I wrote a previous article a few days ago for a very specific reason. I wanted to acclimate readers to "out-sized B" waves. The article I'm referring to is at this LINK. So, we're going to use this article to try to answer the question, "Where did this Dog Come From?".
No, actually, I love dogs, but we have a whippy market which some have claimed is impulsing. I have avoided that tendency for a long time because of the frequent 0 - 2 trend line breaks that I have written about before. So, when we scan a number of beloved market "high flyers", we notice that, while several are above last year's high, several are still below their October, 2018 levels. Here's the partial list I looked at.
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| High Flyers - Daily - Eight Block |
Look through the names, you will see that a few of them are slightly above their Oct, 2018 highs. But some are still below. Yes, charts of GOOG and INTC are correct. Hey, no worries right. Well, the marginal new high seem to represent the marginal new highs the market has already had, do they not? Um. No. Have a look at this chart of venerable Microsoft Corporation (MSFT).
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| MSFT - Daily - Island? |
If you think about Microsoft, it is one of the few stocks that is in all these indexes: DOW, S&P500, NASDAQ 100. One stock can sure tilt a lot of market averages. Earnings are roughly $4.25, so one is paying nearly 29x earnings for this guy. And what has this performance been due to? Folks, this company is now a "utility company". They have to operate their ever expanding Azure server farm, and keep updating the public copies of the signature Microsoft Windows operating system "for free". Yep. Now, I'm not saying they don't have a great revenue stream on the business side, currently. But, they are a failed hardware company and people are buying fewer and fewer PC's to put their operating system on. If I could, I would personally switch to Linux on all my PC's, but several programs just don't operate without Windows - yet.
Regardless of the fundamentals, this one stock, and one other, has been almost single-handedly a driver of market averages. And part of the reason is STOCK BUYBACKS. Mr. Softy has been a leader in this category. In fact, stock buy backs in general surged to an all-time record in 2018 after the greatly ill-advised tax cuts. If you didn't get as big of a refund this year, guess where part of it went to? You guessed it, the deep coffers of MSFT.
Oh yes. There is another stock you might want to check into. And that is Disney. Have a look at that stock price. I'll let you figure out the fundamentals.
In case you missed it earlier in the comments section, here is my latest count on the Dow Jones Industrial Average futures.
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| Dow (YM) Futures - Daily - Outside Day Down |
This count was posted before the larger afternoon slide, and now there is a yet another bearish engulfing candle to the down side. And, at the highest high, it can represent a "key reversal day". Still no other significant lows were exceeded on this index, and down-side follow-through would be needed to claim an interim or longer term high in place.
Have a good start to your evening.
TraderJoe
Highs in TJ
ReplyDeleteAfter the triangle, gold did go north but truncated and fell below e wave. With that and the daily /dx hammer this could get interesting.
ReplyDeleteI know you are intently following GOLD. The count is a real bear at the moment. This is the best I can currently come up with - based on where the 'fives' are.
Deletehttps://invst.ly/aoey0
The up count is at the bottom. Keep in mind a Leading Diagonal A wave down 'could' be in play on the 4-Hr chart.
TJ
Thanks so much for the response. This is my short term thoughts.
Deletehttps://imgur.com/G8MpxwI
Here is long term thoughts.
Deletehttps://imgur.com/InLmlrO
@BBR .. watch those wave degrees on the long term count. I think the second i measures longer than the first 1. The way around that is with a contracting diagonal C wave. If it doesn't measure longer, then you are OK.
DeleteThx, second longer in time, not price. Not ideal, but looks like it was waiting for Fed day.
Delete@BBR .. I think with this morning's lower low there is a valid Leading Diagonal lower. And it could go lower. It would be the 'a' wave of E of a triangle.
DeleteNotice that a count like this 'plays nicely' with the divergences in the EWO, which should appear on anyone's charts - in my view.
Deletehttps://invst.ly/aoonc
TJ
Thx, very interesting in here. I wish those waves if part of an diagonal were more chunky.
DeleteCould the move from the Feb high be a 3 wave zig zag consisting of an impulse down, triple zig zag, and now finishing an ending diagonal?
DeleteThat is the question. That first move down in February looks impulsive to me on a 2hr chart for the right amount of candles and takes out two previous lows.
DeleteMS is putting all their eggs into cloud now. I can see the home market completely fading eventually. But yes they are lucky to have a massive business presence. That part is hard to see ever changing.
ReplyDeleteWell, the IT folks really love the Linux servers. It's primary just the applications (Office, etc.) that would need 'empowerment'.
DeleteTremendous high profit margins in cloud business.
Delete@Bill, agree! ..until people decide they no longer want to 'rent'.
DeleteMicrosoft is goinf to put Linux kernel in his software https://www.wired.it/gadget/computer/2019/05/07/microsoft-kernel-linux-windows-10/... sorry it's italian
DeletePossible truncated expanding diagonal on $SPX ((v) is 2 points less than (iii))? Here is an article explaining expanding diagonals. Note the second paragraph under Gold. The sum of waves 1-3 are equal to sum of waves 2-5. And they are within .11!!
ReplyDeletehttps://www.wavetrack.com/tutorials/elliott-wave-expanding-diagonal-patterns.html
Hourly chart link:
https://imgur.com/nQk4GHv
In a triple zigzag, can the Y wave be shorter in price and time than w and z?
ReplyDeleteIf you meant to say 'triple', and it sounds like you did, then, not likely. A triple zigzag often has the same form as a contracting diagonal when it is not in an channel. Therefore, Y can be shorter than W, but then Z must be shorter than Y. That is still a valid possibility for this market until it is no longer (that is until there is a degree violation to the down side).
DeleteThanks for the confirmation. That's what I suspected.
DeleteLOVE LOVE LOVE to see you supporting your count with charts of individual leading stocks.
ReplyDeleteJoe and jwtx12:
ReplyDeleteI've just gotten back to review, and appears I owe Joe an apology! I misread the (1)(2), 1,2, thinking it was heading up. I don't subscribe to EWI so didn't have their assessment, only going by how it was described. Totally my misread!
I'm glad that Joe has interacted with EWI.
It would be nice to see a longer term chart to clarify exactly where we are, and how the move up "fits in" with some anticipated path. Updating the monthly, and seeing how our current structure relates would be very helpful.
Again, my apologies for the misread!! The other issues (thinking for one's self, and seeking answers to questions, I believe are still valid, regardless of what site one is following.)
jwtx12: thanks for your description of the EWI assessment, and for pointing out my error in interpreting it! I apparently was giving them way more credit than they deserved, lol.
Thanks again.
no problem. I don't have the knowledge/experience to contribute to the daily conversation. glad I could help in some small way instead of just being a consumer
Deleteyes ta. thanks.
DeleteThe DOW just made a clean five-waves-down to a new low. Chart to follow.
ReplyDeleteChart below with 3 = 2.618 x 1
Deletehttps://invst.ly/aop92
TJ
But the DOW made its high on 4/23.
DeleteHi Joe, I see that you've counted the decline on the DOW as a completed impulse. I see 7 waves (not 9). What am I missing? (SEE LINK FOR IMAGE)
Deletehttps://ibb.co/8xjnhbj
As far as I can tell, your 4 is iv of 3, a tiny i, and a long iii and a non-overlapping and triangular ivth wave (your 4) of iii down.
Delete@Bob, the 4/23 high is wave (iii) of the diagonal, and 5/1 is the failed fifth (v) of the diagonal C wave of ((y)). There is nothing impulsive lower until 5/1. Therefore, I assume a truncated fifth wave at the high. So, please don't start counting downward from the 'wrong' place. Elliott always spoke of the 'nominal' high of the move and the 'orthodox' high of the move.
DeleteThanks for responding Joe, BUT based on the image in the link and based on your rules and guidlines, is it strange that we have made new lows (no divergence) on the AO & EWO on your 5th wave?
Deletehttps://ibb.co/qs8m7Hg
KS
DeleteJust a thought. If you use the base channel (0-1-2), you'll see the move down from your 2 hitting lower channel, then small rally to midline. Perhaps this is a possible 1,2, thus the 3rd wave is extended, and this is the start of its count. That would account for the lowest AO trough at your 5. Joe can clarify.
dont know what discussion is about. clean 5 waves and 2.618 on joes chart.
Delete@KS .. the AO and the Elliott Wave Oscillator are exactly the same indicator, but the AO colors the bars as Bill Williams would. The divergence in this case appears to be a Type 2 divergence in this case: much lower price with approximately the same indicator level. In any event, this is a very short term chart which I have cautioned against (five minutes or less). The conclusion one might draw depending upon the extent of the retrace (38.2% or less) might be that it is an x1, or an xA, where 3 or C would be shorter. Let's see how it goes.
DeleteThanks Joe! Btw, when you analyze stocks like MSFT, AAPL etc, do you study the INTRADAY charts with extended hours or without? I ask because the discrepancies between the 2 types are quite noticeable.
Delete@KS, volume 'rules'.
DeleteA bull corrective C wave, or a bear impulse?
ReplyDeleteGood question Kevin. Based on Joe's count for the DOW, i was leaning toward a big bear impulse starting, but RUT does not look impulsive down. I am now tending to think this two day impulse just finished some flat 4th wave.
DeleteGuys it is hard to call every wave, and hard to keep up with all the diverse interests people have in trading. It would be more than a full time job. But for those following the RUT, I would offer this hourly look-see on the futures. If a potential diagonal plays out, what came AFTER it would be critical.
Deletehttps://invst.ly/aore8
TJ
Thanks Joe. I usually follow RUT cash, but your possible count on the futures, as well as all of the charts that you post are very valuable.
Deletecouldnt it be finished diagonal at a or iii?
Delete@marc; absolutely not because the middle wave is not longer by measurement but then the last wave would be longer.
Deleteim looking at expanding where first a and b are 1 and 2
Deletebut then 3 would take too little time i suppose...
Delete@marc; gyecch .. ok, so not totally impossible but much less likely. The prime reason is that usually on the EWO you will see wave 4 of an expanding diagonal retrace to the 0 line and well above it. A key signature of an 'Expanding' Diagonal is the EWO on wave 4 travels well above that for wave 2. That's what provides the expanding appearance and helps avoid the mis-calls.
DeleteYou'd have to show that count. I'm not putting more effort into it.
@marc; that too! (too short of time for wave three).
DeleteLooks like RUT made the "a" wave up at the end of the session. Five clear waves up from the low with a longer fourth wave, in time.
DeleteThe DOW has exceeded the lengths of wave (iv), (ii), and b with just a perfect signature for an Ending Contracting Diagonal on the 4-HR futures chart.
ReplyDeletehttps://invst.ly/aorj0
Further, we are 'starting' to see the expected post-pattern behavior of a rapid drop out of the diagonal. If for some reason (Trade News, etc.) there is another 'stick save', then my count would be we are making another X wave, not a fourth wave.
TJ
A new post has been started for the next day.
ReplyDelete