Cobbler

Like the shoe repairman that tries to save a worn-out pair with new soles, or even more like one of your favorite Savannah, GA peach deserts, I have tried to cobble together the count from what was lying around and available for use - segments we counted earlier. Using the ES 8-hr roll-over contract - the one that is most actively traded - provides this possible view of a barrier triangle. At least it does at this time.

ES Futures (Roll-over contract) - 8 Hr - Possible Barrier Triangle

Friday's up wave is so close to nicking the high that we must allow that it might. If it does, then, it might be a second zigzag upward of the double zigzag w-x-y count to the minuet (d) wave of the triangle. And, this wave may be allowed to go over the top, again, within certain limits.

From this high, it is perhaps possible to make the (e) wave of the triangle, which probably (not certainly) would take out the prior x wave lower. Notice the (c) wave, lower, only retraced a little over 62%, so something similar should be expected for the (e) wave. From there, the minute ⓥ wave top should occur as an impulse or as a diagonal to end the Minor C wave, up.

Now, notice the pattern on the Elliott Wave Oscillator (EWO or AO). You can see the contracting lines across the peaks and valleys and fairly tight hugging of the zero line overall that typically signal a contracting triangle.

If the triangle validates, with a higher high after the (e) wave, it might signal "the last wave dead-ahead" for this index. And, often, not always, the thrust out of a barrier triangle is sub-par. It might not travel the typical technical analysis target of "widest-width-of-the-triangle-added-to-the-breakout-point". It might. But it might not.

We have been looking for a formation that might signal the end of the monthly contracting diagonal, and this might be the start of it. Time will tell. And, yes, the current position shown of the C wave is just a placeholder. It is possible that Goldman & Co will try to drive the market to their 8,000+ target, which would be a Fibonacci number of 8 x 1000. But it might not get there, either.

So, why the barrier triangle? The compression of the triangle is trying to shorten up the minute (e) wave, and thus all of the minute fourth wave triangle to be more equal in price to the minute second wave which was a fairly small wave. Remember triangles are always measured, pricewise, to their (e) waves. And yet the triangle would show huge alternation in time with its second wave, as shown in the daily chart, below.

ES Futures (Roll-over Contract) - Daily - Barrier Triangle

Again, right now we don't have any overlapping waves (in terms of minute ⓘ) to play off of. So, it still follows the 'rules' to call this a fourth wave overall. There are alternates from here. We could have topped but the odds of that grow lower with the higher highs. And it is possible a final upward contracting diagonal is being constructed to drag this thing out into oblivion. But we'll deal with these possibilities if and when they seem to take over the count.

For now, have an excellent rest of the weekend,

TraderJoe

So They'll Never Know

Today we were counting the fifth wave up in an hourly ES impulse, and that occurred until approximately 10:30 am and a price of ES 7,605. The up wave took 49 hourly candles to build. Then, at about 10:30 am a fully 55-point downdraft bar occurred which was a clear stop-runner. Checking an amalgam of newswires, you won't see that "minor excursion (sic?)" explained anywhere. It 'might' have had something to do with POTUS not signing a housing bill, or with the SK Hynix debut, or with the Iran war. No one on Wall $treet apparently owes you an explanation. They won't tell you, and you likely will never find out for sure. The hourly chart of the ES futures showing this bar is below. One thing we know is that in the futures, it went down to overlap bar xi and so likely starts a new wave.

ES Futures - 1 Hr - Five Up & One Bar Down

Of course, being Friday, the machine nanobots bought the bar and squeezed it like there was no tomorrow to make a new higher high. So, psychologically, "mom & pop" and most casual investors will never know the situation occurred unless they may have had a stop hit. All most people will know is stocks closed higher on the day and when they check their daily bars on a chart nothing will look out of place, a high near the high of the daily candle.

Oddly, today we had a discussion on the blog about proportionality in wave counts. So, over the last couple of days, we've had 49 bars up, and only 1 bar down?!! That just seems extremely unlikely, but there it is. The market can try to make restitution if the up wave following the bar is a "b" wave, up, and there is a "c" wave down to follow. Maybe, and likely. Not guaranteed.

Regardless, not only the speed of the recovery, but the complete lack of explanation seems to make the situation just another incident in the never-ending Ponzi scheme of leverage driving this market. The problem is you have to find someone who gives a flying flip. The biggies are passively in this thing, and they literally do not care as long as prices are up. It feels like the leverage is getting more & more extreme. At some point, the leverage will be seen to revealed for what it is. 

Maybe later we'll have more to say about the wave count. Like I said, nothing in the down direction will surprise me. I just can't help wondering about the financial professionals and what they are thinking. Do they see no value whatever in letting some gas out of the system slowly so that it doesn't all come out at once? I guess not.

Well, no one ever blamed the keepers of the keys with exercising judgement that was too good.

Have an excellent start to the evening and the weekend.

TraderJoe

If today was, what was yesterday?

Today from the open we counted most or all of a five-up wave. If that's the case, what was yesterday? Below is the chart of of the ES/SPY (CFD) on the 1-Hr timeframe.

All of the waves up, yesterday, and in the overnight, were so incredibly overlapping that the likely structure up was that of a contracting leading diagonal. The waves have the right length and the right form, and the up wave from 06:00 yesterday to the cash open - which was never seen in the SPY cash - is then well accounted for. This morning's roller-coaster machinations at the open become a b/ii wave. And, so far, the up wave is in a parallel.

Also, as we discussed yesterday, we came almost up to the prior high and almost made yet another double top. As stated earlier, there is significant risk of going over the prior high and/or the prior all-time high.

But nothing has clearly invalidated yet, so it remains to be seen what transpires.

Meanwhile, back at the 4-hr Dow futures (YM), there appears to be a better formed five-waves-down & an upward slanting parallel after it which might bear some watching. The parallel is a smaller version of the one on the ES. But the ES does not count as nicely downward as a five-wave structure.

The market has a very strange feel to it - like every possible excuse for a wave is being used to avoid a decline. Said another way, it feels like the Smart Money knows if a decline is allowed to begin it might quickly get out of control. A similar way to say the same thing that some prior Elliott analysts use is that it is as if the market were waiting for a news story to provide the cover for a decline. Until that happens, it just hasn't, and we'll watch and count patiently.

Have an excellent start to the evening,

TraderJoe

Doubles

You'd think it was a summer co-ed tennis match, but it's this market that is literally seeing doubles almost everywhere. Today, as seen in the ES/SPY (CFD) intraday wave-counting-screen, below, there were double bottoms to within an ES point. And then there were exact double tops later in the day near the upper intraday Bollinger Band.

ES/SPY (CFD) - 30 min - Double Bottoms & Double Tops

The double bottoms are marked by the two down (red) fractals, and the double tops after noon are marked by the two up (green) fractals. As far as I can tell, casually, the double-top/double-bottom scenario is happening with increasing regularity and throws a bit of a wrench into Elliott Wave counting as it's hard to know how those get resolved. Either some large players are doing it as a matter of "support & resistance" trading, or the new meme of retail traders can't get enough of the "levels" trade. Notice, too, how many roughly equal bottoms and tops were made in the overnight session, as well. Curious.

In the next court over from Center Court, the next pair of doubles is the fact that the intraday price so far as this is written has traded back to its 18-period intraday SMA, and, of course, the daily is also back to its 18-day SMA. So, the "battle for the line in the sand" seems to be on.

From an Elliott Wave perspective, the upward triangle and downward diagonal still form a logical pair as we explained with the Principle of Equivalence. We still need resolution.

Have an excellent start to the evening,

TraderJoe

Suspicious Minds - 4

The ES futures today invalidated the expanding diagonal possibility. That leaves a few options. But mostly the levels traders would probably say a new risk area has been defined as on the ES 8-hr (rollover) chart, below. 

So, the primary reason for the chart is that the formation just doesn't at this time look like a triangle. The wave labeled a/i/b is probably not deep enough for a symmetrical triangle. Or, if we are making a barrier triangle, then today's up wave is not high enough. That could change, of course.

The down wave is currently labeled as a/i/b because it could be a five-wave contracting diagonal instead of the expanding diagonal. So, that could be a/i or it could be just a three-wave structure as a b wave which might be part of a larger upward diagonal.

But, let me be clear, there is real risk of going over the top again. That could still happen in a triangle or in a diagonal. But we don't have quite enough waves to better visualize those right now.

Today was very, very overlapping and whippy. The down wave was too. So, the count remains undefined until we get more information. I would keep an eye out on that Local Trend Line.

The day after a holiday is often an up day in a relief rally when nothing seriously bad happens over the weekend. And Tuesday is often, not always, a reversal day when Monday is an up day.

We'll see how it goes. Have an excellent start to the evening,

TraderJoe

Suspicious Minds - 3

In the prior post on the ES September futures (front-month only) daily contract we showed the possibility of breaking up or down out of a triangle, upward, or an expanding diagonal, downward. The internals of those charts are shown below on the ES roll-over contract. This is the lead month prices stitched onto the prior expiry on the volume roll-over day in the 4-Hr timeframe.

The panel on the left shows the 15 June high as a :5, the fifth wave of the Minor C wave. That high truly is a higher all-time-high on the rollover - just not on the lead month contract when considered alone. And that high's rather impulsive look suggests it could be the fifth wave after a fourth wave flat.

If so, we may be getting an expanding diagonal downward with the remaining sequences. 

Still, The Principle of Equivalence says we should at least give roughly equal consideration to the equal and opposite pattern of a possible fourth wave triangle that is wasting a lot of time before making that final high. We haven't seen a real triangle in the Minor C wave, yet, so, yes, this could be the one.

As an Elliott analyst one has to be agnostic about the outcome until certain benchmarks are achieved such as either a new all-time high or a lower low than the 10 June low. As a trader, the job is to try to put the odds on one's side. For example, a current contraindication of price going down is that it is still closing above the 18-day SMA, and so the daily bias remains up until it does no longer. Whereas, from an Elliott perspective, if the peak on 15 June is 'actually' a five-wave sequence, then it has no business inside of a triangle pattern, which must be all three-wave sequences.

So, for example, in the triangle count it is still possible to make a lower low than the prior wave low and still be inside the triangle unless the Ⓒ wave is exceeded lower. Even, then, it might be possible to extend the triangle by dropping the lower trend line a bit, so long as the Ⓐ wave is not exceeded lower. This would make the triangle possibility extended in time by several days.

Of course, once the Ⓐ wave is exceeded lower one is well on-the-way to knowing that the diagonal is likely completing. And after the diagonal completes a pretty still retrace stiff might be expected.

This is just the market's inevitable way of having its say and not letting the profit possibility be one-sided.

So, it is still a time to be patient, calm and especially flexible. The market - as a whole - will speak, and things will become clearer. They always have and likely will continue.

Have an excellent rest of the weekend.

TraderJoe

Suspicious Minds - 2

How do you like them apples? Or Odds? You see right now, the daily ES has a pattern whose wave sequences 'might' be able to all be counted as 'three-wave-sequences'. The daily ES chart is below.

So, the odds are roughly 50-50 that there is a break upward out of a triangle, or a break downward into a diagonal. Even if you're a decent wave counter, the roughly equal odds give one a pause regarding action to be taken - at least until things become a little clearer.

It is often said that "a triangle represents either indecision or a balance of forces". Well, so be it at the moment.

Tomorrow morning's Payroll Report and Unemployment Report would have to take out some significant lows or highs to make the wave count more apparent. Maybe they will. Maybe they won't. Time will tell. It seems curious after months and years of counting waves to be in this position, but here it is. We can still count the innards of a downward diagonal. And we're not oblivious to the shape above as a possible triangle or the fact that we are soon going into a major holiday weekend. So, there we are. 

While I'm on the subject of odd, or odds, I came across this peculiarity when measuring some waves in the SPY today. 

SPY Cash ETF - 1 Hr - Boomerang of Rebalancing Candle

It turns out if you clone the length of the candle that was involved in Russell rebalancing and just add that distance to the bottom of the next candle you get a perfect length match, upward as shown by the blue boxes which are copies. It's almost as if someone's ETF boss said, "look, you broke the damn thing, now fix what you broke." You don't think those kinds of shenanigans really go on, do you? Well, I do, and a whole lot more.

One other minor thing. Of course, that SPY candle breaks the definition of a contracting daily triangle because it made a lower low. But it does so only for the SPY. The other products (ES futures, SPX, etc.) seem fine. Oh well, odds are odd.

Nothing to the downside will surprise me. The volatility is frustrating. They ain't making it easy.

Have an excellent start to the evening,

TraderJoe