Measurement - 2 - CED 'Finally' Dead

U.S. Debt Clock: $23.13 Trillion; prev $23.13
ES Daily Candle: Higher High, Higher Low, Higher Close: Trend Candle
Market Posture: Neutral-to-Negative
Daily Swing Line: Higher
Daily Bias: Up (Settle Above 18-day SMA)
Resistance: Upper Daily Bollinger Band

If you write a blog (rather than read it), you have to understand how many times the writer shakes his head when readers ask, "well, why can't this be an ending diagonal Primary 5th wave"? Some market technicians - including a recent addition on YouTube - have been carrying that count right until this last weekend. Below are the measurements that show that a contracting ending diagonal is not possible from here.

S&P500 Cash Index - Weekly - CED Not Possible

So, here you see how the top of wave (1) in the cash market is at 3,027.98, and the given where the low of wave (2) is, as they count it, and the height of wave (3), it is no longer possible for a down wave to both overlap wave (1) and be shorter than wave (2) - at least in the cash market. The length of wave (2) subtracted from the current (3?) position, as they call it, is 3,033.44 - and it would not overlap wave (1). So, we can now bury the contracting ending diagonal for Primary wave 5. Dead. Gone. Please don't raise the topic again.

My long term count sees the three down waves into December of 2018 at Intermediate (A). This up wave is currently Intermediate (B). It has just exceeded the 1.382 Fibonacci level, and could head to 1.50 or 1.618, and in rare cases even more. Therefore, temporarily, I have switched my market posture back to neutral-to-negative until it becomes more clear where the stopping point might be. (B) waves can be intractable affairs. This one may be no exception.

There are two other things to note. As a practicing Elliott analyst I have again written to a major Elliott Wave publication confirming that I wrote them earlier to state that their count of an Expanded Triangle for Intermediate (4) was not correct. I had written them months ago as you recall based on their errors in degree labeling as I understand it. It is plain to me that - given the extent of the rise, so far, that triangle is also dead. I also made note of another breaking of the rules for triangles as published. The key point is that - based on degree labeling - I wrote in advance and said it would not work. And so far it has not worked in either price or time. That count expected a high last April. Here it is now in December! That's quite a while to wait for the suspected turn.

Secondly, it is pretty clear to most that this rally is being driven by the U.S. Federal Reserve's "hands on" approach to pumping up overnight repo market, and the almost absolute certainty by the institutions that 1) there will be no interest rate hikes, and 2) and repo market problems will be bailed out. This fundamental expansion goes best with the expanding diagonal count I showed yesterday. These patterns can be very hard on the nerves. It is best to take a patient and cautious approach to them. 

It's not that the FED's action overrules all of the other fundamentals in the market. Readers can see that indicators like the Philly FED Index, and projected GDP, for example, are moribund. But, at some point, just printing money can likely not overwhelm all of the others.

Have a good start to the evening.

TraderJoe