Wednesday, December 5, 2018

Measurements Dear Glenn?

Since many of you watched the Neely video from the link yesterday, and since the cash equity market is closed today, let me cover one issue that I consider to be at issue in Neely's thinking.

In the video, Neely posed to us that the rise since 2009 is only a 'corrective wave' possibly of a triangle in some form. He called it wave "d". I understand why Neely is doing this based on his time rules, but what if one or more of Neely's time rules is not exactly correct, as he states it?

Let me pose this question to you with a different diagram, and a differently worded question. How long in price length does a wave have to be, before it simply can not be considered a wave of the same degree as the previous waves? Here is the diagram. Let me explain.

S&P500 Cash - Monthly - Measurements Matter

If you look at this monthly chart, and the Fibonacci ruler shown, you can see that the up wave since 2009 is more than 2.618 times the length of wave b. Is this really a wave d? I mean from price length perspective, how long can this go on? How long does Neely allow it to go on before saying something like, "Uncle!, OK you got me. It's really a new bull market."

And, if the length in price points alone doesn't do it, how about time? From 2009 - 2018 is nine years in length. But from 2002 to 2007 (the b wave ) is only 5 years. How does a wave become shorter, like the c wave, being only two years, and then become longer again like the purported d wave, and still be of the same degree? And if price and time don't do it, how about both of those together with a pretty clear five-wave form?! Not enough for you? What about if the "middle segment" of the rise from 2009 to 2018 is simply "too long" to be a sub-wave? That would be a degree violation. Conflict! (Here I am referring to the fact that from 2011 - 2015, price rises more than all of the b wave!)

This is not logical.

This is one of the reasons why - while I respect Neely very highly, and think he has made a number of vital contributions - either he hasn't finished his work or his reasoning, or doesn't explain why this should be so. Or, perhaps he is incorrect in the application of his own written rules to the current market situation. Remember, the new Neely patterns (such as diametrics, neutral triangles, etc.) were not invented when Mastering Elliott Wave was written. Did he 'invent' such patterns to 'cover his tracks'?

Neely runs a fund. Prechter runs a newsletter service.  I certainly have seen Prechter and Hochberg not follow even the rules of Elliott Wave analysis - let alone the guidelines. Is this possible for Neely too? I don't know for sure. I have nothing against either of these gentlemen, or their companies - just the opposite. I have a lot of respect for them.

But, when I see things that don't make sense or somehow leave a mysterious unexplained void, I will ask questions with ardent fervor.

Have a wonderful day.
TraderJoe
P.S. Chart below added after the open on Dec 06th.

SP500 Cash Index - 30 Minutes - Trend Line Break is Wave i

More than likely, as Neely suggests, the new trend starts after the failure - which we have discussed for many days now, and after the trend line break. Not before. The first wave down is wave i, and the deepest retrace since the trend line break is wave ii. It would then make sense that the gap is part of or most of wave iii. There is no evidence yet that wave three is over (that is what > means).

Each of the above waves would go into making wave minuet (i), down.

SP500 Cash - 5-minutes - v < iii < i

Chart added at end of day. Probable barrier triangle where d can be higher than b, as long as it does not close above b.

Probable Barrier Triangle to make b longer in time than a

101 comments:

  1. in an expanding triangle does time from b to c need be greater than a to b?

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    1. i see where you wrote that now. his d wave should be limited by the b wave where you have mentioned it, too. it would be a 3 wave structure so there is 0 chance it could be 2x b.

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  2. Ok Joe I think a spring just flew out of my head. Re my comment on the previous post: Are you saying that my 3 is too long and that my 1 and 2 are really 4 and the failed 5 of c? which means the c failure was at the end of the day on Monday not Friday which puts us in 1 down from 2793.63?

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  3. Thank you so much Joe, I saw your previous comment about does it look like 1 wave or 3 waves on the daily chart but couldn't make the connection as to what you were saying. (My old head has a limited number of springs left) So I was more right than I knew when I said this is a fascinating point in the market!

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  4. You're right - the idea that the bull market from 2009 to 2018 is a D wave is not logical. I would add that it's also not reasonable. Th S&P TRIPLED over that time - to classify that run as anything but a bullish impulse makes little sense.

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  5. joe
    the initial move off of c never "proved" anything - wasn't fast and strong enough compared to c - so he was left NOT being able to raise degrees according to his rules. not that it matters but i think his c ended in 2012. I've been thinking about that for some time as well.

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    1. So, as you go through the progression of 1, 2, 3, 4, 5; and if three is 'supposed to have the greatest momentum', and 5 is 'supposed to' have much less momentum, then why would one impose the initial price-rise versus time requirement on 5?

      No. c ended where it did. Both he and Precther say so. Not me, although I am sure of it too.

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  6. In other charts and also he comments it in this video, the end of the C should be in the July 2010 low, because considers time of a = time of c.
    Although he change this low to 2010, d=2.272x b.

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    1. ..but he doesn't change his counts all the time ..right ? just where waves start or end?!

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    2. Well..., he uses his figures diametrics and odd triangles to fit into the big count. I consider it a bit doubtful, or little reliable in the short term.
      I have not done it, but a friend who was following his analisys carefully, saw how he skipped his own time rules more than once is his forecasting service.

      So, either now it is not as accurate as before, or the rules he wrote in the book are too strict and should be considered as guidelines and not rules.

      For this, I am very aware of your progress in wave grade and times.

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  7. Joe, the fact that you adhere strictly to rules and as closely as possible to guidelines is why I read your blog. When I trace your logic, I often discover a new connection I hadn't yet learned. Thanks again.

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  8. Thanks Joe for great work you’re doing. I am still just a toddler in this world. Have you ever tried doing the count (especially on the long term charts) using a log chart instead? Does that change things around?

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    1. Sure. All the time. Changes nothing but channels well in the really long term charts

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    2. Jay, Draw a line connecting 2011 bottom to 2018 bottom than extend that till today on a log chart. You'll notice we haven't reach that yet.

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    3. Thanks interesting line indeed

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  9. Just fyi - the futures in an approximately -50 point down move from Monday's settle, or a -66 point down move from the overnight high, have already retraced 'much more than' the 78.6% retrace level from the low of the up wave beginning Nov. 23.

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    1. fyi, the down move is now greater than the down subwaves of the x wave and in less time. Thats a clue correct?

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    2. So reducing odds of a triangle. Which would need to be a B wave triangle in this position - which further reduces potential 4th wave from the top?

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    3. Mark, further evidence we are a different degree wave? - e.g. 3rd

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    4. i think - joe is expert - lets see if he offers any wisdom

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  10. I know most have the advantage of futures to validate degrees. On the cash chart, I have (1) down at 27 points. It is challenging to break down the straight down move from 2792 into subwaves less than 27 points.

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  11. pbeck:
    See my post above at 3:38 pm and joe's reply.

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    1. Yeah, I think I am following. We are in 1 of Big 3 down off the WXY. I was just having difficulty counting the internal waves to figure out where we are in this wave.

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    2. I get it now, (1) of ((3)) started on Tuesday not Monday

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  12. Hi I'm trying to find the link to Neely's video in yesterday's post, but can't seem to see it. Has it been removed?

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  13. A new comment and chart update have been added to the above post as a post-script.

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  14. Many thanks for the chart update

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  15. Joe, I was counting the same. As I see it because of the shape so far that the 0-2 trend line is not going to give us a good starting point for a channel for this wave. Must use 1-3 and a parallel off of wave 2. Have I got the process right?

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    1. Yes. Because of the shallow retrace for wave ii, look for wave i to be the extended wave in the sequence.

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  16. And we also know that wave 5 will be less than or equal to 3 since 3 cannot be the shortest wave

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    1. 3 is already greater than 1 so there is no limitation for 5 but would look for equality or Fib relationship between 5 and 1.

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    2. Correct - I was thinking if we had the wave 1 extension, but 3 ended up going longer

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  17. Joe, quick question - Wave i has 6 candles to it, wave ii has only 3 - but I thought wave ii should be longer in time than wave i? Is that not always the case?

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    1. Be careful where you start ii, it is a flat wave.

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  18. Now cash down below the prior (x) wave.

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    1. Watch for a short wave iv and a 'wave in a wedge'. It's possible for me to miss wave iv traveling.

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  19. Replies
    1. Yes. if 2 flat then looking for sharp for 4. a of 4 looking mature. a pull back and then leg higher fits nicely for channel challenge and EWO reading.

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    2. EWO has hit minimum -10% of max reading.

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    3. Price has climbed above day's opening level

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  20. Be very, very careful here. There is a way to count v < iii < i in a wedge as I was proposing. I may have missed wave iv while traveling. Will try to post a chart if internet allows.

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  21. Third chart posted. SP500 5-min chart, or v < iii < i in a wedge.

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    1. When there are more bars in this up wave than in wave ii, you will have confirmed that the higher degree wave (ii) is likely beginning.

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  22. but technically being inside of iv is not eliminated right ? , awo still looks good to me -_- or the "more bars" you mentioned is good enough to eliminate

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  23. Seeing clean 5 waves up from the low on SPX 5 mins chart.

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  24. Replies
    1. Would the corrective pattern target 2690 for a zigzag?

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    2. 38.2% retrace = 2687
      50% retrace = 2707
      Gap Fill = 2701

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    3. I really like the 2707 50% retrace. It moves price back to a previously furiously contested pivot. I think we see a ramp over-night to rattle a few cages on the short side and then a sneak intra-day reversal tomorrow to continue the carnage...that death cross takes months to develop and I seriously doubt it is going to be reversed "on a dime" so to speak. Mr. Market is VERY tricksy! He!he!

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  25. You are amazing, Joe! Thanks for your guidance

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    Replies
    1. Welcome .. just trying to follow the rules and guidelines.

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  26. Hi Joe,

    Sorry been silent last couple weeks been following along though great work!

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  27. Watch out for a flat b wave. It may try to take more time than 'a' up that way. IT doesn't have to, but it can.

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  28. Yes, saw that. Got stopped out by that flat. Not expecting a flat for 2. LOL

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    1. market playing with me. Had to be a running flat.

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    2. perhaps a complex b and can still make a regular expanded flat

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    3. in (a) down, and (b) up of a flat, before (c) down starts, then (b) should be in three 'obvious' waves. Not complex .. just visually .. a real clear three waves up.

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    4. A triangle b can be longer in time than a? Check it. My tools are not good enough right now. And a triangle would be bad news for upward movement.

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    5. Market moving up now. don't see any triangle. Frustrating day, flat stopped out long, waited for flat to form properly but it became a running flat so missed the up move. Guess I was in hope mode about the more complex b. LOL

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    6. P_T. You are confusing me. I m not providing trading or investment advice, but my understanding of an Elliott Wave trading plan involves 'never' shorting a "B" wave. On the way down, one sells wave 3, and wave 5. One stands aside in 4. One buys wave 'a' up, or 'c'. Period. In an Elliott wave trading plan, one is only taking the impulse moves, period. But, you are, of course, free to do as you wish.

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    7. Was not short. Got long in A up. Was going to ride out B. After b of B exceed A I thought we might be in C up and raised my stop too tight. Stopped out for a profit. Wanted to get back in for C up. I was waiting for c of B to drop to the level a of B but B turned out to be a running flat and never dropped that low so missed C up.

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    8. Turns out was not a flat but a triangle.

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    9. OK, try to remember in corrections that the A wave has the same 'risks' as the 1 wave does in a typical EW trading plan. There is a risk of 100% retrace. And, in a corrective pattern - where one is not sure if A is a 'five' or A is a 'three', the risk is the B wave of a FLAT can go 'below' the start of A.

      That is why many, many EW trading plans eliminate trading the 1 wave, the 4 wave, the A wave and the B wave. But again, I offer a description only, and not trading or investment advice.

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  29. Added chart at end of cash session. Probable barrier triangle where d can be higher than b as long as it does not close above b.

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    1. Up wave 'can' only be i of c, so watch that (e) wave. Below it is negative, above it is positive.

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  30. Thank you Joe for the effort.
    Cheers

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  31. We are almost at the 100% extension of a from the (e) in the barrier triangle. Therefore, looks like we'll be getting price moving down to start Friday's cash open.

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    1. Some c waves go to 1.27 or 1.618, so get confirmation, first, before counting downward.

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    2. Rereading now what I wrote I should have added in I think we are in a of c. This a of c is almost at 100 of A. Therefore, the hiccup b I am anticipating to begin cash Friday. I agree C could be larger than A. this is quite the norm I would think. failure the exception.

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  32. thanks joe. 2707 to 2723 is decent range for c. i think time requirement will be met for w2>w1. this can extend a couple days counting as w for double zz so we need confirmation elsewhere probably tomorrow

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  33. I know this is not the count we are tracking - and I risk "just putting labels" on a cash chart. I am going to risk it anyway. We did get the 90% retrace today of rally into 2815 cash today. I think we have counted 3 waves down from 2815 to 2631. Then 3 waves up to 2800 and now 5 waves down to 2621. Normally, I would see this as a potential complex flat potential. Then we had 5 waves up today, some overlap that "could be" nesting and another rally. Obviously, this rally wave is not done yet so we do not know the shape (suspecting it will be corrective). If a complex flat back up to 2800+ is a possibility, what could I use to eliminate this option?

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    1. For instance, the Big C wave of this potential flat would need to at least = A into 2815. I think, since its a C wave, it should be faster in time than A and, of course, it should be 5 waves.

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    2. In this case, the B wave was a flat.

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    3. For a Flat starting from 2815, you had to rally to the 90% level 'before' getting the five-waves down. That didn't happen. I.e. you had to rally to 2,795 before getting the five waves down. Therefore, proposed pattern is already meaningless.

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  34. Right, because it would be correcting the previous impulse - doh! I was trying to use the exercise to eliminate other options and overlooked the most obvious. thx

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  35. Wait, I am not trying to argue - just make sure I understand. This is all on the Cash chart - so if this have been invalidated in futures, I would be blind to that because I do not (currently) chart ES.


    Others can answer (it does not have to be Joe). A flat is 3-3-5. So the rally up to 2815 does not have to be a 5 wave if it is the A wave of a flat. It should be a 3 wave move.

    Then for the B wave of this flat. We had another flat.

    1) 3 waves down from 2815 to 2631
    2) 3 waves up to 2800 (which hit the 90% retrace)
    3) now 5 waves down to 2621 to complete the flat and hit the 90% retrace of the rally into 2815.

    Is this overall structure I am highlighting invalid or was it validated in Futures?

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    1. Under that scenario I am attempting to describe, we would now need 5 waves up (ideally to over 2815) to complete the larger degree flat that would be correcting the original ((1)) down into Oct.

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    2. Pbeck, think Joe is talking about hitting 90% based on the closing of the bars. Which did not hapen

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    3. pbeck .. please see this post (copy and paste link, if needed)

      http://studyofcycles.blogspot.com/2018/11/confidence-level-of-down-market.html

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