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.
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| 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
AC indicator hasn't turned positive, adds up with triangle idea. I was thinking last wave. The AO well... turns up on the break out or turns up tomorrow... Have to pay attention and add to my notes.
ReplyDeleteSummer Doldrums could be just around the corner.
Sorry, I got sticky fingers on my iPhone as I typed my comments earlier and ended up having a lot of typos. (please delete it if possible). Here is the correct version:
ReplyDeleteThanks Joe, many kudos to you. A week ago you were expecting a triangle and that is what we got. But I am having trouble following the summary:
- If this is a triangle how can minute ‘a’ down (of iv) be smaller than ‘c’ down?
- If this is a triangle how can we know the top of (iii) that is yet to come?
Hi & thanks for the kudos. The first version of the post was deleted per your request. 'a' is smaller than 'c' because 'b' is the largest wave. This is true of all "running triangles". The only requirement in a running triangle is that b,c,d,& e form a contracting structure. You can search on the terms "running triangle Elliott Wave" and you will see many images on line of such a triangle.
DeleteOften the top of the (iii) will be the widest width of the triangle added to the point where price breaks out the triangle : that is just the 'usual' technical analysis target.
If you are not familiar with running triangles, then I question if you have read The Elliott Wave Principle by Frost & Prechter. Running triangles are covered on page 50, diagram 1-43 of the 10th ED. Having read this book is essential to understanding this blog, and Elliott Wave Theory in general. Not having read it, one will just flounder.