Friday, January 19, 2018

Pop Out of Triangle

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

Regardless of the news background today, prices as measured by the S&P500 Index completed, in good form, the potential hourly triangle that we showed yesterday, and then popped up out of the triangle on word the minority leader was meeting with the President regarding the budget. The hourly chart of the S&P500 Index is below.


S&P500 Cash Index - Hourly - Pop Out of Completed Triangle

So, the issue is that while a legitimate claim can be made that there is a completed count, we must recognize that is a 'probability' only. Clearly, the first pop out of the triangle could only be the first sub-wave of -v. We must await the possibility of further upward price movement. At this point, wave .5 is not longer than wave .3, so there is still some room.

Further, even though we don't like to take a nice 'picture' like the one above and stomp all over it, we must also allow the possibility that this wave is forming an ending contracting diagonal. That is because it is 'plausible' to count one in the hourly DOW, where it is not possible to count the above triangle in the Dow. If it comes to pass, we will show that count. The fact that we are willing to do this - we hope - shows the commitment made to thinking in 'probabilistic' terms. This should be considered a requirement for success in Elliott Wave work.

For now, have a very good start to your evening.
TraderJoe

14 comments:

  1. Pgh Tom Here
    Has the RUT also popped out of a triangle,or is it doing an abc down, or even a 1 down abc up, downward count?

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    1. Reasonably good points, Tom. Also 'possible' that it is in a larger ending contracting diagonal, on cash, with (i) from 1456 to 1562, and (ii) from 1562 to 1502, and (iii) from 1502 to 1604, and (iv) from 1604 to 1559, and wave (v) in progress. Would be possible to see a new high in that scenario. It is not as nicely formed as the prior one however, but it would explain movement over the top. It is also 'possible' that wave (iv) of such a diagonal is still in progress to meet the lower trend line better. Best idea I have at this point is to look for a true "ending wave" structure on this leg up in the Russell. If it's not there, then at 78.6% retrace, it is best to monitor until the count clears up.

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  2. the dow has 5 down and a abc into the close for those that would like to know

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    1. Hi Jeffrey. In this type of comment, it would be most helpful to state the time-frame you are looking at so others can verify if they wish.

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  3. Has anyone noticed since 2000, the markets big turning points are between Jan to March? In 2000, Dow topped Jan 14th. Nasdaq topped March 8th. In 2009, Markets bottomed March 10th. Remember late 2008 and 2009? Everyone was bearish as stocks were going down every single day. The markets are telling us a big change is coming...

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    1. Yes, but the market topped in July, 2007; not within the Jan - Mar turning point window you cited.

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    2. What about the bottom in Feb 2016? Major turning point! The Dow never had a major parabolic move back in 2007 like Nasdaq had in 1999/2000. Now we have the parabolic move.

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    3. Then, what about May 2011, and May 2015? Your observation did not say there had to be a parabolic move before it or anything else as a qualifier or as a trigger.

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    4. I'm just happy to see the markets go parabolic! Also, looking forward to the upcoming crash/depression cycle we have to go through. The only question is how severe the crash will be over the next few years? A 90% total wipe out in the markets would not be uncommon for this cycle. That only sets the market back to the 1980s. In the 1932 bottom, prices retraced about 35 years in the Dow. Some commodities retraced 75 years back to 1855 Prices! This will be fun to see how much money is lost from this cycle!

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  4. Thank-you TraderJoe, things could get interesting this week with the terminal pattern in the S&P500!

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  5. Salut à tous
    C'est pour quand le début de la baisse ????

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  6. Février 2018 fin de III. IV ce terminera en Mai 2019 et V complètera la fin du la première grand cycle en in Décembre 2020 au début Janvier 2021. Market crash likely on 12.20.20 to 01.21.21...

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  7. Hello Joe, thank you, for providing your commentary on the markets. I have a question in which I hope you can give an opinion on. Do you think the A-B base mentioned by Elliot in his book Nature's Law is relevant to the Elliot Wave theory? Why do you think Mr. Prechter disregarded this rule?

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