Wednesday, December 19, 2018

FED Day

Market Outlook: Likely Long Term Top Identified
Market Indexes: Major U.S. Equity Indexes closed uniformly lower
SPX Candle: Higher High, Lower Low, Lower Close - Outside Reversal Candle Lower
FED Posture: Quantitative Tightening (QT)

So, if you're a Federal Reserve Chairman, today you might be thinking, "well, that could've gone better". Markets completed the a:3, b:3, c:5 flat for sub-minuette wave ii that we highlighted in the second chart in yesterday's post. Then, they reversed, headed lower and made new lows for the move.

That being the case, it looks like we are in sub-minuette wave iii, lower. 

 Today, the DOW both broke below it's wave Minor 4 low, and closed below it. The S&P500 appears to have clearly activated the Head & Shoulders top we showed in the December 15th post, the second chart at this LINK.

 There will be backing-and-filling, but this path for the market that we outlined in our December 9th post (also at this LINK), entitled, "A Second Bold Prediction" appears to be on pace. Today broke the lower channel line ever so slightly.
S&P500 Cash - Daily - Down Channel

 While we can now count sub-waves until we're silly, the market must simply be allowed to see if it is going to make that 1.618 extension for this wave. And while there will be backing-and-filling that must adhere to degree rules, so far, we have found no sub-waves that have yet violated those principles.

 The best daily time-frame observations are these: 1) the market has started to push down on the daily Bollinger Bands. There are two days in-a-row with the slow stochastic under the 20 level. We need to see if remains so tomorrow, as that would mean it would shift to 'embedded' status. 2) Since today was an "outside reversal day down", then the high of today should not be taken out in the next two trading sessions or it will be said "to have set a trap for the bears".

 Those are items to watch. Let's see how it goes, as the potential government shut down is the next item on the plate (with the alternative of another continuing resolution to fund it until February.)

 Have a good start to the evening.
TraderJoe
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122 comments:

  1. marcDecember 19, 2018 at 5:12 PM

    thanks joe, not much to do until we get a rally of higher degree

    ReplyDelete
  2. RandomThoughtsDecember 19, 2018 at 5:13 PM

    Hi Joe. I have just a quick question. Where can I find a good explanation of the concept of wave degree? Is it simply that, for instance, minuette wave i cannot be longer in time or price than minor i, and so forth? Or is there more to it? I have been following you for years going back to the EW Trends and Charts chatroom, but was out of touch for some time. By the way, the educational insight you bring to Elliott Wave analysis is much appreciated! Keep up the great work!

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 19, 2018 at 5:57 PM

      I am putting a formal one together now but need a couple of weeks yet to finalize it.

      Delete
    2. DandrewDecember 19, 2018 at 9:16 PM

      Thanks Joe I'm interested too

      Delete
    3. RobertDecember 19, 2018 at 11:00 PM

      I am so happy to hear that Joe thanks a lot! The degree is a huge struggle for me! Looking forward to it.

      Delete
  3. Mark ThimeschDecember 19, 2018 at 5:24 PM

    Thank you Joe! So very appreciated

    ReplyDelete
  4. Gary MorganDecember 19, 2018 at 6:13 PM

    I've been watching that head and shoulders pattern develop for months now. Hoping today wasn't the backtest of the neckline, hoping that comes in the next week or so.

    Big Bradley turn date in mid-January too, possibly the low for that move.

    ReplyDelete
  5. skihardbsDecember 19, 2018 at 6:25 PM

    Joe thanks for your hard work. It's improved my knowledge and use of EW exponentially. Ordered Nature's Law: The Secret of the Universe hope to finish over the holidays.

    ReplyDelete
  6. 6QDecember 19, 2018 at 6:27 PM

    Thank you Joe !
    I like this comment: "While we can now count sub-waves until we're silly". Really many times is better to go at the longer timeframes and relax with the 5 minutes or less.

    ReplyDelete
  7. Elliott_TraderDecember 19, 2018 at 7:19 PM

    Gerald. Unfortunately, I deleted your post. It is not correct, and I do not want people to get confused regarding degrees. I don't want people to assume I endorse a part of it, when some of it is incorrect.

    ReplyDelete
    Replies
    1. GeraldDecember 19, 2018 at 7:26 PM

      Could you provide comment here where I need to reevaluate what I thought to be true now that it has been removed?

      Delete
    2. Elliott_TraderDecember 19, 2018 at 9:51 PM

      Hi Gerald. This topic is too complicated and the rationale a bit too involved for short responses.

      Delete
  8. Walter KrajewskiDecember 19, 2018 at 10:32 PM

    Joe, I follow a lot of EW "analysts". Almost all of them slap numbers and letters on a chart and call it EW theory. Yours is the best, by far, I've seen. Your analysis of degrees and calculations is the big difference(from that I can tell) as well as you acknowledging when you're not sure of the count. Thanks so much because I've learned so much this year. I can't wait to read your book!

    ReplyDelete
  9. RobertDecember 19, 2018 at 11:02 PM

    Hi Joe any other books for EW you would recommend other than EW principle.

    Thank you

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 7:50 AM

      Mastering Elliott Wave (Neely) has some good info in it (although not everything is correct). And Trading Chaos (Bill Williams) is a little easier to tackle.

      Delete
    2. RobertDecember 20, 2018 at 9:35 AM

      Great I will look into them thanks!!

      Delete
  10. KevinDDecember 19, 2018 at 11:54 PM

    Thanks for the great analysis. Honestly I found your analysis better than many of the paid services I subscribe to. Let us know if someday you open one.

    ReplyDelete
  11. KSDecember 20, 2018 at 1:04 AM

    Joe, where can I learn more about the slow stochastic relating to the "embedded' status? Any suggestions?

    ReplyDelete
    Replies
    1. John LockeDecember 20, 2018 at 2:18 AM

      @V
      Here http://studyofcycles.blogspot.com/2015/11/paraphrase-of-ira-epsteins-rules-for.html and the following one (Part 2)

      @Joe
      Your "degree" work should (also) answer two questions:
      - how can Wave3 reach 4.236 x Wave1. From what I understood in your previous posts (but I may be wrong) you say that each subwave of Wave3 can not be greater than Wave1. In this case you are saying that Wave3 can not be greater than 3 times Wave1 (as a limit, assuming that Wave2 and Wave4 correct 0%-1% ... subwave1+subwave3+subwave5 = almost 3times Wave1)
      - what about extensions? From what I read in the books by R.N.Elliott, A.H.Bolton, Frost&Russell, Frost6Prechter, Neely it seems to me that they are saying that an extension is not when a wave is "very long" (to put it simple), but when a wave subdivides in subwaves that have the same dimension of the main wave, and you can't discern one from the other. Have I misunderstood the real meaning of "extension"? Does your approach to "wave degree" cover also this aspect?

      Thank you (and all the others like Pittsburg_Tom, Mark_Spungin, EDT, etc.) for bringing valid ideas in the application of EWT.
      The more figures you attach/link in your comments, the better it is otherwise some speeches may remain obscure.

      In case, Happy Holidays

      Delete
    2. Elliott_TraderDecember 20, 2018 at 7:48 AM

      @John. The question of a 4.236 wave is too complicated to tackle here. But very often wave 3 is limited to 3 x 1 (2.681 is more common). Yes, you are incorrect on the meaning of extension. It has very little to do with the similarity of the internal waves to the main wave, and much more to do with the lengths of the waves.

      Delete
    3. KSDecember 20, 2018 at 9:50 AM

      Thanks John!

      Delete
  12. RobertDecember 20, 2018 at 9:35 AM

    Joe I understand why you use TL channels on the outside of price and how 1 to 3 can help show where 4 is if you place it at 2 etc, but I do not understand the middle trend line. Is their a specific purpose of this and if so is it always directly in the middle of the outer two?

    ReplyDelete
  13. Elliott_TraderDecember 20, 2018 at 10:00 AM

    S&P500 5-min chart; can be five smaller degree waves down from yesterday's high.

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 10:03 AM

      Can also continue to the length of the first wave down.

      Delete
  14. Kelly ODecember 20, 2018 at 10:13 AM

    Joe, I have 2482 as 1.618 of 12/19 wave post-Fed. ES did meet that requirement. In your experience, should SPX cash also meet it more often that not, or is it not required? Thank you.

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 11:04 AM

      In a true impulse, most often. In an impulse that is part of a corrective wave, less often.

      Delete
  15. Elliott_TraderDecember 20, 2018 at 10:26 AM

    Here is a chart on the 5-min count. Good alternation, with two as a FLAT, and four as a double-zigzag or double-combination. Trying to rule in / rule out a diagonal fifth wave.

    https://invst.ly/9kwl0

    TJ

    ReplyDelete
  16. RobertDecember 20, 2018 at 10:36 AM

    Thank you for the chart. diagonal 5th would be ruled out out on a break above 4?

    ReplyDelete
  17. KSDecember 20, 2018 at 10:43 AM

    Thanks for the chart Joe. I think uv got it right for the SPX and DJI, but NDX has not made a 5th just yet (mirror image of AAPL)

    Check out the 5 mins chart https://imgur.com/a/Feplr7v

    ReplyDelete
  18. Pittsburgh TomDecember 20, 2018 at 11:00 AM

    Could have a small inverse head and shoulders forming on 5 min chart. Connect the tops from 3:15 yesterday to form neckline.

    ReplyDelete
    Replies
    1. RobertDecember 20, 2018 at 11:05 AM

      was seeing that also but nasdaq is just flagging looks like crap. Nasdaq cash doesn't have 5 waves down either if that gets put in SPX likely makes a lower low to before a correction.

      Delete
    2. Pittsburgh TomDecember 20, 2018 at 11:10 AM

      agree, there should have been a pop by now. Action is weak and portends lower levels. Now keep in mind every time I say something like this the opposite happens. LOL

      Delete
    3. RobertDecember 20, 2018 at 11:10 AM

      lol I have had that feeling!

      Delete
    4. RobertDecember 20, 2018 at 11:24 AM

      We have it. Now we need a 4 of a 5 and a 5 of a 5 then we are setup for a possible rally short term.

      Delete
  19. Elliott_TraderDecember 20, 2018 at 11:32 AM

    So, we have a second new low today. Possibility of diagonal, triangle / next impulse lower. Solidly in the fourth wave conundrum right now.

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 11:42 AM

      So 2,477 has been exceeded lower; look to the 4th wave as a running triangle as 0 = 2489.

      a = 2,516
      b = 2,583
      c = 2,510
      d = 2,495
      e = 2,501

      This gives a better signature on the EWO, short term.

      Delete
    2. Kelly ODecember 20, 2018 at 12:25 PM

      Joe, During the cash trading session, when you refer to the EWO, should we assume, when you don't specifically say, that you mean the 15 min. (or the 5 min.)? Thanks.

      Delete
  20. Pittsburgh TomDecember 20, 2018 at 11:32 AM

    Joe,
    Is it possible that this morning's low was a b or x wave and 4 didn't end until the 10:40 bar on a 5 min chart?

    ReplyDelete
  21. KSDecember 20, 2018 at 11:39 AM

    Anyone else seeing an expanding diagonal on the 5th wave for SPX

    chart - https://imgur.com/a/TAt0j7G

    ReplyDelete
  22. Elliott_TraderDecember 20, 2018 at 11:54 AM

    Within 3 pts of 5 = 1

    ReplyDelete
  23. Pittsburgh TomDecember 20, 2018 at 11:56 AM

    Long legged doji with reversal bar following on 5 min chart. Something ended.

    ReplyDelete
  24. Elliott_TraderDecember 20, 2018 at 12:05 PM

    On the SPX daily; today's low makes this down wave from Dec 3 LONGER than the one from Oct 3 to Oct 29.

    ReplyDelete
  25. Pittsburgh TomDecember 20, 2018 at 12:24 PM

    Joe,
    Sorry getting confused. Have we abandoned the impulse you posted earlier which would make the up move to 2510 a 2 and now in 3 down?

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 12:30 PM

      Yes. P_T. I said the triangle fit the EWO better on a 5 min chart. This afternoon's low is likely the complete impulse from the FED meeting down.

      Delete
    2. Pittsburgh TomDecember 20, 2018 at 12:35 PM

      Thanks, Tending to my elderly Mom is not allowing me to be glued to the computer today and lost track.

      Delete
  26. Elliott_TraderDecember 20, 2018 at 12:29 PM

    ..possible very minor truncation for v of 5 at the low; completely acceptable.

    ReplyDelete
  27. marcDecember 20, 2018 at 12:29 PM

    getting close to degree change

    ReplyDelete
  28. Elliott_TraderDecember 20, 2018 at 12:40 PM

    Low at 12:15 pm ET must now prove itself. Nothing is violated as I write this, and could still be in the fourth wave of 5.

    ReplyDelete
    Replies
    1. marcDecember 20, 2018 at 12:45 PM

      correct was just getting out the tape measure

      Delete
  29. Pittsburgh TomDecember 20, 2018 at 12:41 PM

    So I just put a Fib retrace on the impulse down from yesterday's Fed high. Wouldn't you know that the 38.2% retrace is at the high of the wave 4 triangle.

    ReplyDelete
  30. Elliott_Day_TraderDecember 20, 2018 at 12:55 PM

    ET, any update on your book ?

    ReplyDelete
  31. Elliott_Day_TraderDecember 20, 2018 at 1:06 PM

    Expanding leading diagonal if 2490..94 is taken out ?

    ReplyDelete
  32. C-DocDecember 20, 2018 at 1:19 PM

    The real time evaluation/discussion of the different count possibilities that have occurred the last few trading days have been immensely helpful in my understanding and application of Elliot Waves. For a newbie like myself there is nothing better than case studies in which you are actually witnessing the case first hand. Thanks Joe (and everyone else who is contributing).

    ReplyDelete
  33. Elliott_TraderDecember 20, 2018 at 1:24 PM

    Another potential triangle from ~11:45ish.

    ReplyDelete
    Replies
    1. KSDecember 20, 2018 at 1:37 PM

      Joe, you mentioned at at 12.30pm that "This afternoon's low is likely the complete impulse from the FED meeting down." I suppose with the "triangle" you've mentioned above, we still have NOT seen the completion on the impulse from the FED meeting???

      Delete
    2. Elliott_TraderDecember 20, 2018 at 1:39 PM

      As far as I can tell, we have not. Getting close though.

      Delete
  34. BBRiderDecember 20, 2018 at 1:36 PM

    Down to the monthly 34 on ES..

    ReplyDelete
  35. Elliott_TraderDecember 20, 2018 at 1:40 PM

    If they keep grinding out a triangle like this, the longer it goes, the more the daily ES is likely to embed.

    ReplyDelete
  36. BBRiderDecember 20, 2018 at 1:57 PM

    ET, At one time I think I read that you had some thoughts on the EWO peaking in the fifth wave on the monthly but were not ready to share. Is my memory correct?

    ReplyDelete
  37. JCDecember 20, 2018 at 1:59 PM

    Daily Russell 2000 firmly embedded on slow stochastic and riding the lower bb. https://invst.ly/9k-cw

    ReplyDelete
  38. Elliott_TraderDecember 20, 2018 at 2:03 PM

    Here's the breakdown and thrust out of the second triangle. And now 5 = 1.

    ReplyDelete
  39. Elliott_TraderDecember 20, 2018 at 2:23 PM

    Here's a chart update

    https://invst.ly/9k-of

    Neely outlines a type of triangle known as "non-limiting" which can extend beyond the usual target. If wave ((5)) goes below 2,430, then the fifth wave may be extending.

    ReplyDelete
  40. KSDecember 20, 2018 at 2:32 PM

    Thank you sir!! My only question, based on what I'v been thought regarding the "look" of a particular wave is this...the size variance of ii relative to the much much larger iv (within wave ((5)). Is that normal?

    ReplyDelete
    Replies
    1. Elliott_TraderDecember 20, 2018 at 2:35 PM

      Welcome. Yes, remember than wave iv is only measured from iii to (e) of the triangle - which is only a few pips and agrees with the small ii.

      Delete
  41. Elliott_TraderDecember 20, 2018 at 2:33 PM

    Now up and over the exit of the second triangle. Probably not a "non-limiting" triangle.

    ReplyDelete
    Replies
    1. Elliott_Day_TraderDecember 20, 2018 at 2:37 PM

      Et, do u see upside degree violation ? Current wave is greater than wave 2.

      Delete
    2. Elliott_TraderDecember 20, 2018 at 2:39 PM

      Yup, E_D_T, thanks for saying. I would hope that someone would point it out (as Marc alluded to earlier too).

      Delete
    3. Pittsburgh TomDecember 20, 2018 at 2:40 PM

      Not Joe but the impulse ended so this up wave is 1 degree larger than the internal waves of the down wave so no violation.

      Delete
    4. Elliott_Day_TraderDecember 20, 2018 at 2:44 PM

      ET, ewo related question. For iii of 3 ewo has greatest value then it gives divergence for v of 3.
      For 5 wave hould it be lesser than v of 3 to give divergence or it does not matter ?

      Delete
    5. Elliott_TraderDecember 20, 2018 at 2:48 PM

      Correct P_T.

      Delete
    6. Elliott_TraderDecember 20, 2018 at 2:53 PM

      E_D_T I can't tell well because there are only about 85 - 90 candles on the 5-minute chart I showed. Hard to find "three of three", in that case. But the fifth wave does end on a nice divergence, so I don't want to look a gift horse in the mouth - from a wave counting perspective ; )

      Delete
  42. marcDecember 20, 2018 at 2:44 PM

    yes thats why its imoortant to identify it change trend

    ReplyDelete
  43. Elliott_Day_TraderDecember 20, 2018 at 2:45 PM

    5 waves up !

    ReplyDelete
    Replies
    1. Pittsburgh TomDecember 20, 2018 at 3:07 PM

      Sometimes hard to differentiate degree on these 1 min charts

      Delete
  44. Pittsburgh TomDecember 20, 2018 at 2:50 PM

    More likely 3 up with 3 being an extended wave with 9 internal waves.

    ReplyDelete
    Replies
    1. Pittsburgh TomDecember 20, 2018 at 2:54 PM

      2 was likely a flat so looking for a zigzag for 4

      Delete
    2. Pittsburgh TomDecember 20, 2018 at 3:05 PM

      my proposed 4 is getting pretty deep, you may have been correct.

      Delete
  45. Pittsburgh TomDecember 20, 2018 at 2:58 PM

    Oh my gosh, I just saw an intelligent concept on CNBC! One of the staff commentators was actually showing Fib retracement levels of the move from 1810 to the top. The secret is out! LOL

    ReplyDelete
  46. Pittsburgh TomDecember 20, 2018 at 3:32 PM

    Anyone care to venture a count from the low? The move has not been strong enough to show an uptrend yet on several non Elliott indicators I watch.

    ReplyDelete
    Replies
    1. RobertDecember 20, 2018 at 3:35 PM

      I have us 5 up from the low now in a zigzag correction with support at 2455 on futures for a wave 2

      Delete
    2. Pittsburgh TomDecember 20, 2018 at 3:38 PM

      I was thinking 5 for A now in possible triangle for B.

      Delete
    3. RobertDecember 20, 2018 at 3:39 PM

      yup was just about to post that triangle forming here so must be a B wave since it is not a 4th. Thanks Tom

      Delete
    4. Elliott_Day_TraderDecember 20, 2018 at 3:39 PM

      Ditto, correction bounced right at 61.8 level.

      Delete
    5. Pittsburgh TomDecember 20, 2018 at 3:41 PM

      e completed: up thrust will confirm.

      Delete
    6. Pittsburgh TomDecember 20, 2018 at 3:43 PM

      nope not a triangle

      Delete
    7. Pittsburgh TomDecember 20, 2018 at 3:44 PM

      Looks like a failed ED for C

      Delete
    8. RobertDecember 20, 2018 at 3:45 PM

      I think a zigzag down to 2655 still on the table.

      Delete
    9. Pittsburgh TomDecember 20, 2018 at 3:48 PM

      Could have been failed ED for c of A and now in larger B down

      Delete
    10. Pittsburgh TomDecember 20, 2018 at 3:49 PM

      Or What you said Robert LOL

      Delete
    11. Pittsburgh TomDecember 20, 2018 at 3:55 PM

      I think it was a failed C. Did nor even reach 38.2% retrace upward. Down move now greater that 61.8% down of up move.

      Delete
    12. Pittsburgh TomDecember 20, 2018 at 3:57 PM

      And now the zizzag looks correct. I think I've found a new corrective pattern called the Chameleon! LOL

      Delete
    13. RobertDecember 20, 2018 at 4:01 PM

      lol! What a day

      Delete
    14. Pittsburgh TomDecember 20, 2018 at 4:03 PM

      Agreed!

      Delete
  47. marcDecember 20, 2018 at 3:37 PM

    break of 98 may be a higher degree subwave if we get there

    ReplyDelete
  48. KSDecember 20, 2018 at 4:02 PM

    Joe, P_T, I agree with your count. I just thought I'd take a look at an alternate (prepare for the worse)

    Pls take a look and let me know your brief thoughts. Thanks - https://imgur.com/a/F9wRuZD

    ReplyDelete
  49. Pittsburgh TomDecember 20, 2018 at 4:16 PM

    V, I can't come up up with anything to disprove it, but then I'm not Joe! lol
    However the way this thing is playing out there are just so many possibilities I don't think we will know what it is until it proves it self. Translation : a time to be patient. Forward visibility low.

    ReplyDelete
  50. KSDecember 20, 2018 at 4:20 PM

    Thanks for the feedback PT - what helped me predict the deep move lower in the SPX was the NDX chart which I had posted earlier in the day. It occurs to me that getting clues on other indexes (INTER-MARKET ANALYSIS) and stocks (AAPL,BA,AMZN,MSFT) gives me clues to SPX direction. I will post up MY counts on DJIA, RUT, etc. soon.

    ReplyDelete
  51. Pittsburgh TomDecember 20, 2018 at 4:23 PM

    As Joe pointed out recently, if your count is correct that lower b wave of the flat is extremely bearish. Boy can I make bold calls! LOL As if things aren't bearish enough.

    ReplyDelete
  52. KSDecember 20, 2018 at 4:34 PM

    RUSSELL 2000 - ALTERNATE COUNT - Joe, P_T - would be great to get your thoughts

    https://imgur.com/a/PHiQwoU

    Thanks

    ReplyDelete
  53. Pittsburgh TomDecember 20, 2018 at 4:38 PM

    Have seen this before but it still gives me a chuckle.
    https://d1yhils6iwh5l5.cloudfront.net/charts/resized/59118/large/zx15.png

    ReplyDelete
  54. Elliott_TraderDecember 20, 2018 at 4:53 PM

    There is a new post for the next day at this time.

    ReplyDelete
  55. UnknownDecember 23, 2018 at 7:10 PM

    Why do you stop the fib 100% at 2462 on the SPX?

    ReplyDelete

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