Key Milestone Passed

We said yesterday, it did not look like the up wave was finished. That was entirely correct. While the futures dropped down initially on the poor employment report, that dip was bought, and new highs resulted. We still don't think the upside is finished.

However, the DOW passed a key milestone today. In this daily chart that we published in the live chart room, you can see that the DOW has now passed the 105% x wave (a) mark, needed, according to the Elliott Wave Principle, to initiate any expanded flat downward. The S&P500, of course, has already passed this mark. Previously, since the DOW was between a 90% - 104% retrace, then it only qualified for a regular flat, not an expanded flat. Here's the DOW's chart.

DJIA Daily - Dow Makes 105% Needed for Expanded Flat

After making this mark, the Dow spent some time finding resistance there. So, now the Dow qualifies in every way for an expanded flat. And, it is interesting that it diverges from it's daily oscillator.

Yesterday, when we were using the fifteen minute chart, we did not have enough candles available to have the benefit of the The Eight Fold Path style analysis. Here is the 10-minute chart of the Dow, which now has enough candles to make some decisions.

The Eight Fold Path Applied to the Intraday Dow

This count becomes quite a bit more objective thanks to the use of the EWO and the RSI. I want to emphasize that this count was not possible until late afternoon, until that wave blue .iv and .v (not shown) of black 3 were made. I could not count another 'five-up' until there was, gulp, another five up.

So, it's clear now - by placing iii of 3 on the maximum of both the EWO and the RSI - that we had an extended fifth wave in wave 3. The S&P500 actually reached a 4.236 x wave 1 Fibonacci extension.

Then, we started a sloppy sideways movement which has not yet retraced even 23.6% of wave 3. This is likely just part of wave 4, and it will likely retrace 23.6%, and possibly even 38.2%. It turns out that 38.2% is right at the location of that blue .ii within the fifth wave extension of wave 3, and that is a common retracement target when the fifth wave extends. We'll see. After wave 4 is confirmed complete (perhaps on Monday or early Tuesday), then a 5th wave up should try to bust the highs to complete this wave.

From an anecdotal sentiment analysis, wave service after wave service is turning more and more bullish - with many placing us in a wave 3 or a wave 5, of some type. Or, they have that as their alternate. Interesting. Many readers are now urging me to "go bullish", and are showing me the "error of my ways". Interesting.

From a wave counting perspective, I want minute wave (b) to be longer in time than minute wave (a). It is. From a corrective wave standpoint, corrections are most effective when they are confusing to count. For most, it is or has been. Interesting! And, from a time standpoint, it would be more usual to have minor wave 4 be longer in time than minor wave 2. Now, it has a chance to be. And, further, it would be super if minor wave 4 was a flat or a triangle to alternate with it's sharp wave 2. Now it has a chance to be that, too!

To say minor wave 4 ended at the down spike in May, is to ignore the time relationships between minor wave 2 and minor wave 4, and also to ignore the recommended alternation. Further, it would also violate all guidelines for a running flat in the Dow, since the Dow never made the 90% retrace level before that wave!

At this point, I would rather not do that. I hope you understand why. I just try to follow the rules and guidelines.

Have a good start to the weekend.
TraderJoe