Wednesday, October 30, 2019

Japanification (No Inflation = No Hikes)

U.S. Debt Clock: $22.93 Trillion; prev $22.93
ES Daily Candle: Higher High, Lower Low, Higher Close: Outside Candle Up
Market Posture: Neutral and Probing
Daily Swing Line: Up (Higher High, Higher Low)
Daily Bias: Up (Settle Above 18-day SMA)

Today, the FED lowered short term rates, the quarter-point, as expected. But, with the look of a scared puppy-dog, Chair Powell said this rate is "appropriate", and they removed some words that were previously signalling more rate cuts - meaning something like, "this is it, for now".  But, then in the following news conference he answered a question stating (paraphrase), "if inflation does not increase, then there will be no rate hikes". This essentially meant, "we're on hold for now, but don't expect to normalize the balance sheet, or get any rate hikes without inflation". Wow. Welcome to Japan, Inc, USA.

Long before the FED announcement and meeting, and in continuation of the work done yesterday, we published a partial chart in the comments indicating that The Eight Fold Method was showing that an impulse upward on the hourly time scale was very, very possible. Here is the continuation of that chart at the futures settlement.

ES - Hourly - The Eight Fold Path Method

We published the chart when the lower lows of the day were in place, with about 134 candles on the chart, and EWO had just gone below the zero line but not by more than -40% of the peak value. (If you are not familiar with this method, please see the Featured Post on this blog).

You have to admit - when the market is impulsing - this method shows it quite well. When it is not, we then have to noodle what kind of non-impulse structure is taking place.

The Dow made a marginal local higher high today (not a new all-time high), and we wonder if it is not forming a diagonal instead of an impulse. While we will watch Facebook and Apple earnings with interest tonight, it is, as we said, possible that the minute ((a)) wave is extending from a diagonal to an impulse, as was discussed in yesterday's blog.

The fifth wave, ((5)), above, looks like it could use another wave series upward, and therefore may not be over yet. But, the invalidation of that would be any movement below ((4)).

Have a good start to the evening.
TraderJoe

33 comments:

  1. > any movement below ((4))

    Look @ the daily candle pattern into the bearish engulfing on 5/1. I think that's what team Ursa wants to see tomorrow.

    Impeachment makes a market event not-POTUS fault. He did all he could, right? He even demanded rate cuts with the spoos above 3K.

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  2. Now have 4th "touch" of Jan '18, Sept '18, July '19 TL.

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  3. ET, any thoughts on gold?

    Here is my XX count. https://imgur.com/9h7DAIS
    Here is the triangle. https://imgur.com/eNN0uq9

    Triangle has the problem of e not coming back into wave trying to correct. Desperately trying to hold that line.

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    Replies
    1. BBR, I prefer your XX count. A breakout of the tight Bollinger bands will confirm or deny this soon.

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    2. Tom, Leaning that way as well. Thanks for the response.

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    3. My best opinion at this time:

      From the daily chart, wave 4 has broken the 0 - 2 trend line with a simple zigzag lower. Wave 2 was a complex w-x-y (y triangle) wave as originally called. Therefore, there is alternation. Wave 3 = 78.6% of wave 1. So, a wave 5 should be shorter than wave 3.

      https://www.tradingview.com/x/JKJaFLNa/

      The daily EWO is still hanging around the zero line, with price slightly above the daily EMA-34. Daily gold should be allowed to try to make a divergent high with the EWO.

      TJ

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    4. Thx ET for all the responses!

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  4. My thinking on ES

    https://imgur.com/PdRX79b

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    Replies
    1. 5 min off the top has 1.618 extension down.

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    2. ..doesn't that make the 'up' sub-wave of 4 longer in 'time' than all of 3? That would be a degree violation. The simpler count might be A-B-C, up, complete or near complete depending on the top structure.

      TJ

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  5. IF minute ((a)) was the diagonal as per the original count, then by the principle of alternation, minute ((c)) in its entirety may not be a diagonal. However, wave (v) of ((c)) - one degree lower - 'may' be a diagonal wave.

    TJ

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    Replies
    1. ET, take a look at DJI, No new ath = terminal triangel Y looks pretty good..?

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  6. My forecast of a month ago has played out. The E wave of the B wave APPEARS to have finished at the 2.618 level of 2007---2009 ---3047 New highs and continued strength likely indicates the next level up at 3080.
    http://tinyurl.com/y29kx2f5

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  7. Its cool there is a smaller megaphone pattern at the top of the larger one.

    https://i.imgur.com/cnr1UHk.png

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  8. At this time, I can only say, that we are still in a larger non-overlapping channel. If there was a truncation, it was at the red *. But wave iii is > 1.618 x wave i, and wave iv does not overlap and is 'currently' inside of 50% x wave iii.

    https://invst.ly/ns7gr

    Taking out today's lower shadow entirely would be a big warning.
    TJ

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    Replies
    1. The DOW can still be seen to be in this configuration until it can't be.

      https://invst.ly/ns94b

      TJ

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    2. Erik, please explain yourself, and don't be so cryptic.

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    3. Down leg from top is deeper than B (if if’s a B)

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    4. So I think it needs to be impulse from oct low to see new highs, that would allow same degree 2 and 4

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    5. yes, that's better. Much thanks.

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  9. House passes resolution that lays out formal rules of the Trump impeachment inquiry. (15 - 20 min ago). Along party lines.

    CNBC Link

    TJ

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  10. Looks like one more wave up. IWM gap support a big hint...

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  11. Interesting that grind higher came on tepid volume, as is also the case with the current decline. What to make of it...?

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  12. I'm pretty sure if the Dow invalidates the upward diagonal by going "too low", it can be seen in a smaller triangle. I will try to publish that one tonight.

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  13. And an impulse from oct low might look like this on ES?
    https://invst.ly/nsza6

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  14. Indices now in bullish falling wedge patterns...looks corrective off highs...

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  15. ET a few days ago you mentioned that NYAD made ATH, if this is the (c) of intermediate B, how would there be time for any bearish divergence to show up before the top? We would need a deeper (b) down to make any sort of small divergence on that strong NYAD trend..or the top will come without divergence and the pullback will show divergence..just some thoughts

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    Replies
    1. I don't think it is (c) yet. See next day's post.

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  16. Could it be a ED of the top on ES?

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    Replies
    1. Possible, but probably not, BBR, based on sentiment and $NYAD.

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