Market Indexes: Major U.S. Equity Indexes closed lower; DJTrans, NDX/NQ Higher
SPX Candle: Higher High, Higher Low, Lower Close - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)
If you have been following our blog, you know that we have counted wave minuet (i), down, and are trying to count minuet (ii), up. Based on the position of the Elliott Wave Oscillator on the fifteen minute chart, this is the best count at this time. However, risks of an incorrect count are exceptionally high in this wave. Anything could happen - including a government shut down. Therefore, we are posting the current count, and the best alternate at this time.
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| SP500 15-Minute - Ending Diagonal c wave of (ii) |
For the count in the chart above, the B wave should try to hold along the up trend line, and there should be a higher high tomorrow. Overall, the above count is to an ending diagonal c wave to finish a flat for wave (ii).
Now, the best alternate.
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| SP500 15-Minute - Y wave Failure |
The chart above is the alternate because too many legs of the triangle would be as yet undetermined. Failure to make a higher high than (a) tomorrow would be telling, as would a (b) wave below today's low.
These are valid alternates, provided the (e) wave of the triangle closes above wave (i); the wave it is trying to correct. Remember, wave (ii) is never a triangle in it's entirety, and that is just what this chart shows. The triangle would only be the y wave of a complex correction.
The alternate would suggest the market is extremely weak, and might present another failure because of the potential power of a large third wave down yet to come.
Stay patient, flexible and calm. This is the hard part of the work!
Have a good start to your evening,
TraderJoe
Thanks so much for your hard work Joe!!
ReplyDeleteWelcome.
DeleteThanks, why don't you use futures for wave counting. During the last wave i down you could see a clear 4th subwave in futures but not in cash. I know the volume isn't the same but with algos trading it shouldn't matter as they operate 24/7.
ReplyDeleteAll waves must show up in cash.
DeleteExcellent update! Thanks Joe. Take a look at the Russell 2000. Much easier count and lots of clues.
ReplyDeleteThanks & welcome. Just that the RUT is not the SPX.
DeleteThank you for showing the alternate, joe. I was under the impression a triangle could not show up in 2. It appears they can as a y.
ReplyDeleteCorrect.
Delete..or as a 'b' wave triangle, before a 'c' wave up to ii.
DeleteI think the rule is the triangle cannot be the ONLY structure in a second wave.
DeleteTell that to me on election night 2106, with a +/-200 point round trip in the futures. Yea .. matters not. Tell that to EWI - which often says, "ignore the FED", and miss the 2009 - 2018 bull market from QE. Tim, you really need to plot, SPX versus FED balance sheet to help shape your views.
ReplyDeleteThanks again! Great work
ReplyDeletefiat ccy based money seem to always depreciate in value as the central banks prints money out of deflationary pressures. But i think that will only work to the point in which the public still have faith in the fiat ccy system and the role of central bank. If that faith based system breaks down, then the money printing mechanism will cease to work. That is what I am afraid may possibly happen down the road as central banks are forced down the road of QEfinity with no alternatives. Fed balance sheet and SPX has been well correlated over the decade since QE took place but when the faith breaks down it may cease to follow conventional wisdom that when more money is printed asset prices go up.
ReplyDelete..just remember. The gov't is aware of what it can do by calling anything a national emergency. We are not aware of what they will do.
DeleteET,
ReplyDeleteAlways like your work however only concern I have is the divergence in the rsi and composite index. Stops will remain tight. Chart is weekly, divergence in daily rsi is more noticeable. We may have to wait on Fed meeting next week.
https://www.tradingview.com/x/AKUBcmi4/
Hi Bill. As far as I know, there is no divergence in the RSI until it's prior peak is exceeded. I have no idea what 'composite index' you are referring to, and if you're not going to take the time to explain such things well in your questions, then I don't care to know. Never said we couldn't be waiting on the FED. We might be, but we don't have to be.
DeleteJoe Whenever I post a comment it is to ask a question. So wanted to post just saying how I am very happy I found this blog and greatly appreciate your work/effort. I have been learning a lot and enjoying reading everyone's comments.
ReplyDeleteThx, Robert. Glad to have you here.
Deletein a contracting diagonal is there a usual retrace from 0 to 3 or from 2 to 3 for a target for 4. I know it needs to at bare minimum overlap 1.
ReplyDeleteFrom 2 to 3 is usually either 62% x 1 or 78% x 1. Wave 4 can vary but is usually a Fibo. Same thing with 4 to 5. Time is key. Each up wave should take less 'time'.
Deleteyeah, I am keyed in to the time factor and need to see the cross of 4 down into wave 1. the ewo is also at it's height around 1 and has been on the descent to date.
Deletewave 2 in on the chart had its b go over the top of 1. c/2 ended below a. this tells me 4 should not go over the top of 3 does not look like it should when I pull up a shorter time frame. w4 should be less in time than w2 and also price. Question do I measure from the top of b it's high since it is over 1 down to the end of 2 or do I take from 1 down to 2. this would help me rule in charting 4's structure.
I don't see it this way. I see wave 1, as including the gap. Before the gap is a subdivided A wave. After the gap is an un-subdivided C wave. That is good alternation within a zigzag.
DeleteSorry Joe, wasn't discussion of spx current structure. another chart I follow. That said, I still have same question I asked in 7:13 post above.
DeleteThen, no. 1 & 3 in a diagonal need to be on the terminals, no located in the interior with a b wave, say, over 1.
DeleteJust want to echo Robert’s comments above. I look forward to this update EVERYDAY after market hours.
ReplyDelete-TJ
Thx!
Deletethanks joe
ReplyDeleteon a 30 min futures chart is it possible the triangle is complete using current prices?
No. As answered earlier.
DeleteThis has nothing to do with SPX. Joe so I have been reading and studying A.J.Frost and Prtechter Elliott Wave book and love it. In the book it says "Most of the subwaves in a triangle are zigzags, but sometimes one of the sub waves (usually wave c) is more complex than the others" have you seen triangles that don't have any zigzags at all? I am looking at CL on a 1 hour chart and I am analyzing this sideways formation as a symmetrical triangle in a wave 4 but most of the triangle waves seem to be flats from what I can measure. Wondering if you had any thoughts on that concept, and if that invalidates the triangle case? thank you
ReplyDeleteI see the same for Natural Gas on the 4 hour chart some of the waves are not zigzags and am not sure if that is allowed or not.
DeleteRobert. Triangles 'always' have at least four zigzags in them. In Crude, use a 4-hour chart on CLF19, and start at the Nov 29th low. Then 'a' is 52.20, and 'b' is 49.65, and 'c' is 54.55 of (a). Then 'a' is 52.16, and 'b' is 54.44, and 'c' is 50.08 of (b), and 51.96 is 'a', 'b' is 50.60, and 'c' is 54.22 of (c), etc. It's up to you to do the rest of the count. I 'will not' do everyone's work for them.
DeleteI have no idea why you picked a 1 hour chart. Where did that come from?
Okay I understand, I was counting it corrective I guess I was just nervous they were not zigzags because they some had long C's...Not sure why I was using an hourly.
DeleteLong C's characteristic of triangles and diagonals.
DeleteOne leg of a triangle will likely be 'complex', either a double zigzag, a flat, or a triangle itself.
DeleteRegarding the likely long term top identification, have you looked at the SPX AD line? We know the NYAD displayed a 3 week divergence from the top. However, the SPX AD line displayed NO divergence at the top. The SPX is the best representation of the US stock market in isolation IMO. For a bear market to occur, you must have a declining SPX AD line by default. The 2018 SPX AD line from the Sept top really doesn't look anything like 2000 & 2007. In fact, it has been making higher highs since the oct 29 bottom and nearly made a new ATH in late Nov/early Dec. This is clearly not long term top activity.
ReplyDeleteNo offense TJ, I think you need a new count from 1810 at a bare minimum that fits the facts. Lots of hidden strength hidden beneath the surface. Maybe you have a good explanation and I'm an open guy, but to me it will be awfully hard to come up with one.
Have you checked Hindenberg Omen? I believe the signal popped again - several times - in the course of weeks leading to Aug top.
DeleteSW. Have a look at $BPSPX. No more discussion on this topic.
DeleteIt really drives me crazy everytime I hear people parotting that Prechter balderdash about news not affecting market moves. I am not certain if is because people are truly able to so completely divorce themselves from reality, or such simpletons as to believe any non-sensical assertion, no matter how much evidence to the contrary. I think Joe is the very first competent Elliottician that I have heard call out this assertion for what is...
ReplyDeleteBULLS_ _ T!!!!
I agree when it comes to major trends, which are clearly not affected by market spikes. That, hoowever, is not the argument that is generally made. It is generally argued that news do not affect market price,not just trends, a manifestly false assertion. These are the same folk who pooh pooh the idea of FOREX of PM price manipulation. I guess dumping 45K naked short contracts into the market does not affect the wave form,but the reverse!!! What poppycock! I have a friend who lost his PM business because of this kind of well-documented criminal activity. The banksters have also admitted they do it.
ReplyDeleteTim, the 'corporate debt' that you cited that might cause the next crash, came from a "too easy FED" -which EWI largely ignored. But now we believe that as the FED reigns in Corporate excess with QT, that the markets won't be affected by this 'news'. But you are saying it 'will' be affected by this news. You can't have your logic both ways.
ReplyDeleteET, does spx need to make a new high over yesterday's hight before 12.50 pm today where time taken by wave (1) of diagonal will become equal to time taken by wave (2) of diagonal above.
ReplyDeleteYes, for the diagonal. If it goes beyond it would be a 'regular' impulse third wave. Isn't it nice to have a way to distinguish the two? Hope this helps.
Deletethanks joe,
Deletethen (1) is counted as impulse (not abc)-
2 is expanded flat?
Yup, helps a lot. For now it seems to be following diagonal characteristics.
DeleteIt is amazing how many people are adamantly citing failure of A/D divergence at the recent top as proof positive we do not have the start of a bear market.
ReplyDeleteI am STILL seeing impulsive counts up from a few analysts who insist that we MUST have A/D divergence, as we have had for all prior bear markets. I wish them (and their subscribers) well!
Especially in light of the predictions that the proper counting and measurements have made. Today we have that higher high we were looking for yesterday
ReplyDelete3 is up and over the top of 1.
ReplyDeletelower low on 30 min 3 may be in. grind over to 4. quick pop into close. gap down tomorrow..
ReplyDeleteJoe,
ReplyDeleteIn the primary count chart above: 0-2 is connected. All the other lines are arbitrary at this point. Once 3 is established can we then connect 1-3 and define the rest of the diagonal allowing for failure or throw over of course?
yes.
Deletejoe - can diagonals have diagonals as wave 5?
ReplyDeleteno; must have zigzags only for wave 5.
DeleteC of ((3)) on the above chart may be a diagonal, itself.
ReplyDeleteA degree violation would occur at 2,669.90, cash, as the downward wave would, if it occurs, become longer than any previous downward wave.
ReplyDeleteAre you referring to down wave from 10.15 to 10.30 PST ?
Deletemeaning we are in 4th wave of diagonal?
Deleteor starting larger 2 wave of bigger diagonal?
DeleteI think that would mean we are entering into higher degree down wave which would be wave 4 of diagonal.
Deletejoe - could (1) (2) (3) becoming just (1) of a new diagonal?
ReplyDeleteyes!
Deleteand would we have to break current 0-2 trendline for a bigger diagonal?
Deletewow. fourth waves of diagonals are pretty bizarre. they can go down a lot and become 2nd waves while keeping impulisive strucuture intact as larger diagonal. not true for impulses. now thats a conundrum if im understanding
Deleteand, you can be right about larger degree being impulsive, buy at 2nd wave low, see a third wave high, but still see a lower low than your entry, but still be in a larger degree trend, losing money, just you bought the b of 1 not a 2 -
DeleteFourth wave of today's diagonal was a triangle.
DeleteHey Joe, this is my first time to post. Thank you for this blog. I've learned a ton in just a few weeks. Would the high of 2682 be the B wave of 4 or the end of 3?
ReplyDeleteThanks,
Novice question in this wave c the size of the wave 3<1 and wave 5<3 and wave 4<2, correct? Sorry trying to marry all this in my mind
ReplyDeletecontracting diagonal
Delete1 > 3 > 5
2 > 4
yes, ski
Deletejoe, do you see 4 as a flat?
ReplyDeleteNo. 4 was a triangle.
Delete5 minute chart shows volume drying up on this rally
ReplyDeleteTJ...looks momentum is lousy (like you said) - time for an updated chart?
ReplyDeleteTime taken by 3 wave of diagonal exceeded the time take by wave 1 of diagonal with last candle on 15 mins chart. Getting an impulse up ?
ReplyDelete4 could be a flat going over top of 3. 3 could already be in.
DeleteThis wave is full of overlaps. Impulses can not have overlaps.
DeleteThe time factors are not part of original EW, they are additions by Neely and if I'm not mistaken they are guidelines not rules.
we could be on C down of 4 going impulse about now.
Deletehere is a look. again, I am beginning.
Deletehttps://invst.ly/9i3yz
Nice Gerald, I thought we cannot have flats in diagonals, is that allowed ?
DeleteEDT
DeleteA diagonal consists of 5 three wave moves.
Each of those 3 wave moves must be a zigzag. The b wave of those zigzags can be a flat.
I was of the understanding it was allowed.
DeleteNice, then diagonal is still in.
DeleteThe flat must be a 3-3-5 structure
Deletethere would be 3 waves in my A to B I just didn't break it out.
Deletejoe
ReplyDeletecount is getting tough with degree violations
are you considering counting the abc of 1 as impulse
Nice diagonal count ET.
ReplyDeleteHere u go guys - this is how I'm trading the SPX...tight stops
ReplyDeleteLINK - https://imgur.com/a/sAbUZMR
Thank you V. I am trading it the same way as you was able to short that wave 5 for 9 handles.
Deletei bought some puts on the break of that blue dashed line - keeping stops very tight
DeleteI think we need to 'tip our hat' to Elliott_Day_Trader, who calculated the timing for the ending of the diagonal as 12:50 pm. I have it ending at exactly 13:00 pm. Was he off by only 'split candles' - you know where one candle is both the end of a down move, and the beginning of an up move??!!
ReplyDeleteGreat work, Elliott_Day_Trader!
Thanks ET.
Deleteyw E_D_T!
DeleteThere is 2,669.80, this down wave is the longest. The degree is changing 'somehow'!
ReplyDeletebigger diagonal? wxy y is abc?
Deletedoes the degree change imply this is not a 4th wave of diagonal? whenever you have time maybe you will address the implications of the large wave down. thanks
DeletePlease pay attention in this link to the TYPICAL signature of the Elliott Wave Oscillator in a diagonal.
ReplyDeletehttps://invst.ly/9i4nw
TJ
Notice the likely divergence of the EWO on wave ((3)) versus wave ((1)). This is how we knew - as certain as we can be about any wave counts - it was not a triangle yesterday. All we had was the wave ((1)) hump.
DeleteIs wave 5 of diaganol still to come?
DeleteYes, pooldawg.
DeleteThank worked out quite nicely...at 38.2 fib ret of wave 3
ReplyDeletehttps://imgur.com/a/sjLBRcW
Joe,
ReplyDeleteIf the 0-2 trend line is broken to the down side will we then re draw a lower boundary or will we consider sub minuette ii to be in?
Key will be if EWO makes a lower low. If it does, we need to consider that the upward waves are only A, and B of (1), of a larger diagonal, to push prices into more of a wedge.
Deletedoes anyone know the maximum throwover for e wave of a triangle?
ReplyDeleteYes, the length of c.
DeleteHave you fully considered the 'time signature' of what you are trying to call a triangle? It has a short wave (a), and then every wave after it is 'longer in time'. That would be the time signature of an 'expanding triangle'. But for an 'expanding triangle' wave (c) would have had to go 'over the top' today. It doesn't add up.
Deletethanks boss.
Deleteim still stuck on triangle lol thanks for everything
not fully ... not even partially considered... thanks again
Deletewelcome.
DeleteNot to forget an earlier comment, I am now showing 116 bars on the S&P500 15-minute chart, since the end of (i), down. That is getting 'exceptionally' close to the 120 - 160 candle guideline for 'the wave of interest', and will likely be in that range when wave ((4)) of the diagonal bottoms.
ReplyDeleteShort term degree violation to the upside. Likely in the B wave of ((4)) down.
ReplyDelete100% AGREE
DeleteET can wave 5 of ending diagonal fail ?
ReplyDeleteYes, it can. Ending diagonals can fail, and are more prone to when they are a C wave. But, do not hear that they 'have' to fail: just that they 'can' fail.
DeleteOk, good to know.
DeleteEWO now at zero, with 120 candles on the board.
ReplyDeletehttps://invst.ly/9i57m
TJ
triangle for b of 4? lol
ReplyDeleteok..
DeleteDown wave now down to 90%; possible flat instead of triangle? welcome to alternates.
DeleteOr ED for C
Deletew-x-y for b and now in c
DeleteThis likely ((4)) with the break down out of a sneakier earlier triangle.
ReplyDeletejoe,
ReplyDeletego back to my 0 for triangle. there is an (a) to start. then a triangle for (b) . then abc or ED for (c). dont respond if its a bad count. thanks
This is the triangle. Earlier and sneakier. Running triangle.
Deletehttps://invst.ly/9i5lq
TJ
I think that comes out to c = a, too.
DeleteApproaching 61.8 fib ret - covered my puts - going to get some lunch at Trader Joe's ;-)
ReplyDeletehttps://imgur.com/a/hexueqV
TJ, Any thoughts on this? A few words will be enough
ReplyDeletehttps://imgur.com/a/TqGjeix
No I have nothing to say, because of the possible implication in the lower right of the chart. I do not offer trading or investment advice. Period.
DeleteFair enough - my main query was differentiating the possible wave c ending diagonal with a possible wave b of some kind - how would you differentiate it? Meaning, which one would you assign more probability to?
ReplyDeleteC at the top is too deep for a triangle. C at the top is deep enough for the B wave of a flat. In the future, do not put your potential trades on a chart or questions simply will not be responded to.
DeleteWith regards to the trades, I understand perfectly.
DeleteRegarding the count, my concern is whether the ABC is complete from the 10th Dec lows..is that whole move from 11.18am PST on the 11th of December, a wave C of ending diagonal?
meaning C = ending diagonal?
DeleteI guess my question will be ignored - alright.Thanks anyways TJ
Deletejoe
ReplyDeletegreat work
If we see a top in a diagonal for w2 i will tip my hat to you. and then its wave 3. im pretty much on same page as you - only thinking w2 may have ended. If necessary you will adjust w2 and find a count. I'll wait for that rather than continuing to inquire and waste your time. thanks
Joe, using a fib extension from the high / low on 12/12 for the ES e-mini futures, this leg down looks to have two 'first tier' downward target zones: 2613.25 (fib 2.618 already hit) and 2593.00 (fib 4.236). For reference only- not a trade recommendation.
ReplyDelete