Market Indexes: Major U.S. Equity Indexes closed higher; DJUtil lower
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
U.S. Equity prices today were almost uniformly higher as the result of the reactions to FED Chair Powell's remarks. The potential down channel prices were following for a potential X wave broke to the upside, and prices continued higher. We had previously warned the new up wave was long enough in time to prevent the 1-2-i-ii count lower within the wave down from the 2,815 high.
Looking at the ES futures chart provides some simple clues. If the "thin red line" is broken to the upside, then it is possible minute wave two ((ii)) will become a double zigzag.
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| ES E-Mini S&P500 Index Futures - Daily - Thin Red Line |
Because wave (x) did not reach the 90% level, then the double zigzag would be the correct wave structure. It is most likely not a flat wave. Price closed over the SMA-18m shown in green, which means the chart now has a positive bias. The daily slow stochastic has also turned up.
There can be "backing and filling" for a b wave at any point. Yes, there are other options, lower, but at this time the chart shows none of that evidence.
Have a great start to your evening.
TraderJoe
Makes sense. Is there a time frame of when you would expect minute 2 to end given minute 1 was approximately all of October? I don't plan to short until 2860 or the 78.6 retracement.
ReplyDeleteI'm not providing any instructions regarding shorting.
DeleteHow would giving a time frame for when minute 2 should end be any different then providing an EW count. I'm not holding anybody responsible for any trading decisions of mine. I'm asking more for the sake of learning and my target is by no means definite. It's just an area of interest because of fib confluences and resistance.
DeleteThanks Joe for the awesome post. Is it EW theoretically possible for price to reach ‘almost’ the all time high (leaning double top) before collapsing again?
ReplyDeleteThat's working backwards. We don't even know the depth of a 'b" wave yet. Usually c = a, or 1.618 x a.
Deletethanks joe
ReplyDeleteOver the last two weeks every EW blog I follow had a down bias. Why is that relavent? Because EW really doesn't work. I use this blogs,aND other EW blogs, as contrarian indicators. While everyone was saying more downside was to come, I was buying at SPY 263. I thought, and still think, more downside is likely around SPY 259 and 261 but since the EW blogosphere bias was down, I started building a long position around 263 based on support and options open interest put support. Turns out I was right. Although Joe gives bullish and bearish scenarios, none of them put you in a position to make any decent money. Today was the perfect day to trade. EW said, if Joe would have said if we break above the downtrend channel and have an hourly close above it, go long. The next resistance, based on TA and option open interest, was SPY 274.5. Based on that direction you could have made close to 2% today. EW doesn't offer that kind of trading advice. I shorted at the close today based on option call open interest and the fact that we hit the last downward resistance. My stop is an hourly close over SPY 275.25. I'm not saying I know what the markets are going to do but I am executing trades with minimal draw down and the potential for big returns. I respect Joe and mean nothing insulting, I just wish him and these EW bloggers posted their trades based on their EW analysis so you can see how in effective it is.
ReplyDeleteI am short SPY 272 put with an Expiration of 12/7. Target SPY 267 and SPY 260. Will decide where to close based on option open interest as I get closer to my targets. Stop is SPY 275.25 for minimal drawn down.
Just my thoughts.. To each their own
I find EW mixed with fibonacci and harmonics is the best way to model and predict future behavior of the market. The key word being "model". If someone is not adept or skilled at EW theory with also being able to give alternate counts that's not necessarily a problem with EW theory but the person. Also, just because we had an up move this last few days doesn't mean we are done going down. There are certain things that are difficult even for EW theory such as predicting the end of 5th waves or how far certain waves we'll extend. Today being a good example.
DeleteI'm still sticking by my original thought that we are making an expanded flat for minute 2 and we should head down below 2600 to complete the B wave. today's up move marks the completion or near completion of the b of B wave. We finished right at .618 retracement and so should head down forming the c wave. I appreciate Joe's lessons and his analysis and it is always best to hear alternate views.
btw, where do you go to see option data?
One can not say that a car does not work because one does not know to drive it.
DeleteAnother question is that the majority of blogs of ew do not count well. In that case, the problem is not the ew theory, the problem is the blogger.
Here, the blogger does not talk about trading. The goal is to count well the waves, and learn to detect errors while counting.
Here it was detected that the last wave was not an impulse while others where calling for a 3th wave, and only knowing this, is a great info, because we have to know that a corrective movement should be retraced soon.
Without knowing the exact count, if you are able to detect if the market is moving in an impulse or in a correction mode, already is a very significant data that reduces the risk.
One other question is if one wants to do the effort to analyse properly the waves, because we see that to do it properly, it is necessary a lot of attention.
Sure, they are many others indicators that help to detect tops and bottoms and all the inputs together will do a trading more successful.
There is one reason and one reason only I do not post trades, or trading advice or investment recommendations. I am not a registered investment adviser and so it is not legal to do so, and so I won't. Some people and sites want to ignore the law. I don't.
DeleteBut, now that is 'water under the bridge' and can no longer be used, the usual way that one might interpret an Elliott Wave count of a diagonal is either one of two ways: 1) to wait and see if the diagonal confirms to the down side - which it didn't - or, 2) to place a 'stop and reverse' above the diagonal invalidation. In this case, that would have been triggered resulting in gains.
Wave counting is one thing. Trading is another thing. People are even a third thing. You can post a recommendation, people will take it or not. Then, some people will say I didn't take your recommendation because I didn't stress it 'loudly' enough.
I prefer not to play this latter game. I maintain that, first, people need to know how to actually count the Elliott Wave - following the real rules & guidelines. Once they can do that - they can see as we did there was only an a, b, c, down - well labeled in advance - and a 'potential' diagonal - also well labeled in advance, then they can decide what to do with that information for themselves.
Remember, ALL diagonals and triangles are potential until they either prove themselves or invalidate. That is why there is the trader's expression, "Trading is Treacherous in Triangles". Once a person becomes used to this well worn expression, and incorporates it into their DNA, the use of stops, and stops & reversal becomes a clear necessity for them.
Then, there are others who will just whine or try to prove themselves a better trader or investor. Good for them. I hope 'everyone' here has a profitable experience. My only task and aim here is to count the Elliott Wave accurately.
Remember ... there are 'still' people who may have made a "long term" decision at the all time high, that are still sitting on profits with no additional trades.
Great insight ET. Between is there a general trading plan to follow with EW. I find one by Robert Ballan little risky as it asks to use all the capital. http://users.atw.hu/cybermanus/forex/Kiemelt.konyvek/Robert%20Balan%20Elliott%20Wave%20Principles.pdf
DeleteAdam if you are short put that means you are bullish and yet you expect SPY to come off lower?
ReplyDeleteEdit.. Bought puts
DeleteJoe, what about 0 = 2630, A = 2674, B = 2664, C = 2744 -> X
ReplyDeleteAm I correct that max lenght for X waves are 61.8?
Still possible - but - less likely with prices over the SMA-18 on the daily chart.
DeleteJoe,ignore the noise of the blog and continue to do what you do. Your a tremendous asset to the world,thanks for your hard work and discipline
ReplyDeleteWe're good dp.. thanks. Never hurts to reiterate the purpose of the blog.
DeleteFrom the up channel we drew in yesterday's P.S., on cash, prices traded down to the mid-line of the channel, and bounced off it. If prices trade below the mid line of the channel, it is likely a correction of some degree has begun.
ReplyDeleteIf you draw the same channel on hourly futures starting at 08:00 Nov 23, then prices have traded below the mid-line of the channel, and traded back up to the mid-line.
So far, because of the narrow point loss it 'could' still be a fourth wave of the 'a' wave up. Will assess better if a correction is confirmed in cash.
89 bars so far on spx 15 mins charts from the low of 2631.09. EWO showing divergence at yesterdays high of 2744 for 3rd wave of 3. Probably planning for a triangle for 4th wave.
DeleteThere is a 5 wave move on the 5 min chart from todays low on the 10:50 bar. It did not exceed the high of yesterdays closing bar. Could we have a possible truncation for this wave up?
ReplyDeleteI think we will need some downward overlaps to say that.
DeleteOn a 1 min chart the move up from the 10:53 bar looks like an ED
DeleteHourly 'spinning top' on the ES futures. Requires closing lower low candle to continue a corrective count on futures.
ReplyDeleteES has done over the top; wave v of (iii) of a; most likely
DeleteAs far as I can tell, price has broken above "the thin red line"; this can not be the location of a two or X wave.
DeleteHourly ES impulse currently counts as: 0 = 2626, 1 = 2684, 2 = 2655, 3 = 2754, 4 = ??; Wave 3 = 1.618 x Wave 1; and there is one way to count with no degree violations.
DeleteThere is all of MACD, and EWO divergence at this high, and volume divergence as well. This does not preclude another slight higher high. It just argues well for at/near the end of a third wave.
DeleteAnd RSI divergence.
DeleteES hourly bearish engulfing candle.
DeleteSo if Wave 5 = Wave 1 that would put us at about 2812
ReplyDeletemmm ..depends where wave four winds up; see tomorrow's chart.
DeleteBe very, very careful here. There is a way to count v < iii < i in a wedge as I was proposing for a first extended wave. Will try to post a chart if internet allows.
ReplyDelete