Wednesday, September 25, 2019

Back to the 'Line in the Sand'

U.S. Debt Clock: $22.62 Trillion
ES Daily Candle: Lower High, Lower Low, Higher Close: Yin-Yang Candle
Market Posture: Neutral-to-negative and Probing Waves
Daily Swing Line: Down (Lower High, Lower Low)
Daily Bias: Neutral (Settle On 18-day SMA)

Overnight the ES futures were roughly unchanged within a range, and traded lower as the market opened - making a lower low day. From the 10 AM candle forward, prices traded higher in a wave we were able to count as a five-wave impulse, upward (See yesterday's comments, if interested).

ES Futures - Daily - Higher Close

Yesterday, we said that "fighting a battle at the 18-day SMA was always a possibility." Today was just that - a return to the 18-day SMA and a poke above it. As a result, we can now show the best alternate, IF the market has found an additional layer of support at today's low.

ES Futures - Daily - Alternate for Z

The second level of potential support is shown by the higher of the two dotted orange lines. If the high of yesterday's outside day down is exceeded, then the focus would turn to this second chart. If, instead, the market decides to put in a good gap down - and follows through - then the count on the first chart remains. Part of the reason we show this Z wave is that the SPY did make a new all-time-high in that ETF in mid-September. An additional wave up could close the gaps at the highs in the cash S&P500.

The market remains a very sloppy and news-driven affair. And wave counting remains difficult in that environment. It can be trying, and yet a flexible and calm approach can help one see the legitimate ruled-based alternates until a clear winner emerges.

Have a good start to your evening.
TraderJoe

21 comments:

  1. As usual thanks. Charts say a thousand words

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  2. With new low in gold this am we have a impulse down.

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  3. QQQ with the false break down back in Aug. This might be a wrap sooner than we think.

    https://finviz.com/chart.ashx?t=QQQ&ty=c&ta=1&p=d&s=l

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  4. We are consolidating at a prior support/resistance shelf and in my view that is short term bullish. Initial waves down at the degree of trend we are expecting do not pause at prior S/R price points. In fact one of the clearest signs we have a high degree trend change is the demolition of multiple S/R price points...lots of gaps below...

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  5. Currently looking for a likely double-zigzag down to 62 - 78%; and will have to monitor if that is attained.

    https://invst.ly/dsgpf

    TJ

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    Replies
    1. There's a lower low to 62%, plus. The market must now prove itself on the upside. If it can't do it, then "Houston, we have a problem."

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    2. ..first signs of life on the upside would be the upward overlap of wave ((W)), and a break of the upper descending channel line, and a successful back test. Barring that, a downward count will be looked at.

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    3. ..for now, keep in mind that the ((Y)) wave is shorter than the ((W)) wave.

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    4. Now there is an upward break of the short term down channel and an overlap on wave ((W)).

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    5. Let's see if the market can complete an expanding diagonal off of the low, as there is downward overlap already. If so, then ((5)) 'should' become longer than ((3)) in price, and maybe time.

      https://invst.ly/dtx-u

      TJ

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    6. ..there's a local new higher high.. an expanding diagonal would target 2,983.50 or higher.

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    7. ..there is ES 2,983.50; the diagonal in the futures is confirmed.

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    8. ..there is also 2,983.50 in cash, also confirming a diagonal as below.

      https://invst.ly/du6mq

      TJ

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  6. Another new high, do we need to watch as this corrective move turned into potential zig / zag?

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    Replies
    1. ..no; still part of ((5)) which is good to 1.618 x ((3)) or 2,992; all three-wave sequences; hard to show in ((1)).

      https://invst.ly/duv8d

      TJ

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  7. or third wave up starting more likely

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  8. There's a break of the rising lower diagonal trend line.

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    Replies
    1. Here's the updated chart, with the break of the rising lower diagonal trend line.

      https://invst.ly/duzgk

      TJ

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

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