S&P500 Candle: Lower High, Lower Low: Trend Candle
Market Posture: Neutral-to-Negative and Probing Waves
Swing Line: Neutral (Higher High, Lower Low)
Bias: Down
If FED Chairman Powell's speech at Jackson Hole was meant to inspire today, it certainly didn't. Steve Leisman from CNBC almost fell asleep summarizing it. That, and some announced retaliation by China in terms of tariffs, sent the market reeling today. Price broke through the 100-day SMA and then the 18-day SMA and kept on going. In doing so, prices filled the futures gap (black circle at the arrow) we said could fill relatively quickly because futures gaps are just not as persistent as cash gaps. We will remove further reference to that gap from future charts.
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| ES - Daily - Lower Daily Low |
While the swing line is confused, today we eliminated the alternate labels on the chart. A more than 2.618 wave was made in the downward direction on the cash 15-minute chart, and that means we should err on the side of a third wave. The bias of price is to the downside again, being below the moving averages. Further, if downside movement continues, the lower Bollinger Band would be a good initial target for the move. The moving averages have crossed over - as we noted yesterday - and today price is confirming the bear cross with lower prices.
The w-x-y failed double zigzag also counts like a good example of a second wave. It found a barrier at the 62% retracement and simply was not able to penetrate it. It tried hard even into last night, still reflecting the caution in the count, but it could not do it. The second wave (ii) is also nicely longer in time than (i), and the Bollinger Bands are now crashing down below the prior high - which should give the bulls some pause. The daily slow stochastic was in over-bought territory and, although it has not rolled over as of the futures settlement, if it does, it would likely confirm the lower daily high.
Any price movement below the x wave would also provide more confirmation of a top. One final reminder: Art Cashin likes to say, "stocks rarely bottom on a Friday".
Have a good start to the weekend.
TraderJoe
Thanks ET. Masterful job. My bias didn't work out this week but this is what I'm working off presently until the market tells me otherwise. Until new lows for the move are made I wouldn't like to see ES much over 2860 on Monday to remain confident on this count and definitely not over 2870.
ReplyDeletehttps://imgur.com/3N7TsZp
I thought higher 'b' waves (such as your b of B at ~2943) are not allowed in triangles and diagonals. I could be wrong but maybe others can confirm.
DeleteTJ "b of B" is not part of a triangle or diagonal.
Deleteyep I didn't read it properly. This is basically Joe's count and what I'm also tracking to. The iii/C should target the 1.61 extension. I think it morphs into an impulse from there and continues lower through a wave iv and v with ultimate target being in the 2100-2200 region. This is what Avi and team is also tracking to.
Delete"Steve Leisman from CNBC almost fell asleep summarizing it." hahaha
ReplyDeleteThanks Joe. Have a good weekend.
Love that you are Quoting Art Cashin
ReplyDeleteR.N. Elliott was a brilliant man who demonstrated the validity of EWT by actually making several remarkable market predictions. One critical way a postulate moves from "theory' to "law" is that it must demonstrate predictive value, hence the name of Elliott's famous work. Having said that, I completely understand why some people look on the method with some skepticism. I actually saw a count that designates yesterday's decline as part of a minute second wave correction inside an unfolding impulsive wave up. This kind of "analysis" poses quite a problem with folk who may not be familiar with EWT, but reasonably informed about other technical indicators in the market. I frankly find it absolutely stunning that folk considered "expert" would actually publish such a count. Something there simply does not add up...
ReplyDelete