Monday, November 12, 2018

((C)) wave Down to 78% Retrace ??

Market Outlook: Likely Long Term Top Identified, Now likely in Minute ((ii)), up
Market Indexes: Major U.S. Equity Indexes closed lower
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

Saturday, we said that based on degree labeling, that the most likely course of prices today was lower for a ((C)) wave. Others disagreed. There were some fake-out waves higher in the futures, overnight, but the market opened lower with a solid gap, lower. Prices declined and kept on declining. Typical of a ((C)) wave.

As an impulse ((C)) wave, lower, this would be the only count at present that makes sense. There is no upward overlap between the high of the triangle and wave (1) down.

S&P500 Cash Index - Fifteen Minutes - C Wave lower?

The only way the count works from a degree labeling standpoint is if there is a "barrier triangle" at the end of the day. Otherwise wave (5) of ((C)) is too long in price. Remember, in a barrier triangle prices bang along the lower barrier, but they don't close lower than the barrier. That IS what we see, above, and the purpose of the triangle is to "better equalize the net distances traveled between wave (2) and waves (4)". This one does that quite well.

Prices briefly breached the 78% retrace, but then they held there for the close.

The downward price structure is just awful, which is what makes me think it is a ((C)) wave. And, the triangle might be signalling that we've seen the last wave. The day ended on a divergence with the Elliott Wave Oscillator.

I will not start an upward count until price should regain the upper declining tend channel line shown above. So far, the degree labeling considerations have been predictive. With "five waves down" today, there should at least be three-waves up, next. And, there could be more. But that remains to be seen.

For a continuing count of an upward contracting diagonal (c) wave of minute ((ii)), in no case can price trade below the prior low at 2,700. That would invalidate a diagonal.

Have a good start to the week.
TraderJoe

84 comments:

  1. thanks joe
    i am assuming you think this can get more complex which is why you are drawing line in sand as upper downtrend line - correct? Or do you just want to teach patience...

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    1. No, it's a valid principle in wave counting. You don't count ((A)) up, until you are over prior ((B)).

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  2. why is not a violation in price that the distance from a to b inside the (b) wave is greater than the distance from (a) to (b)

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    1. Because the (B) wave down is shorter than the ((A)) wave down. In other words, there was a prior higher degree down wave, ((A)), that had established the maximum length a lower degree (B)wave could travel. I hope that is what you are referring to. In the future, it would help is you use the same symbols as the chart for questions. Use two parenthesis (( )) for a circle.

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    2. was reference to 2777.68 to 2790.17 ((B)) being less in price than 2787.69 to 2764.24 the b wave in the ((B)) wave

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    3. so that would answer anta's question a few post's lower how far the b wave in ((B)) can travel, correct? b In that ((B)) flat can be equal to but not more than the length of ((A)) in price.

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    4. Thanks Joe and Gerald. That answers my question too.

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    5. Hi Gerald and Anta, I think there isn't a degree violation because of the structure of correction waves. Sub-wave of correction waves can be larger in price than their parent wave. Just like wave (a) of a contracting triangle, wave (b) of an expanded flat.

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  3. Quite an interesting day full of potential internal patterns to decipher.
    If we should breach 2700 to the downside(the b wave low) would that then indicate that the 2815 high, which was a 61.8%, retrace was all of minute ii instead of a wave 1 of the potential c wave diagonal and we have begun minute iii down?

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    1. Not necessarily. IF this downward wave turns into a full on impulse, look for the expanded flat c wave of the former ((B)), down: the little short one. I'm looking for a good way to rule that in or rule that out. The triangle is one thing that tends to rule it out. It's not definitive though.

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  4. Hi Joe, in your 15m SP500 chart, the (B) wave of the expanded flat ((A))-((B)) is relatively huge.
    What percentage of A can a B travel at most in expanded flat waves?
    Thanks for helping us. Edgar

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    1. Not Joe,
      But the answer can be found in the ratio analysis section (chapter 4) of the EWP book. I have an older copy and it is on p.131. If you have a newer copy it should not be more than a few pages different.

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    2. Hi Tom, EWP page 139: "Wave B in an expanded flat is sometimes 1.236 or 1.382 times the length of wave A". I don´t think 1.382 as the maximum.
      In the chart above, B wave is about 1.62 x A. Edgar

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    3. As Neely explains in "Mastering Elliott Waves", when B surpasses 1.382 of A, is one "elongated flat". In that case, C is very possible will not retrace all B and will be a "irregular failure".

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    4. hi anta, the question you ask was not made my way but I believe that the b wave in the flat could have gone to 2750.22. I get that by taking 2815.15 - 2777.68 the length of ((A)) and subtracting it from where a in flat ended 2787.69. so 2787.69 - (2815.15 - 2777.68) = 2750.22.

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    5. Thanks Gerald and everyone for clarifying.

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  5. SPX 2138 is the next real support level once we break below 2704. It's going to be an interesting rest of the year...

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  6. Thanks for clarifying the barrier triangle pattern. That takes out the ambiguity of expanding diagonal on 5 mins.

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    1. Welcome. Like all triangles the market must prove the case by overlapping wave (1) down.

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    2. Agree. So far the analysis is at its best. Barrier triangle as 4th wave & triangles are usually seen just before last wave and we are at the junction where we expect last wave down.
      You are the best ET !

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  7. Many thank you Joe for these analysis "in live" in the middle of a correction, where is the most difficult point to analyse.

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  8. Joe - I've enjoyed reading your analysis as it is very helpful and thank you for doing it! Quick question - you've mentioned posting during the trading day. Do you have a trading site separate from this one? If so, would you provide the URL? Thx

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    1. No. I don't. In the future, comments are not responded to the 'Unknown account.' Obtain an id to comment.

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  9. Joe any alternate count that this is beginning of wave 3 down. Thanks Sam

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    1. Alternate. ((A)) = 1, ((B)) = 2, ((C)) = 3 of an impulse with a fourth up, 4, that doesn't overlap wave ((A)), then a 5 down to another new low. Since the EWO does have a lower low on ((C)), it's a valid alternate at this time. The EWO should head back towards 0 in either case. Then one has to watch to see if +40% is exceeded upward to try to rule out the impulse.

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  10. ET, silent bleacher bum here that has been reading and learning from your patient, valuable, and excellent analysis for a long time. Excellent call on October 11, 2018 "Possible Top in Daily Crude Oil"!

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  11. I don't know if this was already discussed or not.
    Have we considered the possibility that the 3 waves up from the bottom of minute i is an a-b-c forming a W, and we are in an X down currently?

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  12. With this morning's lower low, it is possible we are forming a triangle ((B)) wave overall. The triangle ((B)) wave would be referencing the hourly chart. There is no telling. That is why an up count doesn't start until we break previous fractal highs.

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    1. So you mean potential triangle for ((B)) started 2/11 and we are in C leg of triangle?

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    2. Yes. SPX now over prior fourth wave.

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  13. An observation:
    If one puts a fib scale on the move up form the bottom of minute i. to the 2815 top, the 38.2% retrace is acting like a magnet. Perhaps an inflection point from which we get major movement.

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  14. Did the DJI (5 mins chart) complete an ending expanding diagonal ? I see v > iii > i and iv > ii . So that could be wave (5) of (C)

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  15. ET, on 5 mins chart SPX ended the down move with expanding ending diagonal. Its rare to see that but is that allowed ?

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    1. As far as my measurements go, the EED, would result in (5) greater than (3), but (3) less than (1), if (4) is at the high of the EED. That is not allowed. So no.

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    2. And FLATs like the lower low after noon, are not allowed inside a diagonal.

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    3. Thanks ET ! Strange am getting 5>3>1. Wave 1 starting at 14.15-15.10 yesterday, wave 3 staring at 15.20-15.50 yesterday, wave 5 starting 9.45-10.30 EST. If you could share a 5 mins chart just to highlight the count after close it would help a lot to understand the structure. No pressure :P.

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    4. OK. There is one way I can get that work. That is to go back to a 5-min chart, and label i, down, ii up, on Nov 9. Then, iii is long enough so that iv can be at the top of the diagonal. SO, ((C)) could have been at today's low. But it would 'have to' hold - even for a triangle.

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    5. So, on further investigation of that count, I found degree violations that don't work, and I can't even see those Nov 9 waves on a 15-min chart. Good news! I found another triangle solution that works with the original count.

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    6. for reference what is original count

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    7. The triangle is as follows from (3) = 2733: A = 2751, B = 2,722 at the end of yesterday, C = 2,743, D = 2,728, and E = 2,740. They all overlap and (4) and (2) of ((C)) remain much closer in net points traveled. It's a "running triangle".

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  16. As far a I can tell the downward move counts as W-X-Y a double zigzag. That would be allowed in a triangle.

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    1. New upper channel line is drawn from 2790, down to 2755; if and only if we trade below today's low are we impulsing lower; hourly EWO is now green.

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  17. At what level on ewo could we rule out an impuls? +11? (using 15 min candles)

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  18. There is a gap at 2685 which coincidentally sits dead nuts on the 61.8% fib retrace of the up move.

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  19. yes - thats how i projected the top at 2816

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  20. small non overlapping 5 down off of this morning's high.

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  21. 2734 still acting like a magnet for better part of two sessions.

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  22. Good news! I found another triangle solution that works with the original count. The triangle is as follows from (3) = 2733: A = 2751, B = 2,722 at the end of yesterday, C = 2,743, D = 2,728, and E = 2,740. They all overlap and (4) and (2) of ((C)) remain much closer in net points traveled. It's a "running triangle".

    Then wave (5) of ((C)) on the fifteen minute chart is this morning's low.

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    1. We just went through the low. The reason that ((A)), ((B)), ((C)) count is so important, is that now it is ((1)), ((2)), ((3)), with ((4)) up this morning, and now ((5)) down. The bearish 'running triangle' signaled the break of the lows.

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    2. And now you have excellent alternation with a long flat for ((2)), and a short sharp for ((4)).

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    3. is it significant that its impulse not ABC

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  23. could 2754.60 have ended 4 in this ((C)) down it would be an expanding triangle not sure with it overlapping 2753.16 the end of 1

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    1. it will be nice when I can rule these out. a follow up question, joe. and that is because wave ((A)) was a diagonal. therefore, wave ((C)) too can not be a diagonal as they are of same degree in a larger single wave?

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  24. Looking on a larger scale I'm considering two possibilities not predictions.
    1. 2815 was all of minute 2 up.
    2. 2815 was a zig zag W and now in a of X down and minute will be large flat

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  25. Above 2,700 can still be the c wave of that very, very, short ((b)) wave.

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    1. It's still a 'real-stinker' of a wave.

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    2. It does temporarily reset the any potential 'diagonal' clock; and could just result in a five-wave (c) wave up of minute (ii).

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    3. Alternation abounds, sharps beget flats, high volatility begets low volatility, and clarity begets confusion. LOL

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    4. 10/11 A
      11/8 B
      thats opposite with big stinker thrown in

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    5. And if 2,700 is taken out, then, it is highly likely minute (ii) ended at the high. But, one thing at a time.

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  26. Oil down 8% taking everything with it.

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    1. I'm showing Crude as being down to the lower weekly channel line. IF it breaks it at some point (could be weeks away yet), then we down in the diagonal scenario I previously outlined.

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  27. Can all of wave yesterday be 1 of C, today's high be 2, and recent low be 3, we would get wave 4 < than wave 2 and new wave lower < than 3 to form ending diagonal ?

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    1. ..possible.. but not required; would need another overlap upward, etc.

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  28. If we understand 2603 -> 2817 as ((A)) and the current move as part of ((B)) travelling back to the origin, all together could become a flat. As already mentioned, all happens to consume time and to keep this years’ profit save.

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    1. This would allow for the Santa rally wave ((C)) to start around 23rd Nov, and the Flat could be an expanding Flat, trapping bears.

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  29. When you see the EWO signature on the 15-minute chart, then currently you have (3) of ((3)) on the low of the EWO, ((3)) on last night's and today's continuing divergence, and ((4)) above the zero line. And now five down ((5)) would be on another divergence.

    Sounds like The Eight Fold Path Method to the tee. As of this time ((5)) = ((1)).

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    1. DOW still hasn't made it's lower low yet.

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    2. 5 min chart 8 fold says move not done in 5 wave

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  30. hi joe
    you can do an update for the graph thanks day
    Thank you

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  31. hi joe
    you can do an update for the graph thanks day
    Thank you

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