Wednesday, January 17, 2018

Higher Volatility - 2

Market Outlook: Expecting Higher Volatility
Market Indexes: Major U.S. Equity Indexes were higher
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

The Russell 2000, NQ futures. and Dow Transports had an inside day. The Dow made a new all-time-high (ATH), the ES futures made a new ATH, but S&P500 Cash did not, at least not as of yet. At the end of our post from yesterday, we said, "So, be prepared for anything including a flat or yet another triangle because there are not, as yet, any invalidating downward overlaps yet."

So today was that kind of "kitchen sink" day. Different indexes did different things, and the volatility index closed slightly higher.

No one chart will best show the market's position, although the S&P500 Index can still be seen to be in an hourly channel from the first of the year, as below. The count shown reflects, the best alternation and a non-overlapping fourth wave, in which the purpose of the Flat wave was to equalize the net distances traveled by waves .2 and .4.

SP500 Cash - Hourly - Potential Five-Wave Count

However, the market will have to prove the case for this count. Because wave .3 is shorter than wave .1, then wave .5 would have to remain shorter than wave .3, and then the market would have to overlap wave .1 near 2,758. Those might prove to be tall orders, but let's see how it goes. (Note: there are only 77 candles on the chart on this time frame. There was no intent to show The Eight Fold Path Method here in this summary chart).

Have a very good start to your evening.


  1. Thanks Joe for the review. I had difficulty understanding this comment - "and then the market would have to overlap wave .1 near 2,758. " Why does this need to happen?

    1. Hello, and welcome. Because only if price overlaps wave .1 can it no longer be in wave .4; otherwise this could be a compound flat or a triangle, and not a fifth wave.