As per The Eight Fold Path Methodology, the three-waves down we described in the last post, became a-b-c once there was upward overlap in the cash market. That likely means if there is to be any further downward movement, it would continue as another diagonal. At the present time, we can not say whether that would be a contracting or an expanding diagonal as there are insufficient waves to base that on.
As of the end of the day, we were able to count "five waves up", with the third wave as a solid 2.618 extension. (That's what we did not get on the way down, not even a solid 1.618 extension. We came two points within that level, but never crossed it.) Today's up wave could not be confirmed to be over at the end of the day, but given the shallow pull-backs it can easily be another "a" wave up.
There is not much point in updating a chart today until there is more information.
Have a good start to the week,
TraderJoe
Thanks Joe,
ReplyDeleteThis wave would be an "a" of what larger wave structure?
Re reading your post I assume you mean part of second wave of downward diagonal. Correct?
DeleteWish I had some conviction to contribute, but I have no idea where we are after today. IBD is still showing a good amount of institutional selling in the last couple of weeks, which would support TJ's count.
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DeleteSo maybe we already have the a of (iii) of ((c))
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Deletehttps://imgur.com/gallery/YLmAjgM
Delete@Erik, your wave (i) of the diagonal of ((c)) - which is supposed to be a sub-wave of ((c)) - is larger than all of ((a)); and that would be a degree violation.
DeleteWe are meassuring diverently beacuse I have ((a))~325 pts and (i) of ((c))~185 only. So maybe this works? U need terminal pts?
DeleteAnd thanks for taking the time to view the charts. I’m trying to find an alternate because of the higher high on ndx.
We have 3 waves down and the daily charts are rife with some of the most powerful candlestick reversal signals such as Morningstars and Bullish Engulfing Candles. Seems to me any downward count is premature.
ReplyDeleteso what does that mean we are still in a down trend?
ReplyDeleteNobody is certain whether it's going towarda 2900 or 2600...
ReplyDeleteI am not professional / full time trader. I have been following TJ for a long time to learn how to chart using EW. My tools are still crude and do not yet follow TJ baseline recommendations (Awesome indicator, correct degree labels etc - I am working on it). Having said all that and at risk of upsetting TJ, I share an idea I plan to work on further when I have switched platforms.
ReplyDeleteWhat if the first wave off 2009 was the extended wave?
It appears to meet basic guidelines I have learned here
1) Line 2-4 does not cut off 3
2) higher level degree degree measures appear to hold
3) First wave extension - nary a pullback
4) Third wave indicators (RSI / MACD - since I am missing AO) appear lined up with 3 of 3
5) Fifth wave could happen on a divergence
6) Approx 123 monthly bars on the chart
Marc, this could slide up your depression era trendline and fail on divergences
https://imgur.com/a/2EKNhjq
One potential problem I see is that in the extended first wave, wave 4 is shorter in time than wave 2
DeleteHm this is a VERY interesting thought Paul..how can one otherwise explain the possible 1-2-i-ii count from 2002 bottom on Nasdaq?! Why didn’t ndx make a new low 2008?!
DeleteTo be clear, I am using TJ's current count as primary. This is just something I am working to validate as a backup in case counts begin invalidating. I have not done all the due diligence (because I do not yet have the toolsets TJ utilizes).
DeleteHi Paul. This is a good effort in some respects, and the good news is I have not ruled it out entirely. It certainly does account for some of the indicators.
DeleteAn indicator which is bothersome for me in my count is the $NYAD (NYSE Advance-Decline line) being at a new all time high. The bothersome thing for you in your count should be the proper description of the degree labels.
What I mean by that is "how do we know your extended first wave is not longer than some larger degree label?" That would invalidate such a count because of degree labeling requirements. You'd have to look back over the history of the market to confirm that. For example, it, for sure, is longer than whatever degree you see the 2000 - 2009 decline as. So, if that's a primary degree wave, then what degree is this 1? It is longer than a primary degree wave.
Then, too, waves 2 & 4 (the bold black ones) don't alternate at this time. That could be fixed if wave 4 forms a triangle, but we'd need to see evidence of that yet, provided the degree labels could be resolved.
As you know, I advocate 'always having a plan B', and this is a good effort at it. Keep it up! I am still studying my 'Plan B's'.
My question continues to be does your plan B get us in a wave 3, not wave 5? By this I mean your count was most bearish at top, but, once revised, it will be most bullish - i.e. we have more than 1 primary leg remaining not in a 5 as most would argue. That is what my work is showing. If it wanst 5 waves up from 2008 the we are probably in (iii) of 3. I dont know but wondering where you stand on this.
Delete@marc; of whom are you asking this question?
DeleteIt was meant for you ET. I am aware there is a level higher where you will talk about alternative counts. I am trying to get some insight ahead of that level.
DeleteDont’ forgett in Dec 18 NYA overlapped it’s 2015 high which Paul has labbeled black 3, so this woud speak for TJs count..?
DeleteIF NYA is to do new ATHs I quess it would need to be in the form of an monthly ending contracting diagonal.
Paul, one of Neely's rules concerning waves of same degree that very few people mention, much less ever pay attention to, is what he calls the "Rule of Similarity and Balance" (MEW 4-3). What that rule says is that in order to be considered a wave of same degree, it has to be at least 1/3 of price and/or time of the adjacent wave of same degree. Your 4 of 1 in Oct 2014 fails to meet that requirement, as it is neither 1/3 the price or time of 3 of 1.
DeleteAlso fundamentals speaks for TJs count with s&p500 12 month forward eps rolled over in q4 18 and have declined since, and the ”japanisation” of the Eurozone with negative y/y gdp in many countries..
DeleteOk, thanks mblcta. I not as aware of all of Neely's rules / guidelines. thx
DeleteGood contribution mblcta.
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ReplyDeleteMeasurement-wise on 5-min SP500 this morning, can still be v = i.
ReplyDelete..can be a 1 minute triangle, and thrust out of triangle to higher high.
DeleteThe Dow appears to be in it's 'b' wave already, with a flat wave.
ReplyDeleteHere's the DOW's chart.
Deletehttps://invst.ly/a9d90
TJ
Not sure what the S&P will do. This is only one possibility. Trend lines are tentative, as it is likely a 'b' wave, and can have many, many forms and take more time if it wants.
Deletehttps://invst.ly/a9dee
TJ
In the S&P500, if this is a triangle or a 'b' wave then it has consumed more time than second wave at the bottom, meaning the degree 'should' change.
DeleteJoe,
ReplyDeleteFor your primary count, there are 3 waves down from 2815 high. Now we have an a wave up that retraced the c wave down in less time suggesting a degree change. However, your count is looking for a b wave here, then a c wave which stops short of 2815. Are you at all concerned about the relative sizes of the a and c which are suggested by the count? Furthermore, if c tops under 2815, why would abc down then abc up be suggetive a a diagonal as a primary count? I am trying to learn and this is good stuff.
Please review the first diagram in this post. What can you tell me about the second wave?
Deletehttps://studyofcycles.blogspot.com/2018/11/diagonal-degrees-and-avoidance-of.html
TJ
ET
DeleteI can tell you it must take out the b wave formed in prior wave down.
So that is helpful. Thanks. Still a bit uncertain about the size of waves in this up wave but I'm going by look not measurement.
Am i correct about the diagram?
And now, we are looking at diagonal second upward waves of two different degrees which both have taken out the corresponding b wave high of prior 3 wave down sequence. So if its a diagonal forming we have met minimum requirements now at both degrees>
Delete@marc - yes, the b waves are 'usually', 'often' taken out. So that is a good sign.
DeleteFYI - Brexit vote at 3 PM ET today.
ReplyDeleteedit: I think it makes more sense if abc can be counted as complete, but i dont think it measures that way.
ReplyDeleteYes would make more sense but how?!
DeleteWe have no proof that the up wave is over, and with a marginal higher high, this could be the c wave in an ending diagonal, or it could just be a complex b:3 wave up, and a big fall yet to come in a c:5 wave.
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ReplyDelete1. Plan B can be categorically ruled out as sub-wave iii is larger than all of 1. That is a degree violation. You have a wave, wave iii, that is supposedly of a smaller degree than 1. But, it is LARGER than wave 1 which you claim is of a larger degree. And that is the very definition of a degree violation.
Delete2. Plan C also relies upon wave 1 being a lower degree than 2000-2009, and so if that was a Primary degree wave, what is the 'degree' of your wave 1.
DeleteTJ whats your view on ndx made a higher low in 2008? Failed C? Uggly triangle? Or did the bottom actually happen 2002 and it might be doing a big expanded flat (currently in 4) so ndx might outperform the other ”cyclical” indices during this bear market? Thanks!
DeleteExpanded diagonal**
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Delete@Erik - I am only going by measurement, not opinion. Because the Nasdaq Composite bottomed in March 2009, it is on the same count as the SP500 from there. Because there is a 38% retrace in 2007, then there is a truncated zigzag at the low in 2009. There is no justification for an expanding diagonal, as there is no fourth wave overlap.
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Delete@tacharts @TJ regarding plan c, would mr market really be so stupid with a shorter 3 and therefore not be able to extend in 5 because 5 have to be smaller than 3 and therefore not be able to adjust to the economic outlook? Imho no. Especially not in this size of degree
@Erik .. that is an unexpected comment. More like this, with words like "stupid" that have no meaning in market analysis will be considered for spam.
DeleteOh sorry that wasn’t meant to be spam. Was a serious question just for discussion. I’m doing my best to translate from my language.
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ReplyDeleteI did. I have no further thoughts on what I already commented on.
DeleteHi ET,
ReplyDeleteI wanted to know your opinion on whether this can count as a contracting diagonal? 2 and 4 are smaller or take less time than b of 1 and 3 respectively, I wasn't sure if that disqualifies it.
https://www.tradingview.com/chart/ES1!/VSSYeO2y-Possible-ED-here/
Thank you.
yes, possible in futures.
DeleteES marginal new five-minute high
ReplyDeleteHere's the ES futures on the 5-minute scale, with the new high. I don't like it any more than you do, but this is a tough pattern to deal with. Could still be part of a b:3 wave up, or part of a diagonal.
Deletehttps://invst.ly/a9fm6
TJ
Joe, when a wave 3 extends by 2.618, don't you think that it would be normal that at least one of the sub-waves would be longer than wave 1? I mean, it seems like simple math would require that to be the case. Also, as long as sub-wave i of 3 isn't larger than all of wave 1, then there shouldn't be a problem with degree violation, right? Having said that, the only viable "Plan B" that I can see is to say that Primary I ended at 1370. Primary II ended at 1075. Primary III ended at either 2872 or 2941. Primary III would have equaled 2.618 x Primary I at 2918. That would mean we're in Primary IV now.
ReplyDelete..still working on that one.
Delete4 of diagonal on ES 5 min?
ReplyDelete4 2 long
DeleteDiagonal has been ruled out by the lower low, but a flat b has not.
ReplyDeletehttps://invst.ly/a9gaq
TJ
if new low then diagonal down on SP
ReplyDeleteyes, if it's longer than the middle wave.
DeleteUK Parliament rejects May's plan a second time. FTSE Futures off 0.3% initially, presently no net change. So response fairly muted so far but tomorrow's cash market may act differently. Watching potential 4th wave triangles on both DAX and CAC Futures. Both did a 78.6% retrace for what would be the "b wave" of their triangles. Now possibly in "c wave" of the triangle. Some choppy action over the next day or two would be needed to complete the triangles. The height of the possible triangles are 2.7% and 1.8% respectively. So a big move in European indices is possible should the triangles play but recall SPX's recent move out of its triangle at the high only did enough to make a new high without coming even close to its measured move. Hard to find more than 3 waves down from the highs in these indices so, apart from a triangle, the other realistic possibilities are a diagonal downward already started (hard to see on the DAX) or a diagonal upward to complete the 5th wave where sub-wave 4 over sub-wave 1 overlaps are already in place.
ReplyDelete