Market Indexes: Major U.S. Equity Indexes closed higher
SPX Candle: Higher High, Lower Low, Higher Close - Outside Candle Up
FED Posture: Quantitative Tightening (QT)
On the Saturday 28 July post, we noted "Interim Top Possible - Not Proven". With today's outside day up, there are two very, very good possibilities. Either we are still in wave sub-wave iv of (iii), or we are in wave minute (iv) within Minor 5. While the DJIA does have some downward overlaps, the S&P500 has not provided downward overlap of any important wave.
Essentially, there are no changes to the count. The uncertainty in the exact degree of wave label I fully accept as part of the phenomenon I have described as The Fourth Wave Conundrum - which occurs at every degree of trend. I realize almost no one wants to accepts this inherent uncertainty. They want to know what the count is. I prefer to recognize the small uncertainty as it prevents me from making larger errors. With 169 candles on the hourly chart (narrowly outside the recommended range of 120 - 160 candles), we are still within the range where a minuet ivth wave of minute (iii) could have bottomed this morning. And, more precisely, we just entered the range (with 119 candles on the chart) where a 90-minute wave could have the same count. The EWO would agree with either. If I had to guess, my best guess would be "still in minute (iii)", but it is just that: an educated guess. So, that's what the daily chart below will show.
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| S&P500 Cash Index - Daily - The Fourth Wave Conundrum |
There are still many ways new highs and pull-backs can occur at this juncture without altering the count. Grueling small triangles, higher B waves, and other reversals are possible here. So one must simply have some flexibility, patience and calm until a fully countable structure emerges. As I have stated in several posts now, downward alternates are still possible. But from a price perspective, downward momentum provides insufficient evidence that a full-on downward count has taken hold. Today's outside day up reinforces that view.
So have a very good start to your evening.
TraderJoe
Outside day down then an outside day up. What a mess! Heck look where bollinger bands closing in. IDK....
ReplyDeleteThanks for the update ET.
Welcome Bill
DeletePersonally, I've never functioned thinking that I can ever know exactly what the count is. The best I can do is know what the count isn't. That's because there is almost always a valid alternate count pointing in the opposite direction. So, what we deal with is a process of elimination and probabilities. That being said, the valid downward count is that the market did a 5 wave move down from 2848 to 2798, and that has now been followed by an expanded flat back up to the .618 level. While SPX had an outside day to the upside today, the DJI had an outside day to the downside yesterday. Both indexes bounced off their 20dma today, which is positive, but the NYMO is still below zero, which is negative. As often happens going into a NFP number, the market is setup to go either way.
ReplyDeleteI used to 'religiously' follow NYMO and its companion NYSI for more than 15 yrs. Turns out, like religions, they are fallible too
DeleteI never found any use for NYSI, but I've used NYMO everyday for more than 34 years. Would be lost without it.
DeleteDon't you just love the way the $NYMO 'burns one' as it is even below zero today, Monday, 8/6 (indicating negative momentum), while the S&P500 makes a new recovery high today?
DeleteI like your new possible count. Makes sense with what's going on. I noticed that the SPX and Nasdaq both retraced 62% today. And the Dow retraced 50%. As bullish as I am, I wouldn't be surprised to see us fail here. But, I am betting/trading on further upside.
ReplyDeleteWas busy at work and couldn't get to this sooner. (I work for AAPL btw, and was happy to see us touch $1T). I had a picture perfect E-mini until yesterday, and was expecting a C down in (iv), and was bamboozled by today's pattern. But taking a step back, todays pattern just finished the B for (iv) as an irregular flat, and we can expect a C down to below 2800. While everyone else is bullish here, I am bearish for the next two days. Either way, time will tell.
ReplyDelete