Friday, January 25, 2019

FED Might Change the Game

Overnight the Wall Street Journal is reportedly saying that the FED might consider halting it's bond redemption program. You can read the story at this LINK.  So, the futures market has popped a bit on that report.

That means if we use the futures chart only, the wave count now depends on if we go back over the recent high or not. See the chart below.

ES E-Mini S&P500 Index Futures - 4 HR - Three Waves or Five?

Both wave i of (i), and wave (i), itself, are retraced by waves that are a 38.2% retrace or less. So according to Neely's guideline - if we are in an impulse - we should look for the first waves to be the extended waves in the sequence, and the overall wave to form a wedge.

Another telling point? The DOW did not make a new low at c of potential wave (iv) where the S&P500 did. And the S&P500 did not overlap it's wave (i), allowing the potential for a fourth non-overlapping wave.

So, if a new high is made, there would, indeed, become an impulse count, up. And, if not, the previously cited ((A)), ((B)), ((C)) count, shown in brown circle would hold.

The grinding nature of the up wave makes wave counting a most difficult exercise. Hang in there with patience, calm and flexibility.

Have a good start to the day.
TraderJoe
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29 comments:

  1. Kelly OJanuary 25, 2019 at 9:07 AM

    Joe, I'm trying to get the hang of which degrees are more predictive than others, if that's possible. If SPX cash made a new high above 2684, the formation up from 12/26 would be larger than wave ((a)) from the ATH to the low of 10/29. While a high above 2675 indicating an impulse seems significant, wouldn't SPX above 2684 be potentially more significant (if it happens)? Thank you.

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    1. Elliott_TraderJanuary 25, 2019 at 9:18 AM

      If there is an impulse up, it would not be larger than the entire down wave from 10/3 to 12/24.

      Delete
  2. tachartsJanuary 25, 2019 at 9:26 AM

    Your possible 5 wave count ties in with my comment/chart of the other day. Still viable that we get that last push up. Thanks for the post.

    ReplyDelete
  3. marcJanuary 25, 2019 at 9:34 AM

    impulse up led the fed decision. we counted it done days in advance of news. the recent pullback was 2, it still is the extended wave. there is a leading diagonal to start wave 3. and the gap will be 3 of 3. Thats the bull count i believe.

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    1. TachyonJanuary 25, 2019 at 11:23 AM

      The eventual termination and reversal of QT was always inevitable.
      Anyone paying attention in fact knows it already happened. A cursory glance at expanding global CB balance sheets makes this abundantly clear. What is truly fascinating is that they felt the need to have some mouthpiece at WSJ pen the obvious. The implication is that what they were ALREADY doing was not having the desired effect. This, imho, is ominous. I expected this kind of ammunition to be reserved for juicing a final wave up to a new ATH. This early deployment could be a sign of trouble...!

      Delete
    2. Gary MorganJanuary 25, 2019 at 12:34 PM

      I think Verne that we are now at the point where more QE will cause the market to collapse, that bullet no longer works. QE did not halt the credit crunch crash, mark-to-market rule amendments helped.

      Ultimately, news is irrelevant, I'm surprised to see wavers even looking at news.

      Delete
    3. TachyonJanuary 25, 2019 at 5:25 PM

      I agree.But they sometimes can delay the inevitable.
      Central bankers are a dishonest,disreputable lot.
      My own suspicion is that after the corporate tax-refund induced market gains evaporated, they panicked and quietly re-introduced Q.E. Look at even their "reported" balance sheets of late.
      You are quite right that they dared not announce what they were doing as it would probably have sparked a market panic. What they have done by implying they still have any ammunition left reeks of sheer desperation. I also agree that the size of the down-side candles is revealing some huge exits from the market. I am now very much inclined to agree with Joe's take that we do have a top in place.
      The EW analysts who have been contending otherwise have been spectacularly wrong in their calls on market direction the last several weeks.

      Delete
    4. Gary MorganJanuary 25, 2019 at 8:04 PM

      That looked like a blow off top in risk assets today to me. Not confirmed by usdjpy. A great bull trap and very few bears I'm board.

      I expect 87 on steroids for 2 weeks.

      Delete
  4. marcJanuary 25, 2019 at 9:36 AM

    today all about what kind of weekly candle will be left on chart

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    1. Pittsburgh TomJanuary 25, 2019 at 10:13 AM

      Also important is the embedded status of the DOW, SPX and Nasdaq. They need a strong up day today to maintain or regain it. A loss of embedded status would signal a pull back or worse.

      Delete
  5. migrationJanuary 25, 2019 at 10:14 AM

    Dow has registered a higher high than last Friday's high. I expect SPX and NDX to follow.

    ReplyDelete
  6. Elliott_TraderJanuary 25, 2019 at 12:21 PM

    I suspect we might be looking at a wave count like this; where ((2)) is a double combination, i.e. the failure of a triangle, to make wave ((2)) longer in time than wave ((1)). Since it is a flat, then wave ((4)) might be a zigzag or triangle.

    https://invst.ly/9vvht

    TJ

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    1. Elliott_TraderJanuary 25, 2019 at 12:24 PM

      As far as I can tell, this pretty much has to be the count because one needed all of wave ((1)) to allow wave three-of-three not be a degree violation.

      Delete
    2. Elliott_TraderJanuary 25, 2019 at 12:46 PM

      bam .. sharp or triangle looks on!

      Delete
  7. scoutJanuary 25, 2019 at 12:45 PM

    failed 5th?

    ReplyDelete
  8. Elliott_TraderJanuary 25, 2019 at 1:03 PM

    Here's a brief update.

    https://invst.ly/9vw13

    TJ

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  9. BillyJanuary 25, 2019 at 1:43 PM

    ET your circle 4 is already longer in price than circle 2, but much shorter in time. Same on the DOW. Can the time factor be part of alternation or is it more likely a greater amount of time is required for circle 4?

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    1. Elliott_TraderJanuary 25, 2019 at 1:59 PM

      Billy.. how many times have I said, "if wave four is a triangle it is measured to it's (e) wave"? A triangle fourth would help equalize the net distances between two and four.

      Delete
  10. Elliott_TraderJanuary 25, 2019 at 2:30 PM

    ES new lower low ... likely into the c wave of ((4)).

    ReplyDelete
  11. Elliott_TraderJanuary 25, 2019 at 4:02 PM

    Well, we don't know for sure, but it is pretty, darn, close.

    https://invst.ly/9vxgz

    TJ

    ReplyDelete
  12. marcJanuary 25, 2019 at 4:31 PM

    the caption 3 waves or 5 is solid, however the 5 you are proposing has 3rd wave cutoff from 0-2 trendline, and as you know there is a completed impulse count at the high as well.

    So I think the first issue is if we had an impulse or a zigzag -
    And second is was the recent pullback sufficient as a B or 2 for an impulse at high.
    biased
    I think saying a new high=5 up is biased counting given above

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    1. BillyJanuary 25, 2019 at 5:32 PM

      Marc the market is as tricky as ever. Regarding the "recent pullback" the DOW made a new high for the move. Thus the pullback "could" be over. Another possibility, even with the new high in the DOW, is the market is stuck in a larger triangle or the circle 4 on ET's chart is incomplete … that is IT could still out to be a triangle. Some more food for thought:
      https://imgur.com/dJNHSA8
      https://imgur.com/LREa0J4

      Delete
    2. BillyJanuary 25, 2019 at 5:59 PM

      One final thought for this thread on my behalf … the market, if I recall correctly, has gapped up the last 2 days. This generally correlates with one type of wave, and it's not a wave 4.

      Delete
    3. TachyonJanuary 25, 2019 at 6:15 PM

      I think it is dangerous to apply the term "generally" to the current market.
      There is very little about this market that is normal in the sense the term is generally used. You simply cannot dismiss the incredible number of bearish set-ups that are consistently being negated by subsequent market price action. One case in point is the island reversal we saw this week. Gaps higher in the market happen when you have buyers willing to pay market price at the open...lots of buyers in the case of the gaps we have been seeing of late. The EWT theory of herd sentiment driving market price may have to be revisited. Retail investors withdrew more money from the market the last 10 weeks than at any other period in history! Who is buying? Institutional money flows show they have been steadily exiting the market for quite some time, to say nothing of insider selling. We are not dealing with "normal" markets in any sense of the term. It in large part explains the befuddlement of so many observers these days imho...

      Delete
    4. marcJanuary 25, 2019 at 6:53 PM

      Thanks Billy
      im referring to count from low to high since december

      Delete
    5. Elliott_TraderJanuary 25, 2019 at 7:58 PM

      @Marc, please see the new post that was started. An Important Measurement.

      Delete
  13. ToddJanuary 25, 2019 at 5:23 PM

    What ever the count is, I am confident the market is going higher. There is still way too much strength and now there are more breakouts.
    For this market to go lower, you are going to need a reversal ASAP.

    ReplyDelete
  14. Elliott_TraderJanuary 25, 2019 at 7:57 PM

    A new post has been started for the day.

    ReplyDelete

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