Market Indexes: Major U.S. Equity Indexes were higher
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
It's hard to argue with measurements, so I'm going to present some. For the time being, pretend the Elliott Wave labels are not on the chart below.
|S&P500 Cash Index Weekly - Channel - With Some Measurements|
If a channel is drawn on an arithmetic scale, it can currently be seen to touch the relevant border points. In fact, some of the lower bodies of the candles in August 2017 are just beginning to be cut off. This suggests there may be a bit of resistance near this level. Whether that happens remains to be seen.
And a third wave (currently shown as minor 3) is just a hair's breadth from the 2.618 Fibonacci extension.
The weekly candle shows no sign of a topping tail. Nor does the daily candle. Nothing downward can be counted without lower daily lows.
If we ignore the topic of wave degree for just a moment, we can see that all of the labeled wave 3, also falls such that no part of a trend line from the origin at 0, through wave 2 cuts off any part of the third wave. This is Glenn Neely's guideline on a large scale.
The reason I asked you to pretend the Elliott Wave labels are not on the chart are as follows. First, notice that the Elliott Wave Oscillator is as green as can be and is rising like all get out. Suppose - just suppose - that if we are in a Primary fifth wave, that there would be an ending diagonal on a very large scale. Then waves 1, 2 ,3 can also be just A, B, C of wave Intermediate (1) of such a diagonal. Remember, if 3 = C, then C waves often show no or little divergence before ending.
Further, (I said I would have more to say about this topic) it is often precisely in triangles and diagonals where we see 2.618 wave relationships. So, if this is wave (1) of such a large diagonal, then the Fibonacci length of 2.618 might make some sense. Another reason to ignore the current wave labels is that I have another idea which is more intimately involved with the concept of degree, and may better explain why price lived under the middle line of the channel shown for more than a year from November 2016 to December 2017, and then pops up over the mid-line on the passage of the tax cut. I'm going to reserve that idea for the time being until there is more evidence for it. But for me, one of the most curious aspects of the chart is why it "folds over to the right" or makes a "right hand turn" in July and August, 2017.
Keep in mind, we are not quite to the 2.618 relationship yet, and sometimes price can just put "tails" above that level if it proves to be resistance. These are characteristics to watch for until something more certain develops. There are numerous Fibonacci relationships in this wave, and I am pointing out one. I showed another such relationship in the live chat room for participants there, related to the "extended fifth wave scenario". We are, after all, dealing with scenarios and probabilities. So patience, caution and flexibility remain the by-words.
Have a very good start to your weekend.