Market Indexes: Major U.S. Equity Indexes closed higher
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
One of the clear reasons that we caution that triangles and diagonals are patterns that must prove themselves is in relationship to a day like today. Overnight, the ES 2-hr triangle had the potential to complete and complete properly. In the last wave, the potential (e) wave, the pattern was invalidated, and a short squeeze was on.
That leaves us with only three-waves down on the daily chart. Sad, but true. Let's eliminate from consideration everything on the daily chart, except this down wave, and what comes after wave 5.
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| S&P500 Cash Index - Daily - Only Three Waves Down |
The Elliott Wave Oscillator (EWO) remains much lower.
It should be clear that so far, there are only three waves down. Could a fourth and fifth wave form? Yes. But given the length of today's rise, a straight-forward downward impulse is now tougher to do.
Could price find resistance at the back test of the channel? Yes.
Could the first three waves down be the start of a downward diagonal? Yes.
Could they only be a second wave of a larger move upward? Given only a 62% retrace to the low, yes, but harder at this time to see how. Therefore, it is lower probability. (See note below!)
This is just one of those situations where one has to wait for more information, and to see what happens, if and when price back tests the channel and interacts with the EMA-13 and EMA-34.
Have a good start to your evening.
TraderJoe
(P.S. Revision after the close. I measured this down wave, it is much, much larger in the cash market than Minor 2, at the election low. Therefore, by degree labeling, it would likely be incorrect to put a 2, or (ii) at the October low.)
hi joe
ReplyDeletechange of meaning today
are we going back to the summit?
it's not easy to follow and understand.
it gets complicated
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Probably back to moving averages, first. One thing at a time
DeleteTHANKS - you cant predict the future - its about probabilities.... I think its a "2" if we could be looking at 2016 to jan top as "1" ... then we are entering 3 of 3 ... dont see any degree violations in that case (have to recehck). If we see the first real momentum and clear impulses that would make sense... i dont know.... and also why do you not want to count 5 down when on smaller time frames I think it looks pretty clean with EWO etc...
ReplyDeleteFirst, that would be a very, very short 2 for such a long wave 1. Not even below prior fourth wave. Second, if we break the Oct low again, we may just have a, b, c of a larger diagonal lower.
Deleteok. now try this. yes its 3 down but start at the blue iii, then we can build a full impulse...??? thats all i got
ReplyDeleteno thats 5 down i believe
DeleteHard to follow you.
DeleteI'm going with rejection at the 20 week ma. Going to be a challenge to break that. Daily ATR is strong with SAR 2846.
ReplyDeleteI almost want to say 2600 to 2660 area for 2 of ED. I'm just not ready to put on my bear hat :)
A more interesting count would be if you could count from the Feb lows to Oct highs as an ABC. Then, you could be in an ED count.
ReplyDeleteTJ, to say there's only 3 waves down is asinine. From 2940, there is only 3 waves down but what if you count form 2941. It looks like 5 waves down. I know it's convenient to use 2940 as the top with a truncation because of the DOW's count, but it may not be the right count. Instead of always talking about triangles and diagonals which aren't common structures, maybe you should talk about extended fifth waves so we all can learn something.
ReplyDeleteI'm not saying it's the right count, but it's worth mentioning because it would allow the market to be in a larger 2nd wave as it appears with today's strength. Adding credence to the extended fifth wave is it was 2.618 * wave 3 almost to the cents.
DeleteLet me be clear. Any further comments with the tone like that in the first paragraph of this one, and your account will be revoked. Such a reply does not even deserve a response. You clearly did not even listen to or absorb the information in the video. I will only repeat that both diagonals, the one at the May, 2015 top, and this one were entirely 'predictive' of the large drops that followed. Both diagonals were fully retraced in less time than they took to build which is the 'timing' rule for diagonals. You should learn to add 'time' or 'speed' as factors in your analysis, and not just price or length.
DeleteHi Joe!
ReplyDeleteThanks for the ”revision after the close” yesterday, that’s an important factor that I surely would have missed othervise!
Isn’t it also less likely for an expanded diagonal minor 5 to follow the minor 4 triangle? Because they are ”cousin” patterns and it’s the same degree?
I like the option as the first wave down of a potential bear market as a diagonal and not an impulse beacuse we topped on bad news and bad narratives in markets, as you say what happened yesterday was a short squeeze.
And thanks for the great video! Wish I started following you alot earlier, that would have saved me a lot of money...
Best / Erik
Yes, a diagonal is less likely immediately following a triangle.
DeleteHi Joe, great work. I rarely comment here but have a quick question. You state that given the length of today's high, that a downward impulse is less likely. What technical data do you use to make that assumption?
ReplyDeleteI ask because as a trader my timing can be off sometimes and its usually when I'm expecting an impulse down. I would like to try and avoid this bc I trade options and if the impulse doesn't happen and instead trades sideways for a longer period of time, my option premiums get killed. Thanks in advance for any insight you can give me
Greater than 38% retracement, so far. 'Can' still be a fourth wave - just less likely. It is a game of probabilities.
DeleteSo far, the decline from 2940 to 2710, and then the rebound to 2813, has been a carbon copy of the decline from the Jan highs. 7 days down in a 5:3:5 subdivision, followed by an attempt to retrace 50%. Mirror image. At this point, the rebound can still easily be a 4th wave.
ReplyDeleteAgree; it 'can'.
DeleteJoe, in your nice video I noticed Primary wave 2 lasted about 6 yrs 1976-82 yet Wave 4 is 2 yrs. You always seem to say Wave 4s of any degree last longer and correct part of Wave 3. Based on your Wave count since 1974 would you change your count based on this? Also could the most recent top be a Wave 3 of 3 meaning a long Major wave 3 of Primary Wave 5 making this correction an Intermediate Wave 4. Thanks Sam
ReplyDeleteNo. What I am an advocate of is the waves 2 and 4 'usually' alternate. And 'most often' wave 4's are longer in time that wave 2's. But both original Elliott and Neely show constructions where the alternation in time is that wave two is 'long' in time, and wave four is 'shorter' in time. And I have no idea what a 'Major' wave is.
DeleteMy mistake. In this Primary 5th , could we be in long intermediate wave 3 that just topped and this starts intermediate wave 4. Thanks.
Delete