The Dow and the S&P did gap downward today, and continued lower. Yesterday, we showed this potential head and shoulders topping pattern. It is possible to consider this pattern as 'activated' since prices filled the gap shown by the black circle on the left, and then only returned to the underside of the neck line.
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| DJIA Cash Index - Daily - Lower Low Day |
But, since the ES daily index stopped right on its lower daily Bollinger Band, with the daily slow stochastic in oversold territory, and our measurement showed today's price decline stopped at a 1.382 times the May 16th up wave, it is also possible to consider this more extended version as an 'almost equal' alternate.
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| DJIA Cash Index - Daily - Expanded Flat Potential |
Counting the internals of the down wave since May 16th provides little in the way of confidence in which form it will be. So, care is still needed, as is paying close attention to the overnight futures.
Have a very good start to your evening.
TraderJoe
There is a possible 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. I'd love to see the 1.382 expanded flat play out. But with 3 waves up off the low (or possibly a triangle in play) it's not the ideal start for a c wave, a diagonal not withstanding.
ReplyDeleteMartin Armstrong says the following... "DOW rallied since late December but not in breakout mode as energy was declining as rally progressed. It also back tested its former uptrend line which is a bearish indication. We now have two weekly sell signals at 25372 and 25207 (DOW closed today at 25126). If the DOW closes the week out below these levels it becomes possible to retest the 23000 area going into June. We still see an important turning point going into summer." His computer has elected July as a "panic" month. This is definition as a large move in one direction or large moves in both directions taking out the high and low of the previous period (i.e. June).
ReplyDeleteInterestingly the ET's head and shoulders pattern on the DOW measures down into the 23000s. If that plays out it would likely be the 3rd wave down. That would leave the 4th wave for the "panic" month of July. Could only see "large moves" associated with a 4th wave if it was part of a diagonal.
I think the stats on H & S completing to the technical price target is less than 50%.
ReplyDeleteTodd I am not an avid follower of head and shoulders patterns but FWIW here's another analyst's current interpretation of the H & S in question:
Deletehttps://imgur.com/H2PQkZK
Thanks Billy
DeleteS&P500 cash gapped up, and has a 1.618 wave to the upside. Can go higher. Previous wave ended before noon yesterday. Chart to follow.
ReplyDeleteChart below, with 1.618 extension;
Deletehttps://invst.ly/ax97g
TJ
There is now downward overlap; only three waves up, so far.
DeleteMarket pulled back from the expected strong resistance at the 25200/2800 area at the first attempt. We've obviously had a degree change as this rebound is the biggest since the nosedive from 2840. 3 waves up so far and the DOW didn't make it back to the 38.2. I am thinking perhaps those 3 waves are only a larger A. The pullback a short while ago was shorter than yesterday's b wave pullback. So perhaps that was "a of B" now in "b of B". If there's a "c of B" it must try to hold 2777-78 or the risk is another test of 2760. My present preference is weakness later today for the conclusion of the B wave and higher tomorrow for the C wave. Then more weakness next week.
DeletePerhaps "b of B" just completed. If so, the retrace on the DOW was greater than 90% suggesting a flat and a retest of today's lows but no more near term bearish than that.
Deletehttps://www.zerohedge.com/s3/files/inline-images/spy%201.618.png?itok=7hgp7Qua
ReplyDeleteHey TJ, I'm sure everyone here appreciates your updates. I certainly do. I noticed you've avoided counts on your charts this week (so far). Is that deliberate because you're not sure what the count is?
ReplyDeletePlease see tomorrow's update.
DeleteVery difficult "no man's land" a-b-c up so far. Need to get above c to have a chance at a diagonal, and below the last down fractal to extend a downward wave. Remember, c = 1.618 x a in the chart.
ReplyDeletehttps://invst.ly/axalz
TJ
Daily cash S&P 500 could be finding resistance at the 100 ma. Second day slow stoch. below 20 and no divergence on AO yet.
ReplyDeletehttps://invst.ly/axa-e
Price just took out the noon fractal low.
ReplyDeleteRussell 2000 just took out yesterday's daily low.
DeleteNow S&P500 cash has upward overlap, and another a-b-c, but this one downward. Feels like a larger triangle or diagonal. Downward measurement is just over 62%.
ReplyDeletehttps://invst.ly/axbdr
TJ
No decision at the end of the day.. just compression.
Delete