Market Indexes: Major U.S. Equity Indexes closed lower; $RUT higher
SPX Candle: Lower High, Lower Low, Lower Close - Outside Candle Down
FED Posture: Quantitative Tightening (QT)
Well, yesterday we said that "the trend is your friend", and that "the ((A)) wave up could have more to go". In the overnight hours and early this morning it did. Then, if you were following the comments from yesterday's blog, I noted there were now "five-waves down" at about 11:00 AM ET, but the ES futures hadn't confirmed yet. Later it was noted, "ES Futures below 2,704 at 12:55 ET. Down trend confirmation occurred."
So, from everything I can see, we are in the ((B)) wave lower. And it is threatening to be a sun-of-a-gun to count. With that in mind, I thought I'd show you just how I counted today's wave. Maybe, it will help your keep track of it. The chart below starts at the ((A)) wave high, and is just today's down wave.
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| ES E-Mini S&P500 Index Futures - 5 Min - Down Count in ((B)) |
The key to count was between 11:00 ET and 13:00 ET. From 11:00 to 12:00 ET you can see three distinct lower lows.You can also see the distinct diagonal-shaped wave with the trend lines added. As far as I can tell, that was just a lower degree A wave down within ((B)), down. Then, following it, notice there were five more non-overlapping impulse waves, so-labeled. Notice, too, the MACD does not bottom until 13:00 ET. Therefore, it appears the wave sequence down is A-B-C. The MACD low occurs on the C wave, with no divergence. This is characteristic of C waves.
From 13:00 to 14:30 there was news on China, which created a smaller degree a wave, up, followed by a FLAT b wave down, and the spike c wave up. So, most likely, that either ended an X wave, or the X wave is adding waves as a triangle.The triangle is the least reliable wave. If it busts up, then X might go on to 62% perhaps as a diagonal. Right now, any structure there is incomplete.
If a triangle or other acceptable correction forms, then it is possible, we will get a further A-B-C down, to make a double zigzag A-B-C-X-A-B-C (or W-X-Y).
But there ARE three waves down. That also means the 13:00 low could be the three wave of (a) of a much larger and longer triangle in time. That would mean the (b) wave could go up to 78% or so.
Do you see why ((B)) waves can be so tough to count? You have three waves down, and it could legitimately start two different patterns.
If the multiple zigzag forms, then it might back-test the hourly diagonal trend line. We didn't get anywhere near it today, and that would still be an expectation. Whether it happens or not is still up to the market.
Have a good start to your evening and to your weekend.
TraderJoe
Nice work, TJ. You have been great recently and I think you did a nice job this whole year.
ReplyDeleteThanks Todd. Nice of you to say.
DeleteWelcome Marc.
ReplyDeleteThe way I see it, last night's rally that continued into this morning created 7 waves up from 2604 low. That's a double zig-zag that retraced from outside the lower BB back up to the 20dma. That's standard operating procedure in bear markets. Therefore, I would expect a deep move back down to either retest the lows, or exceed them. The 150 point rally could have easily been the entire b/ii wave.
ReplyDeleteYes. The problem is 'the way you see it'. I leave your posts on here so people can see what a poor wave counter you have been. You always call it bearish. I have 'never' seen you make an upside call, here or on other wave sites. That's not the way EW works. There is no double-zigzag. There are no overlapping waves. You continue to ignore 'time' in your analyses.
DeleteI just take things one wave at a time, and look to see if the wave in question subdivided by 5 or 3. From Thursday's low (that you had previously labeled as wave iv) to Friday morning's open was only 3 waves. Therefore, that rally can't be a wave v. It can only be an abc. So, that means there were 7 waves up from 2604...a double zig-zag. That can be wave (a) of a contracting triangle, which means it will be the high print of wave B, or it can be wave a of B, or it can be wave y of a running correction that began at the 10/11 low at 2710.
DeleteNope .You've likely got it all wrong and you haven't even said if you are talking cash or futures and what your terminal points are. Therefore, in one ear and...
DeleteET, any way you could post SPX cash 5 mins counts. I am seeing interesting count where degrees are coming into picture. Not sure if am seeing it right way.
ReplyDelete-$id.
I posted a 5-min ES chart. Cash counts exactly the same, except the first 'a' wave lower of the diagonal starts at the 09:45 am bar. You'll have to take the time to explain your point better.
DeleteThnx ET! My problem was counting wave starting at 10.05am & ending at 10.15 am as (ii) and that was coming out to be shorter than wave starting at 10.40 am & ending at 10.55 am. After making low at 10.40 am as (i) of A degree violation is going away thnx a bunch !
DeleteThanks Joe. Appreciate your work and detailed analysis.
ReplyDeleteI've said the following before, and I'm saying them again -- I've learnt a great deal from your blog, and I'm still learning wonderful stuffs from you daily.
Wishing you a wonderful weekend!
Thanks migration. You have a good one too.
DeleteThanks for your outstanding work again!
ReplyDeleteSince every wave counter i follow now thinks the top is in and we are in a wave 2/B up, isn`t it possible that we have just seen wave C of 4 (with an irregular flat as wave 4) and we are now in wave 5 with new highs coming?
We are now entering the strongest months of the year and the leading economic indicators still don`t signal a recession.
As I have said in many, many replies to this question asked many times now, "any and all upward counts (i.e. to a new high, not a correction) rely on exceeding 2,900 again". We are nowhere near there, and upward counts simply will not be addressed until or unless that level is crossed.
DeleteI can also answer in another manner: Wave Intermediate (4) from the May 2015 top to February 2016 low was a little less than nine months in length of time. If Minor wave 4 from the Jan 2018 top, were still on going, as the C wave down you cite, it would now be a full ten months in length. That would be a "DEGREE VIOLATION" in time.
DeleteYou simply can not have have a smaller degree wave - Minor 4 - be longer in either price or time than the higher degree wave Intermediate (4). Can't happen, or the term 'degree' has no meaning. I previously had written that the triangle for Minor 4 was 'required' so that Minor 4 did not violate the price degree. That triangle occurred on schedule, and the new high followed; contradicting EWI.
The same 'must' be true of time for each wave degree, or the term 'degree' has no meaning. It does.