Stubborn Refusal

Many analysts have not fully acknowledged that both the ES and the NQ futures made new all-time highs (NQ on 16 Jun) if their roll-over contracts are considered (again, those are the contracts where the prior contract month's prices and the new contract month's prices are just stitched together - with no adjustment - on the volume roll over date given by the exchange, often the CME). That fact confuses Elliott Wave analysis a bit because one can ask, "is it a new high or isn't it?". Well, it can be but it doesn't have to be. Similarly, I have stubbornly refused to analyze the NQ futures until something at least reasonably clear became apparent. Why? Because there was no point. Now, we can at least look at a chart and suggest some plausible options. The NQ daily chart (roll-over contract) is below.

NQ Futures Roll-over Contract - Daily - Ambiguous

So, there are two counts here. One way the ambiguity in the roll-over and lead-month's contracts can be resolved is if the the marginal new high is just a blue (b) wave shown above. That can make the diagonal down a blue (c) wave, and price could imaginarily or actually go over the high again. 

The other way to resolve the ambiguity is if the minor higher high is actually a black minuet (v)th wave of the minute ⓥth wave in the Minor C wave count that ends the move. Then, price would not go over the high again.

What makes the pattern ambiguous is that a diagonal, itself, is often ambiguous. We know it can be either leading or ending in certain circumstances. I contend it is one of the market's very survival mechanisms. Otherwise, traders would be too sure of what the count was. And this pattern would be the 3-3-3-3-3 variety which is allowed to be either. If it were the 5-3-5-3-5 pattern it would decrease the ambiguity - because that pattern is thought to be 'leading only'.

None-the-less, there are two factors of wave counting which are much, much less ambiguous. Those are, 1) the extent of price travel, and 2) the time taken to travel. (As an aside, sometimes trend lines are less ambiguous, too, but which trend line then becomes the key.) But back to the analysis.

There is no question that this down wave in the NQ has taken more time than any of the down waves since the Minor B low. As regular readers of this blog know, that may change the degree. The last lone option is likely the (c) wave of a Flat, because fourth waves can take more time, and even travel slightly more than their second waves.

In terms of price extent, we know that the 9th Jun low has not been exceeded yet. We are leaving room above that it could be. That might introduce some motive character into the down wave. But, it could still be just the (c) wave of a flat.

Still, at some point, the time factor, and the degree change will over-rule the price extent and likely point lower. We could be nearing that point now. But bear in mind that even a diagonal likely needs a retrace wave, and that could be quite a stiff one and near the highs again. (It certainly does not have to, but it can).

That is why I always say when counting a downward diagonal, "we have a diagonal, watch the high". I am saying that here, too. If a new high is not made, it is possible for the green 1 ? on the lower right to prevail.

Keep in mind with the different indexes that they simply have different stocks in them, so they can top at slightly different times.

Have an excellent rest of the weekend,

TraderJoe

Cobbler - 3

If the ES daily pattern is the barrier triangle, it might look like this overall. The (d) wave looks to be the complex leg of the triangle.

After the higher high in the after-hours, price traveled down to the S2 daily support pivot and bounced strongly into the close. Price did not close back below the 18-day SMA, so the daily bias is still up. And the regular calculation of the daily slow stochastic shows four closes over the 80 level, meaning it is currently embedded, until/unless it comes back under the 79 level.

It's summer whippy and difficult trading.

Have an excellent start to the evening,

TraderJoe

Cobbler - 2

The Principle of Equivalence says that within the potential barrier triangle we need to consider at least two close-in local scenarios with today's price movement lower that went essential nowhere. The first one is that the minuet (d) wave is completed as shown in the ES 4 Hr chart, below.

That would make today's expanding diagonal downward the lower degree "A" wave of the minuet (e) wave of the triangle. And, again, that (e) wave can take out the prior X wave lower.

The second scenario is that the expanding diagonal today ended the lower degree (C) wave of an expanded flat of a Ⓑ wave - since it went nowhere important - and the (d) wave requires a higher high Ⓒ wave up, to finish the Y wave, now, as in the chart below.

I have no preference which occurs. I have no dog in the fight. On the daily chart, price is still above the 18-day SMA. The rationale for the second count is that often in a barrier triangle prices quickly go over the prior high, then settle back under it on the close using the timeframe of interest (ES 8 Hr or daily here). That hasn't happened yet. It could.

Note, the MACD is curled over on the 4-Hr. There is a 'way' we could have topped. But price extension lower isn't showing it yet. Maybe it will. It just hasn't yet. I'll be keeping my eyes open.

Have an excellent start to the evening,

TraderJoe

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 minuet (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