Wednesday, July 31, 2019

Five Waves Down to Minimum Retrace

The S&P500, the SPY and the ES completed five waves down, as suggested by the dotted declining trend lines in yesterday's post. For emphasis, this count is shown below.

SPY - 15 min - Five Waves Down as a Diagonal

In making the five-waves-down, the 'minimum' objective for the move lower was obtained. See chart below. Now it is a question of whether the small-degree diagonal, above, is an ending or a leading one.

ES E-Mini S&P500 Futures - 4 Hr - Five Waves Down to Minimum Target


The downward overlap on minuet (i) - from previous posts - was the first target for a down wave. You can see by the overlap that the target has been obtained. IF the diagonal is an ending one, then the down move is over as minuet (c) of minute ((b)). IF the diagonal is a leading one, then only the sub-minuet wave i, of minuet (c) is completed today. The secondary target is the approximate 2,900 level where the weekly up trend line is located, along with the 100-day SMA.

Any lower lows suggest the diagonal is leading. To invalidate a leading diagonal a new all-time high would be required. From strictly a time perspective, the waves would look and measure much more proportionately if there was indeed additional downside movement.

Remember, tomorrow is the first day of the new month, with potential inflows, and then Friday is the Payroll Employment Report.

Have an excellent start to your evening.
TraderJoe

37 comments:

  1. Thanks!
    Wave 5 of expanded diagonal is longer than all of (a), might this indicate that this was an ending diagonal?

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    Replies
    1. Or should we just focus on degres within (c) itself?

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    2. I don't 'quite' understand the mechanism, yet, but there is 'some way' in which the (c) wave of an expanded flat can become 2.62 x (a). That possibility or the negation of it should be watched for, as it is a common ratio in the EW books.

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    3. Yes question is under which cercumstances is (c) allowed to extend to 2.62? What’s the mechanism that regulates this? Offcourse 1, 2 or 3 of (c) have to be allowed to be bigger than (a) to make this possible, but what doesn’t make sence imho is if an even lower degree of subwaves is bigger than all of (a), like i, iii or v of 1, 3 or 5 as the current situation. (a) and (c) are still part of the same correction and degree, so intuition tells me that degree should be followed, at the same time corrections has to be allowed to morph into more complex structures, so maybe the degree mechanism isn’t working in the same way as in impulses? Maybe (a) and (c) isn’t that dependent on each other? Or one can reason that (a) and (c) is the motive waves within the correction and therefore have the same degree rules as 1, 3 and 5 within an impulse?
      I guess one needs to make computer studies on this...

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    4. @Erik, of course (a) and (c) are not dependent on each other. The (c) wave is a "third wave", and can grow by extension - like any 'third' wave. All that matters is that the first sub-wave of (c) is smaller than all of (a), which it is.

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  2. Does anybody know a good source for the rules and guidelines of expanding diagonals? The 5th wave was an expanding diagonal inside an expanding diagonal. I read somewhere, not sure where, that when an expanding diagonal appears, it is usually the first wave of a major down trend.

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    1. First of all, Neely doesn't even believe in them. Second of all, Prechter who has catalogued them doesn't know if they are 5-3-5-3-5 or 3-3-3-3-3, and states "the jury is still out". In short, they are so rare that we are still learning about them. Like all diagonals 'some' of them of 1 waves, but 'most' of them are A or C waves.

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    2. dont waste your time i have never seen one in 43 years

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    3. @jeff .. you just saw one above.

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    4. ET have shown several exp diagonals in different degrees on this blogg

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  3. This comment has been removed by the author.

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    1. After todays high in gold, its ugly, but longer term looks good.

      https://imgur.com/2WvmVGx

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    2. On the phone but I think 1412 would have been a channel hit on the above

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  4. more like one 2 one 2 and in wave 3

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    1. 'defintitely' not. The principle of wave 'degree' does not allow the second two - which you are claiming is of smaller degree - to be larger than the first two, which it is by measurement. And, it can not be 1, and a 'flat' 2 because then b which would be a smaller degree wave than 1 would be larger in points than 1. This is also prohibited by the definition of the term wave 'degree'.

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  5. Replies
    1. No, it is not an E-D to the high. In neither cash nor futures does your wave (iv) overlap wave (i) which is the primary characteristic of a diagonal. This item was checked long before I posted the (a), (b), (c) count, and it led to a correct prediction of the move lower, with the really quite exact timing. You are now looking in the "rear view mirror" and trying desperately to see something which isn't even there!

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  6. Thanks as always! Is the long waited market crash finally upon us?

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  7. Joe -

    What probability do you give to your primary count that suggests this is a (c) wave of ((b)) with one more impulse to come which likely takes us to new highs? Roughly speaking. Thanks

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  8. ET, do you have an updated graphic of the short term market structure at this juncture?

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  9. SP500 cash market is still inside of .c = .a; watching for triangle or diagonal as a sign of a top. Sideways right now.

    https://invst.ly/bhdxg

    TJ

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    Replies
    1. ..woa .. 38.2% busted .. looks like .c ended at the high

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    2. Tariff tweet .."Trump says US will impose 10% tariffs on $300 billion of Chinese goods starting September 1", source CNBC

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    3. ..yesterday's cash .b wave low exceeded lower.

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  10. so now we have a expanding diagonal with an 'abc' retrace?

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  11. Daily CL accelerating to the down side, below the 18 and 100 ma, and slow stoch. turning down. https://invst.ly/bhebx

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  12. I'm showing the tweet truncation like this, otherwise the retrace at the arrow is too larger and creates a degree violation.

    https://invst.ly/bhejh

    TJ

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    Replies
    1. There goes the FED low in the futures. Hey, these guys work well together!

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    2. There is a futures gap at 2,953.75; prices currently at ~2,956.

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    3. ..daily futures gap just filled.

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  13. Is this something to look closer into? A different terminal position for the leading diagonal? It would make the expanded diagonal an A or 1 wave instead, and help with degree considerations I believe? And also better sync between futures and cash index.

    https://invst.ly/bhfja
    https://invst.ly/bhfkz

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    Replies
    1. @Erik .. a minute ((b)) wave down can also be a FLAT-X-ZIGZAG, i.e. a complex without violating degrees. The X wave up (this morning) would be of larger degree as (a), down, and (b), up, and (c) down, and solve all the problems. No need to change counts.

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  14. Daily S&P 500 closed below the lower bb. https://invst.ly/bhfyq

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  15. A new post has been started for the next day.

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