Friday, January 1, 2016

New Year's Wishes

We could, of course, spend a lot of time in this blog wishing everyone well in the new year (and we sincerely do!), but rather we have some wishes that some Elliott Wave blogs and sites would really tell it like it was - for them! Some were fantastically bullish from 2014 - 2015, setting targets for the S&P500 as high as 2,500+ within that time, only to be sorely disappointed that not only was that level not reached, but even more modest new highs after the May, 2015 high were not reached.

Not so for us! We took the approach that an ending diagonal triangle was formed from November, 2014 to May, 2015, and that it meant downside ahead. People wrote to us - told us we were crazy - told us we didn't know how to count an ending diagonal - because the downside wasn't occurring as fast as it 'should' have (clearly in their opinion), until, whoosh, then there was all the downside you could handle in August!

What really galls us though, through out the whole affair is the lack of candor some of these sites have had. Even in their "year-end review", they make no mention of how they doggedly posted 1-2-i-ii, up, in full pace with the bullish fervor of the time, did not obtain new highs, and these waves were not followed by the elusive wave 3. We even went to these sites, pleaded with them as best we could to 'look out below', posted numerous charts - only to be ignored until it was too late.

In other words, if you were placing investments on a "three to follow" - plain and simple - you lost! They got caught up in bullish sentiment; we did not.

Rather our approach cited the "fourth wave conundrum", the whippy trade, and the lack of follow-through. We said it was very possible a triangle was forming for Primary 4, as just one of the many alternates possible in the various wave four structures; OR that Primary 5 was forming, giving probabilities only. We even 'tried' to count five waves up from the August low, but quickly noted on December 19th in this blog when downward overlap occurred, and that count appeared kaput - just someone's pipe dream.

So, where are we now? To make life simple : we are still in a range! We are in the range between the August, 2015 low and the May, 2015 high. Until we break out of that range, we can not assign a new Intermediate wave label. We showed you the possible & even probable W-X-Y count, down to a new low in the December 19th post. The reasoning is simple: we think that since the other market averages (DJIA, DJT, RUT) made lower lows in August, 2015, proving out their earlier ending diagonals ending in May, 2015, that the S&P500 should too.

Well, how about the current wave structure? As we cited in the December 20th blog post. It is "still" not out of the realm of possibility that the market makes a Primary 4th triangle, but the wave structure still is not indicating that (a slightly higher high over the November 2 high is needed to reactivate that possibility). Instead, we think, most likely we are headed for the new low, wave (Y), shown in the December 19th post, and as evidence, we are counting this structure below on the four hourly chart of the cash S&P 500.

In this chart the blue numerals are the number of S&P points traveled. As you can see, the structure currently is Wave minute iii (circle iii) is 112 points, and it is longer than minute i (circle i) at 97 points. And wave minute iv (circle iv) at 88 points is longer than wave minute ii (circle ii) at 85 points. Wave minute iv also overlaps wave minute i, so the only thing that would be needed is for wave minute v (circle v) to become longer than wave i. If this occurs, and a proper Expanding Leading Diagonal is formed, then it would be minor wave A, of Intermediate (Y). This would be a 3:3:3:3:3 form of a Leading Diagonal and would NOT be as bearish as the 5:3:5:3:5 variety - meaning it may not be a final top. But, it could be bearish enough to form minor A-B-C down to Intermediate wave (Y).

Will it occur? Well sometimes the first trading day of the new month and new year can have some fireworks in it from the new inflows from pension plans, 401k plans, etc. So, it is even 'possible' that wave minute iv (circle-iv) is not done to the upside yet. Thursday's down move 'could' only be wave iv of the minuet (c) wave higher of minute iv. That would not change anything as long as the high of wave minute ii (circle ii) was not exceeded at 2104.27 on the cash S&P.

Barring that, wave minute v (circle v) should become longer than minute iii (circle iii) at 1970.55, and this would be the level to exceed lower once the end of minute wave iv (circle iv) is confirmed.


  1. Happy New Year Joe and all you guys at EWT&C! Great post as always and you gave out some great info that many seem to leave out. Much appreciated! Thanks

    1. Thanks, Mark. Thanks for commenting and all your continued support!

  2. Happy new year and thank you for your posts.

  3. Hi Guru Joe
    Wish you Blessings in abundance,Peace Joy & Prosperity in 2016.
    Many Thanks for your most educational and valuable posts

  4. Joe,
    Your teachings are always insightful and valuable. I greatly value your objective approach and the way you hold yourself (and others) accountable. That's a rare and precious commodity . . . in this arena in particular. Know that you're appreciated.
    May you be happy, healthy, safe, and live with ease,

  5. Great stuff as usual.
    Joe, how about the market is forming a wave 4 of the August low in the complex shape of a double three: zigzag - X(2104.27) - ascending triangle (currently working on wave e)? I realise, a marginal overlap with wave 1 (1993.48) was there, but as long as e or the triangle terminates above it (as it should to keep the pattern) the overlap is still technically not there.

    1. Hi mo - Looked at your chart. In a triangle, wave 'a' is usually the shortest in time, and the most violent based on studies that have been done and published elsewhere. This version of a triangle would fight those odds, as it makes the 'a' wave the longest.

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    3. Got it, thanks very much.
      I just wanted to add, since the issue of the 1993.48 overlap remains to be one of importance here, that on the front month contract in ES there was no overlap. It kind of adds to the controversy here, imho.

  6. hanks for all the work you do providing your valuable insight into market moves. I'm not a day trader, but rather a long term investor. I'm hoping you will still be doing videos (it's been awhile!) because they provide a much longer view of the markets. Your last few videos enabled me to avoid that long drop last September for which I'm very grateful! Happy New Year too!