Although this still may be holiday-light trading, care is needed because the S&P500 did something a little unexpected today. The Dow did not. First, here is the Dow on the half-hourly chart. The second wave, 2, did indeed take a little more time - as we posited on the S&P chart.
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| DJIA Cash Index - 30 Minutes - Expanding Diagonal and Wave 2? |
The Dow - as can plainly be seen had an exact 62% retrace of its expanding diagonal with a higher high (C) wave today. Its (B) wave counts like a triangle. The S&P500 did not make the higher high. That being the case, it is possible to see the S&P as having failed again at today's high. This is not necessarily good news for the market. Now let's look at the Dow's daily chart.
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| DJIA Cash Index - Daily - Head & Shoulders |
To be clear, I rarely call head and shoulders patterns. But I also don't call inverse head-and-shoulders patterns like many were doing at the recent failed breakout above the high. The issue is I'm thinking if we break the daily lows, above, a lot of technicians will begin calling this pattern.
It bears watching - and there are other ways it can develop, such as a larger right shoulder. So real care is needed, and so is attention to the overnight futures for a few days.
Since the Dow never made the higher all time high - just as I expected - it may be that the Dow is providing the clearer Elliott Wave count. Perhaps the Dow is more trade-war dependent and the variety of stocks in the S&P500 is simply causing that index to be harder to count.
Have a great start to the week.
TraderJoe
>So real care is needed, and so is attention to the overnight futures for a few days.
ReplyDeleteLook left, to Feb 18, the waterfall/recognition moment could be tomorrow, into early Thursday.
Message for Verne, you are correct, it is manipulated, but down as well as up, hence the sneaky dip so far. Good luck.
Joe-
ReplyDeleteI hope you'll forgive a stupid question (another one, lol).
Assuming our wxy up, wxy down is still good, could we finish with an abc flat (expanded)? We retraced just beyond 105%. 3 waves up, 3 waves down for a and b. This could put c back up around the 2870ish area +/-.
Thanks.
'Possible' but getting less likely as the Dow already made 62%. Why did the SP500 fail? Keep your eye on the futures.
DeleteThanks! I'm watching.
DeleteI do not see anyway to count the move down from 2892 as a diagonal or as an impulse for the following reasons: second move down is bigger than first move down so can't be a diagonal and there is overlap of 2832 up so cannot be an impulse. A (1)(2)(i)(ii) count doesn't work because (i) would be greater than (1). So the move down MUST be corrective.
ReplyDeleteThe first two moves down count well as a zigzag. Today, the market threw in an X and a Y. The X is about the same length as the B of the zigzag. Y may not be quite finished as yet. The WXY will then finish the B wave of the flat that started at 2801. The 5 waves down today from 2840.51 look like a 4th wave is needed of about 7.77 and then wave 5 will make the flat bigger than 100%. I would predict a low around 2795-2797 if the low is not in already.
I am only saying care and flexibility are needed. The larger b wave can possibly work - as the larger right shoulder scenario I noted above. Futures have already dropped below your expectations to 2,782. It's possible a 1.382 x wave will occur down to 2,763. But, as of this time there is no triangle or diagonal yet in evidence that points to an end to the wave. Will need to see the cash open, as well. Also, a larger b wave does tend to agree with the location of the lower daily Bollinger Band and two moving averages on the ES.
Deletebelow those levels
DeleteJoe, thank you again for all of this. Look forward to your posts every day! With gaps above and below, we all have choices to make. I'm expecting the possibility of some ugly waves ahead, including lower-lows, but think that a noteworthy objective of this downward motion has been accomplished - to break 2800. While bearish in the long-term it seems gaps above, once again, have been left for a reason. Both the January 2018 and Oct 2018 moves down felt like vicious liquidations. The downward moves we've seen, while sometimes sharp, seem to be more of a controlled fall. That said, I'm neutral until we see higher highs. Again, thank you for your work.
ReplyDeleteWelcome. What do you mean by 'higher highs?' How high are you describing?
DeleteExpanding leading diagonal from ES 2890?
ReplyDeleteNoticed that as well. The AO has increasingly lower troughs, consistent with this assessment.
DeleteRegardless of the count downward - there are a couple of variations - a Fibo ruler currently shows inside of 1.382 per the chart below on the hourly SP500. It 'can' break lower if it wants. It just hasn't yet.
ReplyDeletehttps://invst.ly/awzpk
TJ
The Dow's a 138.2 dead ringer for that potential expanded b wave as well.
ReplyDeleteIF that the correct count it would help explain some of the ambiguity. RUT Futures have a 1.618 relationship for the same potential b wave whilst for NQ the relationship is 1.72. DAX and CAC also have taken out the mid-May low, but only have 1.2 relationship or less. FTSE has managed to stay just above its mid-May low but its retrace back down is greater than 90%.
DeletePossibility of a 78% triangle, as follows. The count would bust above (c), and (e) must cross back up over the origin.
ReplyDeletehttps://invst.ly/aw-5x
TJ
right, then a "last" wave down fits with my thinking
DeleteAs an (e) wave, it went too far; last chance (c) wave, or higher.
DeletePotential triangle remained alive as of the cash close in this form.
Deletehttps://invst.ly/aw-o-
Otherwise, if the triangle busts upward, it suggests the down trend ended at the lows of the day, shortly before noon.
TJ
There is a potential triangle on the NQ, completing 15 minutes before the cash close. If so then it would fit with a regulation a-b-c on the DOW/SPX.
Delete