Sunday, December 22, 2019

Measurement - 3 - Nearing 0.618 x W

Sentiment? Check! Bullish overbought sentiment as being shown in the options market is screaming for a pull-back. The 10-day average of the put-to-call ratio is the lowest all year at 0.55!

Put/Call Ratio - Daily - Speculative

Fibonacci? Check! Per the chart below, there should be a vibration off of the 0.618 x W wave at the 3,245 - 55 level in the next few days.

ES Futures - 2 Day - Nearing 0.618 x W

Positioning? Check! The Commercial Trade and Large Hedge Funds are positioned against the smaller funds, and they are more short than they have been all year.

ES Futures - Daily - Commericals shorter than ever

Breadth? No! Uncheck! The NY advance-decline line is making new all time highs, as is on-balance volume.

$NYAD - Daily Cumulative New High

There will "more than likely" be a divergence at an all-time market high which is not seen yet.

Conclusion
Since the October up trend has begun, it has not broken a price channel to the down-side yet. Therefore, this entire up wave is being labeled as sub-wave a of Minor Y, still within Intermediate (B). A down leg for b to test the prior market highs at 3,025 would make sense and possibly provide a dip into January for some stocks to begin to diverge against. Right now, only transports and real-estate are diverging - and only slightly.

I admit to having gone back-and-forth against two counts. If the diagonal I sketched out in the last few days is correct, it could be a 'leading diagonal a wave'. In other words there are ways to see both counts as exactly equivalent.

Have an excellent Holiday!
TraderJoe

25 comments:

  1. TJ now you're going to have to show how Y is 5 waves from Oct 3 low as you told me last week how there would be degree violations in that count when zooming in. Not posting as a gotcha thing but I think it'd be useful for the more EW focused readers.

    ReplyDelete
    Replies
    1. Just to clarify: Y? or a of Y? Not sure why you said Y.

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    2. Yep, a of Y is what I meant

      Delete
    3. The only way I see to count it without degree violations is with the extended first wave up to Thanksgiving, as below.

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

      TJ

      Delete
    4. ..then, wave ((2)) is the most time consuming by price, and by far the longest by time. This is supported by the MACD which would be "too deep" on this time scale for a fourth wave. It is more than -40% of the prior max.

      Thus, this ((3)) would be shorter than ((1)). Hard to know over the holidays where the ((4))'s and ((5))'s will wind up - other than the Fibonacci projections on the larger scale.

      Delete
    5. 3 crosses below the 0-2 TL though.

      Anyways, I think the odds of it being an impulse is high. I'm looking at other markets and large caps to determine when they will all sync in a turn to down. They seem far more readable to me at the moment.

      Delete
    6. nice to see a bullish impulse count TJ, better late then never...

      however, i don't understand why you want to fit such a strong impulse in your bearish idea... your unfinished a of Y wave alone is close to a 150% extention of (A) ...

      thanks for your ideas and enjoy your holidays

      KAVIAAR

      Delete
    7. and regarding your count, you say 3 is complete... but could this wedge looking structure not be the beginning of i of 3 (x), it will be followed by shallow retrace for ii, then the melt up will continue...
      in other words, game over for the bears... correction finished a year ago with a quick abc

      hope you'll not delete my message,

      take care
      KAVIAAR

      Delete
    8. If there is a triangle in the middle of the whole two-daily pattern from Dec 24th 2018, then the whole structure 'can not' be a second wave, by Elliott Wave 'rules'. Yet, per the discussion above with C, this up wave would break degree rules as a new impulse if there is 'not' a triangle.

      Therefore, the whole correction most likely 'did not' finish a year ago with a quick abc. Christmas seasonality typically runs until about 1/5 at the latest.

      Delete
    9. @KAVI .. please note you are expressing your 'ultra-bullish' sentiments when the $CPCE is down at 0.45; you 'should' have been expressing them back on Oct 1 - 3, when the $CPCE was up in the 0.95 range, and the crowd was turning bearish. You didn't. But, no, just like the crowd, you are turning uber bullish just as they are. Good luck with that.

      Delete
  2. For those that are wondering, here is how both counts would be identically equivalent - with the same predictions.

    https://invst.ly/p728z

    TJ

    ReplyDelete
    Replies
    1. It appears that a of Y is already longer in time than all of W. (X is shorter than both W and Y). Is this of consequence?
      Thanks!

      Delete
    2. According to measurements done as the result of your question, then, yes! There are 48 2-day bars in the diagonal version of 'a', versus 43 2-day bars in W. Therefore, to avoid degree violation we must conclude that the triangle X version shown in the post is the correct version. This allows 'a' to be shorter than all of W in time.

      Delete
    3. ..and please see C's question - above.

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  3. I was just looking at the $CPCE. Great chart. I like the added technical's. Thank you.

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  4. Regarding the "positioning" point.
    I see that last time "Commercials" were so short (indicator so low) was in :
    - mid August - S&P @2820 --> few weeks later 3020 (+7%) and now is 3220 (+14%)
    - mid October - S&P @2880 --> now 3220 (+12%)

    So, what should we infer from that?

    Merry Christmas to all of you, and especially to you for this great Blog

    ReplyDelete
    Replies
    1. Commercials are the 'market makers' and they have the staying power. You'll note they were positioned properly for each short term decline. You'll also note that much of the rise was accomplished when open interest was virtually zero. This is what makes it so hard on the rest of us - the retail, when we see nothing but over-night gaps. Remember, the chart reflects only what each group is willing to "go home with", or "the open interest". What they do during the day - opening and/or offsetting positions - is not reflected in the chart.

      Delete
  5. Very short term, IF we get a bear flag playing out, then ((5)) should equal 0.618 x net(1-3) of at least 3,225.50 as below.

    https://invst.ly/p7kau

    TJ

    ReplyDelete
    Replies
    1. First breech of potential bear flag to the down side.

      https://invst.ly/p7l7u

      TJ

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    2. ES has the new low with a very slow expanding-diagonal; probably ending.

      https://invst.ly/p7n8c

      TJ

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    3. ..some might think it's a triangle, but a triangle violates degree - as the (a) wave of a triangle would be longer in time than ((2)).

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    4. 5 has the look of a flat.
      Shouldn't an Ending Diagonal be composed only by zig-zags?

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    5. @John .. some zigzags are 99%; it didn't go over the top. I watched it carefully. It was a few ticks off. And the last, and fifth, wave was very aggressive, lower.

      https://invst.ly/p7nlk

      TJ

      Delete
  6. A new post has been started for the next day.

    ReplyDelete
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