Monday, November 19, 2018

c Failure

Market Outlook: Likely Long Term Top Identified, Now likely in Minuet (iii), down
Market Indexes: Major U.S. Equity Indexes closed lower; DJUtil Higher
SPX Candle: Lower High, Lower Low, Lower Close - Red Marubozu
FED Posture: Quantitative Tightening (QT)

Sorry for the late post. The holidays approach, and I won't be posting anywhere near as much, or as timely, or responding to comments as frequently.

Today was an excellent example of how the contracting diagonal we showed on the ES chart likely ended the upward c wave of minuet (ii) wave on the hourly chart. Nearly to a person, with a few notable exceptions that are catching on, almost everyone wanted that wave to have more time, or to have more price upward. Those that saw the very long b wave down know that in such a case, the upward c wave can fail. Fail it did, and down it went.

When one looks at the daily chart, the candle pattern that is seen is that of a Red Marubozu candle. Often, and not always, such a candle is a continuation pattern, and not an ending pattern. For that reason, and because of degree labeling, the count that applies best is this one.

S&P500 Cash Index - 5 Minute Chart - Red Marubozu

The 'Prior wave' at the top that looks so tempting as 1-2 (with the whole down wave as 3) is likely the failure wave. You will note that the wave from ~12:30 to 14:00 did not break the low of the prior fourth wave in less time than the wave from 09:30 on the 16th to the high at ~13:00 took to build. Therefore, that down wave from ~12:30 to 14:00 would be very, very suspicious as the first wave of the down count, even though that's it what it might look like to one's eye. But that down wave also did not even break the trend line of the prior waves - making it even more suspicious as a first wave lower.

Notice in this count that wave ((5)) is shorter than wave ((3)) which is shorter than wave ((1)), and wave ((4)) took more time and alternates in shape with wave ((2)) - which is the usual order of business. Wave ((4)) is a Flat, and wave ((2)) is a Sharp. Further, there are no degree violations in this count, which is very, very difficult to say if the waves from 12:30 - 14:00 are counted as a 1-2. That count would seem to introduce degree violations. The gap is a sub-wave iii of the wave ((1)).

The hourly count remains the same at this time.

Have a good start to the evening,


  1. Thank you for your efforts and discipline!!! I went short shortly after the "c" wave high...the market "struggles" to climb higher and that was evident with the back n forth price moves...and when we have a direct move downward with purpose it confirms to me we have just started w3. Today is the first back to back days I arrived at the same answer as our wonderful teacher!!!!

  2. Thank you for the count Joe. I wasn't sure just where the impulse ended.I knew it was either where you have it or at 1:30. So we have sub minuet i of minuet (iii) under out belt.
    In today"s impulse was 1 an extended wave?
    I also wanted to ask where it was you just recently discussed extended wave 1's and the effects on the EWO. Was it in a post or was it in the video?

  3. W3 hmmm.. IS this the beginning of Great Depression #2?

  4. Without a doubt in my mind.

  5. Joe: Does today's action change your count of Monday? Thanks again for all of your hard work and your willingness to share.

  6. If we are now in wave (iii) of ((iii)) downward I assume that yesterday we completed subwaves i and ii of (iii), and today I am counting the first sub-wave and sub-sub-wave of wave iii of (iii) of ((iii)). In general I expect a lower number of bars for a sub-wave of a lower order wave. When counting bars number, is it correct to consider also the overnight bars ?

    1. I think you will find counting overnight bars confusing. It can be done, but I would look more to cash. (iii) of ((iii)) is still possible. So is the B wave of the larger flat. Be flexible and patient.