Market Indexes: Major U.S. Equity Indexes closed lower; DJ Util Higher
SPX Candle: Lower High, Higher Low, Lower Close - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)
They are just numbers, and we do not want to get emotional at all about them. But today, in what will likely be a widely publicized bit of technical trivia, the S&P500 Daily Cash Index experienced a bear-cross. Some will term it a death-cross. I prefer the prior terminology. So while many readers have been asking, "why can't this still be a fourth wave?", the market's key trend indicators are offering a different view. Here is the daily chart. (By the way, for those who missed it, we offered our rationale for why this should not be a fourth wave at our post back in the beginning of November at this LINK.)
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| S&P500 Cash - Daily - Bear Cross |
As many of you already know, the bear-cross is when the 50-day simple moving average (or SMA) crosses under the 200-day SMA. And while, historically, prices often bounce from a level like this - due to all the hype surrounding the cross - the significance is that this area where the two cross should offer formidable resistance to upward price movement.
Today was a pretty bad day for the NASDAQ 100 futures (the NQ). There was actually an outside reversal day down in that market that resulted in a lower low. That did not occur in the S&P500. From a wave counting perspective - count each market on it's own. By contrast, this week the ES futures had an outside reversal week down.
What today's price action did accomplish in the S&P500 was getting within 90% of the bottom of the prior candle - which allows a legitimate flat wave to form for wave (ii), on yesterday's daily chart - if it wants to.
The daily MACD has not crossed lower yet, but certainly could. Will prices "just let loose" from here and trade lower? They could, but it would seem like an incomplete upward correction for wave (ii) if they did. Further, prices are getting quite near the lower daily Bollinger Band, and that may offer some key support. So, we will maintain a vigilant watch out for that one if the upward correction is all done and over. Meanwhile, we will note as we did during some updates to yesterday's post, that if we formed a b:3 wave down, then it has taken more 'time' than the a:3 three-wave sequence, up, of yesterday and this morning. That could mean there is a c:5 wave, upward, yet to go.
Have a good start to your evening and to the weekend, and rest up.
TraderJoe
Thanks, could this also be an incomplete ending diagonal for a C wave down, with Thursday's bounce being a B wave.
ReplyDeleteWelcome. No. It can not be an ending diagonal - for reasons covered at the 'link' above.
Deletejoe, is a running barrier triangle a valid pattern?
ReplyDeleteHi Gerald. No. Sorry. It's either a 'barrier' triangle which has a flat top or flat bottom, or a "running triangle" that contracts. There are no hybrids.
Deleteso the b wave in a barrier triangle both it's high and close are not allowed to go over the high of 3?
DeleteAs to the last question, I have not seen a 'definite' ruling anywhere, that the high of b can not exceed the high of 3. While it makes sense, in terms of the definition of the barrier, Frost & Prechter are mute on this point. They say only that, "(b) and (d) are generally at the same height" and do not specify the relationship to 3.
DeleteWish I could be of more help, but I don't want to add rules where there are none specified.
thanks joe. I understand why primary count is looking for a flat for (ii) to finish. I believe we should consider and prepare alternate counts that allow for (ii) to be complete and anticipate a gap down open as 3 of (iii). It would be very helpful to be prepared in real time rather than just going by look and feel. It would also be very helpful to know if such a count can not be found (although i think i have identified one that works but I'm not an expert). I think everything yo uhave mentioned would be sufficient to "allow" a second wave to end a bit early.
ReplyDeleteAll I can say is that I offered a chart yesterday where there were 'five waves down' on the five-minute chart. That was likely part of the b:3 wave. But, it still five-waves down. Could it start a larger move? Possibly. But the waves after it would have to be considered as a "running flat failure". Possible. But, quite rare. Not illegal by the 'rules' as there is at the end of the session an upward overlap if the five-move down. But, still a formation of this type is very, very rare. It would gain more credibility if Friday's low is exceeded on the open.
DeleteThough the Guidelines say that Wave B of a Flat usually retraces up to 138% of Wave A, I seem to recall that recently there was a short term Wave B that retraced closer to 150%. That would put SPX in the ballpark of 2580 before Wave C started, right?
DeleteNo. No. No. A flat can start with a B wave anywhere from 90% to 105%. It is only the 'expanded flat', not the regular flat that starts with B over 105% to 138%, typically. Please re-read the EWP if you are unclear on this matter.
DeleteSorry, I should have typed expanded flat. If an expanded flat has been ruled out, then I missed that.
DeleteRight. An expanded flat has not been 'ruled out', but is less likely at this point, as in the upward direction prices exceeded the short term declining trend channel.
DeleteThank you for patiently explaining that, Joe. Still learning...
DeleteJoe, How does your sentiment indicator look, is it providing any indication for a start of wave ((3)).
ReplyDeletehttps://money.cnn.com/data/fear-and-greed/
You mentioned that wave b:3 took more "time" than a:3, apart from the potential c wave upwards, does it imply anything else?
Thank you.
Neither the raw put-call ratio, nor the 10-day moving average seems immediately positioned for plunge. Doesn't mean it can't happen - just less likely from a probability standpoint. Weekly sentiment indicators like bull-bear do not provide daily timing signals. Michigan Sentiment on Friday was quite near an all time high.
DeleteSo, best indicator in the short term would be a new low below Friday's low.
Hello Joe, I am a newcomer to your site. I gave up on EW analysts years ago when Prechter's top calls cost me dearly. He has my respect regarding general social occurrences at market tops and bottoms but his wave analysis is way off and has been for years. I even documented all his calls to demonstrate to myself how incorrect he was and it was over 75% incorrect for a several year stretch. Enough to bankrupt any follower. Reading your posts here has been very interesting as you are detail and rule-oriented as am I. The subject of a higher degree 4th wave that you lay out is convincing. I use a complex but fundamental process that has served me well under many market conditions for a few years now and I agree with the your proposal that a 4th wave is complete. My difficulty right now is regarding the 5th wave completion and accompanying down acceleration having begun. Is it a reasonable possibility in EW analysis that there could be more time if not price until we see the acceleration top of this market? (either a new ATH or a lower high as in a right shoulder scenario). The reason I ask is that the vix futures market instrument VXX is currently showing remarkable similarities in behavior to the 15 dec 2014 - Jan 30 2015 time window but potentially at a higher degree. In both cases, the 50/200 ma (using VXX daily chart) have both 'flattened' which can be very telling using VXX as it is almost always in a constant decay except at important tops (which supports the idea of a completed or impending price/acceleration top currently). Looking at vix bear futures (VXX) action subsequent to Jan 30 2015 we see a golden cross 'touch' very similar to the 'touch' today (bearish for prices) but then a reverse move (bullish for prices) until we arrived at the market 'down-acceleration' top which was at a higher high in August 2015. There are other criteria that I use that do support the possibility for a similar scenario for today. Current SPX price swings are much larger proportionally compared to the vix futures moves in both directions which is quite unusual and looks ominous for either side (long and short) but I expect it could well bust upwards just as easily and shake out a large number of bear positions if the chart follows a similar path to 2015. Presented here simply for your perusal. Very much appreciate your thoughts in regard to EW analysis moving forward.
ReplyDeleteIn general, replies are not provided to the Unknown acct. Please log in. At this point, all other counts have been relegated to the 'slope of hope'. I'll adjust only if certain upward price levels are exceeded.
DeleteHi Joe, hope your weekend is going well. I had a quick question about USD daily chart and I welcome anyone else's input as well. When I perform my analysis on it I see 5 waves up from Feb this year until August this year then a corrective ZigZag until September then a weird looking pattern 5-3-5-3-5 the problem for me is wave 4 overlaps wave 1. Just curious what your thoughts were on that? I think this whole move in 2018 is a corrective zigzag before lower again and if so that would mean we are in wave C right now. I thought maybe this wave C was a ending diagonal since 4 overlaps 1 but it cant be cause 1 and 3 are both five waves.
ReplyDeleteCurious to hear others thoughts. Thank you!
See if a daily triangle can be formed starting in Nov of this year. Use the four hour chart, and see if the EWO, or MACD is going sideways. I will not do the work for you. Hope your weekend is going well, too.
DeleteThank you for your feedback. I don't want anyone to do the work for me of course, I just would reassurance or constructive criticism to see if I am on the right track. I have been playing around with the four hour and coming up with the possibility of a running triangle as shown. The issue with that is wave (B)is not a zigzag therefor that wave cannot be part of the triangle https://www.tradingview.com/x/TDmBiGyG/. There I consider the possibility of a symmetrical triangle for a wave (4) a shown here https://www.tradingview.com/x/XRli99CV/
DeleteWell, thanks for responding in this manner. While the triangle you have outlined is both beautiful and correct, you need to re-examine the count leading up to it, and whether it is, indeed, a wave (4) triangle. No part of wave (4) should overlap wave (1). So, the triangle must be part of a 'different' count. What waves do triangles 'most often' appear in besides four?
DeleteThey occur in B waves. If that is so then wouldn't the zigzag from August 15- September 20th be a A wave with this move from September 20th until now a B wave? If so then I am coming up with wave B being in a double the triangle being the last leg. Is that possible? Because this B wave would be a expanded flat since we are above the origin of wave A.
DeleteJoe I am sorry for all the questions! I know it can probably get overwhelming with all of us looking for guidance! Last one I have pondered this USD setup that I am questioning. Triangles occur most often in waves 4 and B. This is what I am coming up with right now https://www.tradingview.com/x/XFjoD2jB/
DeleteHowever I believe we are in a correction since the February 2018 low meaning this sequence would be a 5-3-3 is that even valid? 5 up to August of this year, three down, and now another three up with us being in wave B right now.
Thank you so much!
Some points to consider. I've seen some dialog about one more new high. This post MA Cross sheds some light on that topic if one does a little research. The last time the 50 sma crossed below the 200 sma was in 2016 Int wave 4. The time before that was in 2011 Int wave 2. The time before that was in 2007-08 Primary 4. Seeing the pattern yet? We've had a primary 4 level with a cross then Int 2 and 4 level corrections with crosses. We are out of corrections. There are no more corrective waves left to be had. The current cross can only confirm one thing. The bull is dead!
ReplyDeleteTom, the 50 and 200 day SMAs crossed in 2016, 2011 AND 2010. The time before that was indeed in 2007-2008. Just saying.
DeleteI stand corrected, 2010 was minor 4 of Int 1. That adds to my premise that these crosses are occurring in waves 2 and 4. Since we've exhausted all possible 2's and 4's the only conclusion is a reverse of trend on a large scale. If I'm right the crosses will reverse and we will get positive crosses on upward corrections in waves 2 and 4.
DeleteJoe,
ReplyDeleteI seem to recall somewhere in the recent past you mentioning the possibility of the first move off of the top being a diagonal rather than an impulse. Every time I look at a chart and see that minute ((1)) it bothers me. Is it a 3 or is it a 5. It can be counted either way but from the right look perspective it looks like a three. If it is a three then the diagonal would be required. Wondering if you have thoughts on this?
Forgot to mention that it does not measure well on the EWO as an impulse.
DeletePlease see this post. Copy and past link if needed.
Deletehttps://studyofcycles.blogspot.com/2018/10/gap-up-gap-fill-lower-low.html
It isn't a 'possible' contracting diagonal. It 'is' one in every detail including: price signature, time signature, and MACD signature.
I think due to poor wording in my question we were speaking of different degrees. The chart did clear it up for me though. I was proposing that if minute 1 was a three then minor 1 would have to be a diagonal. However, since minute 1 was a diagonal the impulse for minor 1 is required.
Deletejoe, i am trying to chart something i get 123 there is divergence on iii and v on the ewo. 2 on the ewo is crossed zero. however when i thought it would be making 4 the ewo took on too much water for a 4. iii of 3 is 12.5009. we have gone as deep as -6.4764. my question is once the ewo took on too much does that invalidate everything and i switch and now 123 is now ABC and C is now (A)? price has gone above 3 so could a running triangle be forming for 4 and i would use the ewo reading at it's e location? this future e could be in tolerance.
ReplyDeletei'll post a chart for visual.
https://imgur.com/cmUmV7Q
How many 15-minute candles do you have on that chart?
Deletetoo many. low is first 15 min on 11/26 so that is 9 full days. 26 in a day. so 234. that is embarrassing i'll have to admit.
Deletealso before you commented i missed a measurement .. i think. A off the top of (3) while less in time than (1) to (2) travels a greater distance. it is greater than 1.618 of (2) this means A is too large, correct? this would definitely make 123 into ABC.
Right on the number of candles. If you don't follow the first step in the procedure, you will generally wind up with an incorrect answer.
DeleteI can not, and will not answer this question because of the implied trading or investment advice.
ReplyDelete