Flaky Day

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed mixed
SPX Candle: Lower High, Lower Low, Higher Close - Doji Candle
FED Posture: Quantitative Tightening (QT)

Yesterday we said that, because of the holiday, that today could be a flaky day. It was. Stocks as measured by the cash S&P500 Index had closed Thursday at 2,901. Initially, stocks had a small gap down at the outset and traded down five points to 2,896. Immediately after the open, the market reversed, filled the opening gap, and traded higher to 2,906, a ten point swing. 

Then, around 10:15 am, a decline began to a new lower low at 2,891, a fifteen point swing, and making a new daily lower low. Beginning at around 12:30 pm ET, a couple of rally attempts lifted the market to close at 2,901; virtually unchanged.

S&P500 Cash Index - Daily - Doji Candle

The Elliott Wave Oscillator is still green, rising and above the zero line. It has not broken higher yet, but could, in the next couple of trading sessions.

We have often noted here, that the last trading day of the month is often 'sloppy' due to window dressing. This day was no exception. We have also noted the first trading day of the new month (Tuesday, for cash equities) is often positive due to the typical influx of funds from pension plans, retirement funds, 401k's, company bonuses, dividend reinvestment plans, etc. 

If that should be the case again, then, it is highly possible wave .iv wrapped up this morning at the low. That would likely mean any higher all-time high wave would confirm the onset of a sub-minuet wave .v of minuet v of wave minute (iii).

Have a very good start to your evening, and to your long weekend. See you on Tuesday.
TraderJoe

Backing Off

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed lower
SPX Candle: Lower High, Lower Low, Lower Close -  Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)

Yesterday we wrote, "There are now enough waves within sub-minuet wave .iii to call it complete, but it could have smaller degree waves if it intends to sub-divide. Regardless, we need to be on watch for the onset of sub-minuet wave .iv of minuet wave v."

With today's gap down opening, and further follow-through, the onset of wave .iv appears to be in the market. Stocks, as measured by the S&P500 Index, had closed yesterday at 2,914. This morning, they opened down at 2,909, and fell to 2,907, before a brief rally to 2,912, and another fade to 2,904 by about 11:30 am ET. At that time a rally attempt to surpass 2,912 failed, and stocks headed lower in earnest on a news story that another $200 billion in tariffs against China was about to roll out. (Whether that is true or not remains to be seen). Stocks fell to the 2,895 level, the level of a prior wave four, closing an up gap, and found some support there, closing at 2,901. Here is the daily chart of the cash S&P500 Index for reference.

S&P500 Cash Index - Daily - Backing Off

  
The market is most likely now in sub-minuet wave .iv, as shown. Being a fourth wave, being subject to The Fourth Wave Conundrum, and it being near a holiday weekend, make the progress of this wave very uncertain. This wave can take a lot more time if it wants. It can go over the top again (in a 'b' wave portion), or it could form a triangle. That much is unpredictable. However, wave .iv should not overlap wave .i for this count to hold.

The Elliott Wave Oscillator remains green, rising and above the zero line. It has not broken-out to new local highs yet, and so is still on a divergence. By the time wave minute (iii) is over, the EWO may have broken out. Time will tell.

For now, the S&P500 has another cash gap at the top of the market. The Dow missed filling it's cash gap from Feb 1 to Feb 2 by 20 points, yesterday, and backed off further today. Stock market volume has gotten quite light at only 2.7 billion shares on the NYSE. That can make for some flaky trade, along with the likely fourth wave.

Have a good start to your evening, and a good start to your long weekend if you have left already!
TraderJoe 

Nearing Upper Parallel

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

In yesterday's post, we wrote, "we would still expect to see new highs within wave .iii. This could happen fairly quickly - within the next day or so." Today provided the higher high needed.

S&P500 Cash Index - Daily - Nearing Upper Parallel

As we have been writing about, this is still within the context of making minuet wave v of minute wave (iii). We have expected - per our previous posts - that wave minute (iii) will likely hit or exceed the upper parallel to show it's power as a third wave. Today got the wave structure still closer to that upper parallel line.

There are now enough waves within sub-minuet wave .iii to call it complete, but it could have smaller degree waves if it intends to sub-divide. Regardless, we need to be on watch for the onset of sub-minuet wave .iv of minuet wave v.

The Elliott Wave Oscillator is still green, rising and above the zero line. Since fourth waves tend to be more unpredictable, there could be new highs within the wave .iv: we'll simply have to watch and do our best with it.

Have a very good start to your evening.
TraderJoe

Narrow Consolidation Day

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

Today was a narrow range consolidation day, after the recent market days that gapped up. We had warned "that there could be backing and filling at any time". That's apparently what we got today.

The market, as measured by the cash S&P500 Index, had closed yesterday at 2,897, and at the open, the market gapped up in it's first foray over the 2,900 level to 2,901. This high, as best we can tell is the high of an internal sub-wave three still of sub-minuet wave .iii on the daily chart, which is below for reference. Then prices dropped to 2,893 by around 12:30 pm, and traded up to close at 2,897 again.

S&P500 Cash Index - Daily - Higher High Day

Since today's low was likely then the fourth sub-wave within that sub-minuet wave .iii, we would still expect to see new highs within wave .iii. This could happen fairly quickly - within the next day or so. Then a somewhat larger pull-back would occur for the sub-minuet .ivth wave, before completing minuet v, within minute (iii).

With today's higher high, sub-minuet wave .iii became longer in price than sub-minuet wave .i within minuet wave v. And according to our count, it still has a little ways to go. The Elliott Wave Oscillator remains green, above the zero line and rising.

While the exercise continues to be to attempt to count the waves to a top, my market outlook is shifting from neutral to cautious. I am not bullish. I am neutral and wary of a top. (This is not to be taken as trading or investment advice. It is only a sign that most of the countable waves to a top are in place. Not all of them but many of them.) 

Have a very good start to your evening. 
TraderJoe

S&P500, NASDAQ 100 and Russell Futures new Historic Highs

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

We said on our Friday post, "With today's gap up, and follow-through, we think it signals the start of wave sub-minuet .iii of minuet v of minute (iii) within the Minor 5th wave. If so, the upper channel boundary should be the first price target. A wave .iii needs to get enough distance in it so that a wave .iv does not overlap wave .i. "

Today provided all the more evidence for that view, with a gap up, follow-through and overall +22 point gain for the market as measured by the S&P500 cash index. Here is the daily chart for reference.

S&P500 Cash Index - Daily - Gap Up

The gaps and near vertical nature of the rise likely indicate the third wave character. The Elliott Wave Oscillator is still green, above zero, and rising. An eventual target of the upper Elliott parallel trend channel remains in place for wave (iii). There can be backing and filling at any time. We indicated that wave .ii of this wave v of minute (iii) should not travel below wave .e of the wave iv triangle. It did not. We do not yet conclude that it is over for upward price action, although backing-and-filling can occur at any time. When a wave .iv of v of (iii) begins, it should not overlap it's wave .i.

Today, the Dow Jones Industrial Average entered an important downward price gap area from it's February 1 close to it's February 2 open. The expectation is that the gap will be filled.

Have a very good start to your evening, and to your week.
TraderJoe

The Measurements are In!

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

The market, as measured by the cash S&P500 Index, ended the week with a daily gain of +17.71 points and ended the week at a second set of new historic highs. Here is the daily chart for reference.

S&P500 Cash Index - Daily - New Historic Highs

The Elliott Wave Oscillator on the daily chart is still green and rising. With today's gap up, and follow-through, we think it signals the start of wave sub-minuet .iii of minuet v of minute (iii) within the Minor 5th wave. If so, the upper channel boundary should be the first price target. A wave .iii needs to get enough distance in it so that a wave .iv does not overlap wave .i. 

With regard to the Dow Jones Industrial Average, and the title of this post, the daily chart now also shows it is in a supportable Minor 5th wave configuration.

DJIA Cash - Daily - Minor 5th Wave

The problem for the Dow all along has been the marginal new lower low at where it shows the Minor 4th wave location. Over the course of the last four days, however, the measurements have now come in that show that the Dow (as an alternate) can be making an expanding ending diagonal for it's minor wave 5. That is because by the gray Fibonacci ruler, wave minute (v) is now longer in price than minute (iii), which is longer in price than minute (i) of such a diagonal. Also, wave (iv), by the red Fibonacci ruler is just barely longer than wave (ii), and these "longer than" wave relationships also hold up for the amount of time spent in each wave, as well. It is clear than wave (iv) overlaps wave (i) without traveling below the low of wave (ii), also.

So, from a pattern perspective, the pattern looks and measures in a manner that no Elliott Wave rules for an expanding diagonal wave are broken. This is in distinct contrast to all the Elliott Wave web-sites and services that found contracting diagonals in this pattern, patterns which broke the rules, and their patterns were not predictive. They kept predicting a crash when none occurred. That is the danger of breaking the Elliott Wave rules - whether for someone else's system of counting or not.

The reason why the pattern may be the alternate is whether the internal structures of the waves counts best as zigzags or not. I have my questions about it, and time will tell. Again, that is why the pattern is the alternate for the S&P even though it may be correct in the DJIA.

Have a good start to your evening and your weekend!
TraderJoe

New Historic High for S&P500

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed higher; DJUtil lower
SPX Candle: Higher High, Higher Low, Higher Close -  Doji Candle
FED Posture: Quantitative Tightening (QT)

Proving out the value of The Eight Fold Path Methodology, the cash S&P500 Index made a new intraday all-time-high today. The market gapped up at the open, traded up to 2,873.23, breaking the old high of 2,872.87 and then fell prey to some profit taking, still ending up on the day. Still, it was good enough to clearly indicate the triangle scenario for a Minor 4th wave was correct.

We consider this a major success as several other websites and some major Elliott Wave services were posting outright bearish counts, as were several wave counters who read this site trying so hard to convince us of. It's possible the Dow will not make a new high, but the evidence is not leaning that way yet.

Here is the daily chart of the cash S&P500 Index for reference.

S&P500 Cash Index - Daily - New All Time High

Also, by price trading above the blue .b wave above, it proved out that the triangle scenario was correct for that wave, as well. Since, price has established that we are now in the Minor 5 wave, we have included it on the chart. The importance of today is that the last of the gaps to the upside were technically filled today, and now all of the gaps are clearly below the market. This does not mean upside price movement can't continue higher. It also does not mean we can't gap higher. It just means we should have on our radar the possibility of an outside key reversal day down - or other bar - that does not leave a gap at the top of the market to begin the larger wave down. When that bar occurs, it will be significant. It may be days or weeks off yet.

Now the task will become to do what we can to find that top. This can go in one of a few finite ways. Price can continue in an impulse. This seems most likely, and price can attack the upper channel line yet. If you are interested in the other possibilities, then let us know what you think of our wave counting method, which is freely disclosed for you, and we'll see about including the alternatives in a later post. Remember, we even told you in advance, our rationale why a triangle scenario for Minor 4 would be the best path from an Elliott Wave counting perspective. No one else - no other web-site, and no other Elliott Wave service we are aware of did that for you, in advance, and had it be correct.

Thanks for reading. Thanks for hanging in. Patience, flexibility and calm have paid off yet again.
Have a good start to your evening.
TraderJoe

A SPY Among Us

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed higher; NDX, DJUtil lower
SPX Candle: Higher High, Higher Low, Higher Close -  Doji Candle
FED Posture: Quantitative Tightening (QT)

In this volatile and slow slog higher, the market as measured by the S&P500 Cash Index, ($SPX) made a higher daily high and went on to retreat a bit toward the end of the session, still closing higher by about +7 points. There is nothing remarkable here.

S&P500 Cash Index - Daily - Doji

It should be noted that the Elliott Wave Oscillator on the above chart is now green and still above zero. There are a finite number of ways this wave could play out. But, in any event, new local highs and all-time highs are expected at some point.

For those who might not follow such things regularly, the SPY (the ETF of the $SPX) has already broken out to new all-time-highs, as below.

SPY - Daily - At New All-Time Highs

This of course completely insures that the SPY above, simply can not be counted as 1, down, and a 2 up, from the January low to here. Granted the SPY includes the dividends that the $SPX pays, and is not reflective of "price only", but it also lends a very, very high probability (> 98%) that the $SPX will follow this count and be counted as Minor 5, now near or later over it's December highs. Otherwise an index and it's ETF would be grossly out of step in terms of the wave sequence. Might be interesting to watch that RSI divergence, however.

Sorry bears, but at this point, the triangle count for Minor wave 4 has just about been completely proved out.

Have a good start to your evening and to your week.
TraderJoe

Countable Triangle

From Thursday's post on the daily chart, we said it was likely we were forming a running triangle as a fourth wave. Friday's lower open provided the e wave of the triangle, which overlapped the prior wave iii, making a valid running triangle. In a running triangle, wave e must always overlap it's prior iii wave (or A wave if the running triangle is the B wave of a zigzag) in order to be corrective to it.

This wave did that, and then headed higher, as expected, with the Dow Jones Industrial Average even making a new high since it's up trend began on April 2. Here is the daily chart of the S&P500 Cash Index, for reference.

S&P500 Cash Index - Daily - Completed Triangle

The five zigzag waves of the triangle help assure there are no degree violations within the up wave, and better equalize the net distance traveled by waves ii and iv.  The likelihood of being in the minute (iii) wave only was also increased by this fresh new high for the New York Advance-Decline line.

NY Advance-Decline Line - Daily - Fresh New High

It is unlikely to start a full-fledged bear market while the A/D line is making new all-time highs. For perspective, the weekly chart of  the S&P500 Cash Index is below.

S&P500 Cash Index - Weekly

Everything from the weekly chart still seems satisfactory with the making of a minute (iii) wave higher within Minor 5. The weekly EWO is still green and rising, but still lower than the prior high. It is likely that minute (iii) would reach new all time highs, thenafter a minute (iv) pullback.

Hope you're having a good weekend.
TraderJoe

Whippy, Whippy

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed higher
SPX Candle: Higher High, Higher Low, Higher Close -  Follow-Through Candle
FED Posture: Quantitative Tightening (QT)

In typical action characteristic of a potential triangle, the market as measured by the S&P500 Cash Index gapped higher today, after gapping lower yesterday. Then, it made a new high not only over yesterday, but also the day prior. We said that nothing had yet taken the market out of the pattern of a fourth wave. Today is no different. Here is the daily chart of the S&P500 Cash Index for reference.

S&P500 Cash Index - Daily - Potential Running Triangle

At the risk of the chart becoming too busy, I have sketched in the potential contracting trend lines of this fourth wave if it is a triangle. See the black dashed lines. So far, they look good. Things could change, but the resistance to upward movement at the mid-line of the channel is pretty clear.  So is current support at that same line. Let's see if any more to this pattern is developed (there is one way to consider this triangle completed, but it might be rushing things a bit). If a running triangle does form clearly, then perhaps the market will clearly let us know where the top of wave minute (iii) will be.

On another note, the US Dollar Index futures did get that closing lower candle for verification today. We had spoken about that yesterday. So, it ups the odds that a top is in (again, not to be taken as trading or investment advice). 

Have a very good start to your evening.
TraderJoe

Gap Lower and Rebound

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed lower; DJUtil, DJTrans higher
SPX Candle: Lower High, Lower Low, Lower Close -  Hammer Candle
FED Posture: Quantitative Tightening (QT)

Yesterday's inside candle could not break through the previous day's high in the cash market. It was something of a sign of weakness. Stocks, as measured by the S&P500, gapped lower, and continued lower until late in the session when a bit of a rebound occurred. Here is the daily chart of the S&P500 Cash Index for reference.

S&P500 Cash Index- Daily - Gap lower and Rebound

There is still nothing that takes this wave out of the realm of a possible fourth wave. Until there is, one must be patient, and continue to be flexible. Stocks dropped down to the daily EMA-34, breached it a bit, then held, and rebounded. The Elliott Wave Oscillator continued red and lower, as upward momentum continues as dreadful.

But, this is what we technicians have been waiting for. We are beginning to see further signs that the $NYAD is beginning to buckle, which may allow for a divergent top from prices at some point in the future. Today's candle is only a 'weak' hammer candle, as the real body of the candle is not green or unchanged. Therefore, it may only represent being in a triangle still. The Russell 2000 also did not break down out of it's potential triangle.

On another note from our recent posts (and not to be taken or interpreted as trading or investment advice), there is a 90 - 95% chance that the U.S. Dollar Index made at least an interim top today. Concomitantly, the EUR/USD may have bottomed with a similar probability. Typical candlestick charting would require a confirming lower close candle for the Dollar (and vice-versa for the EUR/USD).

Have a very good start to your evening.
TraderJoe

Still Nothing Much

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed higher;
SPX Candle: Lower High, Higher Low, Higher Close -  Inside Candle
FED Posture: Quantitative Tightening (QT)

If yesterday was an outside day down in the S&P500 cash market, and it was, then today was an inside day up, even though it started with a gap up. It's still very, very difficult (because of the Fourth Wave Conundrum) to nail down the exact count. Here is the daily chart of S&P500 Cash Index for reference, with our best take on it.

S&P500 Cash Index - Daily - Still Languishing

The momentum continues to be awful (as one would expect in a fifth wave - Minor 5), and the Elliott Wave Oscillator is red and declining - even though today was an up day. Today was also a lower volume day in the cash markets.

So, if the Russell 2000 is still in a triangle, and it appears to be, then perhaps we are also making a smaller running triangle for wave iv of (iii) in the S&P500 Index.Time will tell. But at this time there is insufficient down side price movement to give bearish alternatives much ink.

Have a good start to your evening.
TraderJoe

Dollar Demonstrates 4WC

In our last post we said it was the first time possible to count a completed five-wave up sequence in the U.S. Dollar Index, so we wanted to alert the reader to it. However, well aware of the Fourth Wave Conundrum (4WC), we said we could still see two ways for the Dollar to extend it's rise if the potential ending diagonal we highlighted did not show the typical post-pattern behavior. We said that the first possibility was of that of a longer wave (iii) for the diagonal, and the second was as a longer triangle for a fourth wave.

With Friday's large move higher, it appears the latter of these options is the correct one. Here is a revised daily chart of the U.S. Dollar Index. Friday's move does look like the typical 'thrust' out of a triangle, still on a divergence with the Elliott Wave Oscillator. The 'fooler' wave, of course, is the (d) wave of the barrier triangle - with it's marginal higher high - which initially suggested the upper barrier line could be the up-sloping line of a diagonal instead.

U.S. Dollar Index Futures - Daily - Likely Triangle

With the inclusion of the channel, and the measurement boxes, one can see that the best count at this time is as a standard impulse wave - with 124 candles for the wave of interest - well within the usual parameters of The Eight Fold Path Methodology. And the boxes show this impulse has the potential to form a 5 = 1 leg, a very common relationship in Elliott Wave work. The important lesson here is not the exact count. No, the significance is that the Dollar demonstrates clearly how The Fourth Wave Conundrum operates to create uncertainty in the Elliott Wave - an uncertainty that must be dealt with and incorporated into one's routine. And, it happens at every degree of trend.

With Friday's drop, the S&P500 Index can be in one of several configurations including a fourth wave flat, a fourth wave triangle, a fifth wave diagonal or even a fifth wave truncation. Because some of these options are at different degrees of trend, rather than confuse the reader with too many options, we will be patient and calm and look for the wave sequence to clear up a bit. However, we will show the futures contract that has the greater propensity to be in a triangle now, at that is the Russell 2000 futures, below.

Russell 2000 Futures - Daily - Potential Triangle

Again, like diagonals, triangles are structures which must prove themselves by forming properly, and by showing the correct post-pattern behavior. We will watch to see if this one does. As with all potential triangles, any significant drop below the prior (c) wave would be a sign that a triangle is not forming properly and require re-evaluation.

In the meanwhile, have an excellent weekend.
TraderJoe

Backing and Filling Continues

Market Outlook: Now Getting Higher Volatility  
Market Indexes: Major U.S. Equity Indexes closed lower; NDX, DJUtil higher
SPX Candle: Higher High, Lower Low, Lower Close -  Outside Candle
FED Posture: Quantitative Tightening (QT)

Again with relatively narrow price range movement, the stock market, as measured by the S&P500 Index, had an outside day lower, but did not even fill it's closest near-by gap yet. Here is the daily chart of the S&P500 Cash Index for reference.

S&P500 Cash Index - Daily - Outside Day

The Elliott Wave Oscillator (EWO) still has green histogram bars and is still rising. Price momentum remains puckish, and the small nature of the pull-pack thus far is hard to argue with. This appears to still be a sub-wave within the minuet wave v of minute wave (iii).

On a slightly different note, in previous post we stated that we might begin to look for a bottom in the EUR/USD. We now show the daily chart of it's near-inverse: the daily US Dollar Index futures, which may be nearing or at a top.

DX - US Dollar Index Futures - Daily

For the first time, it is possible to count a completed five-wave sequence upward in this index, too. If so, it would be to an a contracting ending diagonal at this point in time, occurring on a divergence with the Elliott Wave Oscillator. Remember, diagonals are structures which must prove themselves, so we would want to see the typical post-pattern behavior that occurs after a diagonal to confirm it, otherwise, an extension of minuet wave (iii), as shown, or even an extension of minute ((iv)), not shown, as a larger triangle is possible.

Still, it is possible to count a completed wave sequence and we wanted to bring it to your attention. 

Have a very good start to your evening.
TraderJoe