) made a higher daily high near the R1 daily pivot level. But, as the SPX500 30- minute intraday wave-counting-screen, IWCS, shows, price could not close outside the lower band this morning.

SPX500 (CFD) - 30 minute - IWCS

Further, price could not close on or below the daily Pivot level (P) and is headed back for the 18-period intraday moving average after the intraday slow stochastic lost its embedded status.

Short-term we continue to follow the local technicals as prices continue to try to resolve to a fuller EW count.

Have an excellent rest of the day.

TraderJoe

EWaves Envy ?

As you might know, Elliott Prechter, the son of Robert Prechter from Elliott Wave International, has spent a LOT of time and money developing the EWaves program which is purported to automatically scan thousands of markets or stocks quickly and look for their conformance to Elliott Wave patterns. I have no doubt that with today's computer capabilities that is largely or at least mostly true. For my part, I am just here to say that at least for daily and weekly charts, you can "mimic" what the EWaves charts look and feel like, just by using the Zigzag indicator on TradingView as the daily chart of the ES futures (roll-over contract) shows below.

ES Futures - Daily - ZigZag Indicator Wave Counting

This chart is current as of today. EWaves intentionally avoids using circled letters and numbers for clarity and, instead, uses larger or smaller numerals, and/or colors for wave-degree distinction.

If the ZigZag indicator is used in TradingView, one just hides the price series so that the overall form of the wave appears. The purpose of this ZigZag indicator is to provide the true "terminal points" of the move - which are often inaccurate if just closing prices are used.

When you look at this chart, among other things you might ask, "why were the letters A & B assigned to the blue labels?" It is because B wave retrace is only about 38+% which is typically smaller than a second wave, which is most often 50 - 62%. That is really the prime rationale, but the other portion of the rationale is the look of A wave - which has the look of a non-pullback wave. These no-pullback waves are often either A or C waves.

Now, we don't claim this method can scan a lot of stocks or indexes. Nor does it do the automatic labeling that Ewaves does. But if you have a few that are of interest, you might try this method to improve your own wave-labeling skills. It is very, very possible that EWaves is on to a real advantage here - and one that can take out some of the emotion. But it likely may be too pricey for some individuals and seems largely targeted to subscription services and institutions.

Have an excellent start to the evening,

TraderJoe