Market Indexes: Major U.S. Equity Indexes closed lower
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
Prices plunged in the overnight market, supposedly on worries about China or earnings of American companies in China. Even before the open, the Dow, Russell 2000 and ES (S&P) futures had made new lows below the October 11th low.
After the cash market opened, prices as measured by the S&P500 cash index spiked all the way down to 2,691.43, before the dip buyers came in around 10:15, and prices began a rebound in five-waves and almost closed the opening cash gap, but missed it by just a tad at 15:30 ET. Prices then fell off a bit into the close.
Any way you cut it, there is now the reality of "five waves down". That reality is shown on the first cash chart below.
Today's low is just precisely below the low of minute wave (ii) on the chart, and this completely eliminates any expanding diagonal upward diagonal some were talking about. Not only does the level do it, but so does the presence of five-waves down. We said we could not consider any upward diagonals as a possibility again until or unless prices got above the 2,900 level. They didn't.
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| S&P500 Cash Index - Daily - Five Waves Down |
What might be unexpected by many? We caution, what appears below does not have to happen, but it could. However, given the current wave relationships, it is possible for the downward wave to form a diagonal lower. Not a diagonal higher. Let me clearly indicate at this time that this count is an alternate. But it is a legit one based on having five-waves up at the end of the day today.
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| S&P500 Cash - Daily - Alternate |
Because so far the waves look like three-wave sequences, and they feel choppy as can be during the day, it is possible we are making a contracting diagonal lower. We already have the potential overlap for iv on wave i, but to remain valid, this alternate must see wave iv first remain shorter in price points than wave ii. This is reason we have placed a Fibonacci ruler on potential wave iv.
Whether or not a diagonal comes to pass, then, either way, more than likely we are looking at minute wave (i) in the downward direction. Remain flexible, calm and patient.
And, have a very good start to your evening.
TraderJoe
Thanks nice work as usual
ReplyDeleteMuch thanks
DeleteHi Joe, do you think this iv to v is finished? Looking at 15 minute chart, to me looks dificult to count a complete 5 waves. The today gap looks to me a iii wave and maybe a terminal figure is forming with a pending 5th wave. Could be ? Or it is part of a longer corrective figure.
ReplyDeleteYes, more down movement is possible.
DeleteThank you !
Deletehi joe
ReplyDeleteonce the drop of 5 waves is over, where are we going?
can you make a schema for the rest of the wave?
thank you joe
Hi Dom. Not yet. Patience please.
DeleteThank you ET! Market tricked me
ReplyDeleteWelcome, Bill.
DeleteSince the move from 2817 down to today's low is impossible to count as a 5 wave subdivision, then all I see is an abc up from 2710 to 2817, and an abc down from 2817 to 2691. That means that today's low can not be a 5th wave. NDX did not make a lower low today. So, I'm counting today's low as either a wave b, or a wave x, of the corrective wave that began at 2710 on 10/11. The recovery today retraced 50% of the 2817-2691 move, which means that a running correction from 2710 *could* already be complete. (still lot's of other possibilities as well)
ReplyDeleteThe failure of NDX to make a low is a prime reason for the alternate diagonal.
DeleteAwesome job, ET. A little bit of the fog is gone now. In comparison, the Nasdaq did not make a lower low today. Does this mean this index is already in its correction wave up?
ReplyDeleteSee comment above yours.
DeleteGreat work, Joe! thank you!
ReplyDeleteQUESTION: IF(and that's a big 'if') the SP500 happens to form the diagonal pattern, would it suggest to be careful of a possible quick counter trend rally that fools both the bears and the bulls by retracing much of the initial drop, say 50 - 61.8%? Or am I purely speculating at this point? Thank you
Good speculation, though. And you're welcome.
DeleteJoe I too use Ninja but having trouble finding an EWO on the site. Do you have a link? I use NT7. Thanks if you do.
ReplyDeletelook for Ao (Awesome Oscillator) is the same, with the name used by williams.
DeleteThere is no EWO or Ao in Ninja. I learned C## (C Sharp) the programming language of Ninja and built my own from William's original formulas. I wanted to be sure it was exactly the same and didn't use shortcut techniques or different moving averages (Ema's vs Sma's, etc.) You may wish to do the same. It's good practice.
DeleteThanks
DeletePlease, visit this page. Awesome is available here:
Deletehttps://ninjatraderecosystem.com/user-app-share-download/ao-awesome-oscillator-by-bill-williams/
What would keep today's "c" from being the end of an "a" leg of a flat/expanding flat, thus seeing prices retest/surpass Oct 3 highs?
ReplyDeleteThanks!
Are you saying such things just to argue or to try to get back even from the high? There are not even higher high days yet to justify such a count and further you haven't explained what position such an expanded flat would be in.
Delete