Unless you were able to follow the comments from yesterday, you might not know that last night was "burning the mid-night oil" when tariffs were announced on Mexico. The problem became that waves were now becoming too long in time, and in price, with smaller and smaller retracements. Here's the ES 4-Hr chart, which is being used so that it contains prices from all-hours trading.
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| ES E-Mini S&P500 Futures - 4 Hr - Nested 1-2's? |
This chart was actually developed and posted last night. Because the next wave down from 2 / B is actually longer in time, but not yet in price, than the first wave down as 1 / A, then these waves must be of the same degree. Of that there is no doubt, and I wrote about that in yesterday's post.
But, now we see at red ii, that the wave is not longer in time than the prior blue (ii) - as might be expected of a fourth wave - if this were a roughly equal C wave. And that is a problem. A big one. Therefore, until we know more the primary count is 1-2-3 in the downward direction. It is 'possible' a 1.618 wave will form downward, and Monday could see additional price slide. The alternate must become and remain an A-B-C count lower. Note: The degrees posted on this chart are simply for 'relative' wave counting information. Actual degree labeling is pending evaluation.
Prices are still in the channel, above, and the daily MACD is still below the zero line, and the daily Elliott Wave Oscillator does not have a divergence. The Russell 2000 has had it's 18-day SMA cross lower under the 100-day SMA in a bear cross.
On the daily chart, ES prices are still pushing down on the daily lower Bollinger Band. The NQ and ES futures have their daily slow stochastic embedded to the downside. The Russell's slow stochastic has been embedded for several days now. Crude Oil fell more than another $3 today, and that is signalling some kind of slow down in the economy, too.
The message here is that while there may be pull-backs and backing-and-filling, all it may take to send stocks sliding is a lack of buyers: a so-called buyer's strike.
So, as always, take care, be flexible and be patient.
Have a good start to your evening and to your weekend.
TraderJoe
Joe -
ReplyDeleteThanks for the post! Using a standard wave path where w3=w1x1.618,w1=w5, and starting with the possible i,ii (red) I constructed the rest of (iii). Using standard retrace for (iv), then (v)=(i), this builds out 3. Then standard retrace to 4. At this point, I run into trouble with a 2-4 TL that doesnt cut through part of 3. Its the price action following 2 that runs along the top of the channel. Do you find the same issue? Perhaps Im missing something.
Thanks!! (if time permits)
too nested perhaps with wave 2 not retrac9ng enough or 2.618 3rd wave coming.
DeleteI believe the deeper w3, the worse it gets, as 4 will be lower yet. It looks like 3 would need to end around 1=3 to allow 4 to move high enough to eliminate the issue. With parity between 1 and 3, this could suggest an extended 5 to "catch up ground" to the downside.
Deletewhy a 2_4 trendline not the 0-2
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ReplyDeleteAdd'l note. If 1=3 to allow 2-4 to clear 3, 4 will most likely overlap anyway, suggesting 5-3-5-3-5 leading diagonal (if Im not mistaken).
ReplyDeleteBasis ES.
DeleteIs it not a problem that red i (of lower degree) is longer then blue i that started the decline?
ReplyDeleteKAVIAAR
DeleteBlue (i) begins at 2/B, and thus is longer than red i I believe, if I'm understanding your question.
i mean the other blue (i), the one that started the decline. it should be of a higher degree then red (i). the problem is that the latter is a bigger decline.
Deletei wonder if this is a problem for this count. if so, it is probably an abc down with red i = iii of c
sincerely
No. It's is not a problem for red i, because you have to take the degrees in order. Once 1 finishes, that's it. Then 2 starts, and 2 ends.
DeleteNow in the new wave (i) just has to be shorter than 1, and red i, shorter than the new (i). That is the way that third waves grow larger by extension.
The direction of the equity markets is clearly down at the present time. However, the ambiguity of a clear down count on Wall Street still plagues us. European indices are equally ambiguous, if not more so. So let's go back to a diagonal down count which may allay most of our problems whilst conjuring up some interesting possibilities for the months ahead.
ReplyDeleteWhat if the first wave down to 2801.43/25222.57 was actually an a-b-c for Wave 1. Then if we change blue (i) to a of 3 and blue (ii) to b of 3 the market is free to make a sizeable drop for c of 3 as forewarned by the head and shoulders pattern and Armstrong.
Wave 4 of the diagonal would then have to make an impressive rally back upstairs to clip the lows of Wave 1 at 2801.43/25222.57. Remember Armstrong's computer is predicting July to be a "panic" month and that certainly could be a buying panic for Wave 4 of the diagonal.
Wave 5 of course would then have to make fresh lows for the move and could take an indeterminable of time doing so. Here I can add two items of interest. Firstly, the world economy (particularly China) is due to bottom out in January 2020 and generally stocks move in advance of economic peaks and troughs. Secondly, this Wave 4 on the DAX is about to start its 71st week. Wave 2 of the same degree took 87 weeks. If Wave 4 is to at least equal Wave 2 in terms of time the DAX correction should not complete before the week starting 21 September 2019.
Will upload a chart for you shortly.
Deletehttps://imgur.com/Wg2jVXK
Deletehttps://imgur.com/BgFXIDy
https://imgur.com/mV4Hu36
Gap down on Monday looking like a reasonable proposition. Weekend trading at IG has the DOW presently down over 100 points (low for the day so far was 170).
Deletehttps://www.ig.com/uk/weekend-trading
Billy, you are spending a lot of time and effort for questionable results. Wave three in a contracting diagonal is usually shorter in "time" and never longer in price than wave one. In the ES your third wave would be longer in 'time'. In the Russell futures, a third wave is 'already' longer in price - violating a key rule for the Russell.
DeleteET I'm not sure I'm following you. I'm not proposing any contracting diagonal.
DeleteBilly, please see the first wave in your first chart .. can not have a flat as a component of a diagonal (waves 1-5).
DeleteCan not have any flats as a main leg of a diagonal, by EW 'rule'. 1,3,5 and 2,4 in a diagonal 'must' all be zigzags. Only the b leg components of the internal zigzags would be allowed to be flats. So, based on what you have presented, you leave me confused.
Okay I think I'm with you now. Thanks for pointing that out. See if I get this right: If we are in a c wave downwards, and cannot find an a-b-c count for wave 1 of c without the use of a flat, a diagonal is off the table and the c wave MUST still be composed of 5 waves.
DeleteRight.
DeleteJust throwing this out as a possible:
ReplyDeleteBuilding out 5 waves (using common w4 retraces and w5s = w1s) basis futures, this takes us down around 2560 area. This is .618 retrace of our B wave. If this C leg takes more time than A took, it could qualify as a C-failure flat. Its not uncommon to see these in diagonal form as a terminating wave. We need to reach later part of July to be longer in time than A. If any of the remaining legs were to extend, this would aid in reaching/exceeding the .618 retrace level. Just thought this might be something to be aware of.
Can not have any flats as a main leg of a diagonal, by EW 'rule'. 1,3,5 and 2,4 in a diagonal 'must' all be zigzags. Only the b leg components of the internal zigzags would be allowed to be flats. So, based on what you have presented, you leave me confused.
DeleteI think tacharts may be referring to the c wave as a diagonal component of the a-b-c flat that started at 2940.91 in September 2018 with the "a" leg concluding in December 2018 and the "b" leg concluding at the recent ATH.
DeleteBilly -
DeleteI am indeed. Thanks.
What do you think about this potential ending diagonal on the Canadian stock market index?? Price and time is valid and (1) did also go over previous ATH, the B on the (5) is almost not visible on the monthly chart though:
ReplyDeletehttps://invst.ly/axv6m
Australian index very weak since 09 lows but had a great relative run up 03-08.
DeleteWhy did this index just tag the 90% level? Does it want to do a flat? Seems like the recent Dec bull leg is very important..and this set up is actually valid on more indices and sectors.
https://invst.ly/axv7r
Dax index. Down leg too deep for a B wave, and overlap prevents impuls, so have to be an expanded diagonal or WXY down? (2) could also be (4)?
Deletehttps://invst.ly/axv8l
TJ is it ok to post/discuss other indices or does it just confuse people?
DeleteHi, Joe. I'd appreciate if you look at this chart for me. I want to make sure I understand this correct, "with a being more in time than A this allows b to more in price and time than A." Would your count be the same?
ReplyDeletehttps://imgur.com/k5BPaKZ
the a and b do not belong in wave C. that needs a 5 wave move. it must be 5 waves because I believe I can make out an expanding diagonal in A if I took time frame down. if expanding diagonal does not exist in A. then a and b stay in, however, A B C is now W X Y. That was in error.
DeleteGerald. I have said many times on here my role is not to review everyone's individual wave counts. That would take more time than it is worth and might be discouraging for some. My role is to count as a role-model for what good counts look like.
DeleteThen, too, working too quickly on someone's count might cause me to make an error - and actually do more harm than good. So, understand, I really prefer not to do this.
From your count, it is really clear to me, that you need to read up on the basics, and better internalize them. If A was in five waves, as you said above, then Wave C must be in five waves. Therefore, your a, b of C are actually the d & e of the triangle. This is because b of C overlaps the A wave again. And C is the simple 'thrust' out of the triangle.
Again, please do not ask me to review counts as a regular routine - only if there is something in particular that needs to be learned.
Thanks for the help, Joe. Did not think anything of that overlap of A afer where I had e.
DeleteIf you asked the blog to label it I wonder how many would have gone the way i did?
Enjoy the remainder of your weekend.
Joe,
ReplyDeleteiii (not labeled) of first blue (iii)
is bigger than first blue (i)
This is similar type violation I pointed out in October count...
Waves are getting bigger as degrees are getting smaller off the top. I see you labeled blue (ii) not at the local high as failed flat. Given waves getting bigger i think the count has to be reevaluated.
I think we can count 5 down off the top or will be able to with 1 new low.
Really, really depends where iii ended. How long is it exactly, since it is only a few pips off? Was there an expanded flat iv, involved? Too hard to tell. And see the comment in response to the 1:29 PM comment, below.
DeleteAnd I showed in this chart, the cash definitely does not have this problem.
DeleteLink to 1.618 Extension Post
TJ
i see. either accelerate downward soon because 1s and 2s are smaller and smaller running out of time and space, or upward correction of unknown degree. the sentiment charts you have posted in past may be useful now. thanks
Deletesomething like this
ReplyDeletehttps://imgur.com/KPo54Gk
Then your second supposed sub-wave (a) is larger than all of 1?
DeleteTJ
i think that is acceptable in expanding structure. a5>a3>a1 as are the c waves.
Delete..and yet your 1 & 3 are 'primarily' in a parallel, and don't "seem" to be expanding waves? Oh, yes, there is 'some' expansion of the trend lines, but one really has to 'push' it to get them to be seen as expanding? That would suggest an expanding diagonal does not have 'the right look'.
Deletemeasurements yes, looks : NO on several measures. The high probability call is for accelleration downward but its not a sure thing which is why i am proposing this alternative.
DeleteCould be wrong on this, but consider if the red i is blue (iii), and now completing blue (v). As long a (v)<(iii), this would measure out similar to an extended wave (i), where the remaining waves reach .618-1.00 the length of (i). This completed wave 3 could come in right around 1=3 area with (v)<(iii). Just a thought.
ReplyDeleteBoth (ii) and (iv) would have shallow retraces (around .382) as is common with these, and the wave would have a wedge shape.
DeleteClearly, I did consider it given the note on the chart and in the text, that "time wise" red ii, as a blue (iv), would be 'shorter in time' than blue (ii). That is not the 'usual' order of things. If that's the way it pans out, then it is C = A. It really causes me to scratch my head and wonder if people try to read my posts with understanding.
DeleteOn a different note (possibly related), the last two Heikin Ashi candles (4hr) are showing upper wicks. Indication of a slowing, possible pause/trend change in the near future. (basis the cfd contract).
ReplyDeleteta
Deleteare you trying to make a case for the resimption of a bull market from 2008 or are you trying to refute very bearish counts. im not sure where you are coming from. thanks
marc-
DeleteActually, neither of those. I was simply trying to provide a possible explanation (extended 1st wave and its characteristics) to fit in with Joe's assertion of being an ABC. I did read the post, but I didnt see a mention of an extended 1st wave (specifically), thus my post above. The Heikin Ashi was simply an observation that might tie into a turn around the A=C area.
If we were to form a diagonal down, this could tie into a possible C-failure flat (at the .618 or lower), and signal a resumption of the uptrend. This is simply a possibility I'm following.
Next big test of support in the 2650 area SPX. It's the target of the head and shoulders, the 50% retrace for the rally since Christmas, as well as the target for a C wave of 1.618x magnitude from the 2792 high. Plus, you can see the prior bounces from this level last year.
ReplyDeleteWave D in an expanding triangle should not be "shorter in time" than wave C. Expanding triangles expand in time as well as price.
DeleteMaybe gap down and follow through 23/5 is breakout of triangle..so triangle starts 9/5 or 13/5, works on both dow and spx I believe
ReplyDeletewatch for move too big off bottom for working count
ReplyDeleteplus overlap potential
DeleteHave been watching for that as well after move up from .786 retrace of early morning rally.
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DeletePlease correct me if I'm wrong but I think I am correct in saying we have a potential 1-2, (i)-(ii), i-ii count on our hands at the present moment if this bounce is correcting the move down from 2799.00 made last Thursday.
ReplyDeleteThe two larger legs of the decline have measured 152.70 pts and 154.03 pts so this would satisfy those looking for only an a-b-c correction with waves a & c being virtually equal.
We have seemed to have ruled out the likelihood of a diagonal for a downward "c wave" count on the evidence within the decline so far. Therefore the most likely options at this stage is either the bottom is soon to fall out of the market or the "b wave" was either not a "b wave" or is incomplete. Not too sure what else would be a realistic option at the present juncture.
As the move down from red ii to apparent red iii is shorter than red i, this could also allow for a red v<iii. This would be a 5 wave move with w i being the longest. Should form a wedge (falling) with no overlap. This is simply a possibility as long as v<iii (if I'm thinking correctly).
DeleteBilly - if we start to accelerate down, I like your one/twos.
Deletetacharts, I am suggesting the "apparent red iii" is possibly subdividing and perhaps is a long, long way from completion.
DeleteThat is a lot of nested 1-2s in this timeframe. I can't recall anything like that in the last couple years.
DeleteDaily S&P 500 slow stoch. embedded and 18ma approaching the 100ma.
ReplyDeletehttps://invst.ly/ay8s3
Possible support on the S&P 500 might be around 2700 where the weekly 100ma and the lower bb are coming together. The slow stoch. is still pointing down.
ReplyDeletehttps://invst.ly/ay92o
S&P500 new low of day (LOD).
ReplyDeleteFor the moment, futures have held at the .886 retrace (from overnight low to high today). Precarious.
ReplyDeleteNQ appears the most suggestive that the low for this move is incomplete. It is the only futures index of the majors that has made a fresh low in the last hour by using only 3 waves in the process. The 3 waves down look a bit excessive in size to be considered an expanded "b wave" at over 2 times the corresponding "a wave".
ReplyDeleteWould like to see an overlap of 29th low.
ReplyDeleteJoe, all the action n the ndx. I'm having a bit of issues with wave degrees in the last few waves - getting too big of move - but im being guided by 1.618 extensions. If you can take a look it would be excellent. No worries.
ReplyDeleteES new low of day.
ReplyDeleteYeah, that's look like a third vawe as you analysed. Thanks Joe
DeleteThank you Joe
DeleteThank you Joe.
ReplyDeleteDuring the weekend I visited many blogs, your analysis and predicted the market BSET!!!
Can't wait for your new post, and as always thank you in advance!
Thanks and welcome David.
DeleteA new post has been started for the next day.
ReplyDelete