Monday, March 9, 2020

Always the Same

Regardless of the size of the wave, and regardless of one's thoughts about their wave-counting skills, a good wave count always begins with the designation of a "base channel". The base channel (or zigzag channel) for this move is shown below.

ES Futures - 4 Hr - Base Channel

When one looks at the base channel and the two significant futures gaps shown, one can see that it is hard to tease more out of the wave count than this. Could the most recent down wave be a minute ((b)) wave down on a divergence with the Elliott Wave Oscillator?

Yes, that is possible, but one should not assume so, until there are more substantial waves and more direct evidence. Could there be a Tuesday turn-around day? There could, but there is very, very little evidence for that yet. The prime case would be that the Fibonacci ruler shows today's down move is a 1.382 relationship. And, one could argue that the VIX is very high, and the CBOE put-call ratio is quite high - perhaps in the "Zone of Despair".

But, price will still be the best indicator. And, there, upward overlap, trading above the mid-channel and eventually above the upper descending channel line will be better indicators of a minute ((b)) wave, lower.

Trading full bars below the lower channel boundary, would tend to indicate other things. As it stands now, there are only three-waves down.

If today's down wave is the ((b)) wave of an expanded flat, it would indicate a significantly weaker market that we have seen in a very long time. It would be similar to the start of the 2009 - 2018 bull market - which also started with a flat wave.

If a zigzag winds up being the down count, then a diagonal lower can not be ruled out. 

Bottom line .. it is a little too early to say what the overall count is with more specificity. Sharp reversals are possible in bear markets, and we have to see 1) if they occur, and 2) how far they travel.

Try to relax and recognize the most typical wave counting options. Flats are a little more common that diagonals, so perhaps that is what will develop. Don't get worried too much about 1.382 or 1.618; a flat can 'fail' if the market is to be exceptionally weak.

For now, let's hope the market circuit breakers are not needed for a while. They are very, very disruptive to actually trying to place orders.

Have a very good start to your evening.
TraderJoe

43 comments:

  1. Thanks ET,
    what probability do you give 1-2-i-ii down with regards to sentiment and divergences?

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    1. I guess you don't get the gist of the post. Where is the ii to go with the i?

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    2. .38 retrace of the nested wave would be ~2860 ES so realistically would be in the danger zone below there. The after hours rally has to start something much bigger to remove the nested count. That's generally probably why ET is leaving it wide open. If it is a crash scenario then sentiment and divergences won't matter.

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  2. The reason I'm asking is because this down wave, if counted as zigzag minor or minute 1 of a bigger degree diagonal, it will be bigger than intermediate (A), which can be resolved with a 1-2-i-ii, or minute ((b)).

    https://invst.ly/q2am4

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    1. I like the idea of comparing to (A) to suggest if we are in C of the flat or Large Contracting Ending Diagonal.

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  3. The market had a gap down June, 1930. Two weeks later the market dropped 21%. Eventually, the market declined 84% two years later. That gap in the Dow took 20 years to fill. Oil stocks also went down 90% or more in the early 1930s. Folks, we are entering the same cycle. Good luck!

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    1. Hey Tim, Do you have a chart of that?

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    2. @Tim, I clearly stated that links to paid sites are not allowed. Do not post any more links to paid sites. If you continue, you risk me turning off ALL commenting - even for non-offending members.

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  4. Hi TJ would this work in alternation with the 2016 low, as in 1-2, 3 in 2018, then a triangle in 4 with a likely ED to come??? https://snipboard.io/0Up3e6.jpg

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    1. No. You have completely ignored my degree labels from yesterday's count.

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    2. Degree is everything and lets face it aside from being right on the bear trade alternate bull counts are always there Id hope, but hope dont pay the bills .)
      https://snipboard.io/gzh5cH.jpg

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  5. This is how I count it and I can easily make the case it topped but considering the implications Im not sure I want it to be over yet..... https://snipboard.io/vkczjM.jpg

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  6. bounce was from Feb 28 to March 5 (Wed)

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    1. @wizard29, I have deleted your 'crash post' because even though there was some Elliott Wave terminology in it, it is largely your opinion and is not based on evidence. Please do not continue in this vein or you will be spending a lot of effort to write a lot of words which will only be deleted, or if it continues, spammed.

      TJ

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  7. Normally nested 1,2's have a very low probability,but this third wave is or will be a killer. I look for a possible waterfall tomorrow at least starting.

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  8. This is likely the 'five-wave-up' sequence that meets the criteria for a 'faster rise' than the previous correction, and honors the 0 - ((2)) trend line with a larger flat for ((4)), providing alternation in the impulse.

    https://invst.ly/q2c7v

    For further up movement, the low would have to hold.

    TJ

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    Replies
    1. .. and wave ((5)) can go a bit further if it wants by forming another flat or triangle here.

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  9. Last weeks S&P low bounced off the 50% retracement level from the Dec 18' low to the Feb 20' high. It followed up by rallying 50% of its losses. Today it bounced hard off the 62% retracement level from the 2018 to 2020 move. I'm left wondering if we will now see a 62% retracement back up.

    The biggest fear I have is not lower prices, but higher prices. This market continues to disappoint bears. I see good reason to think today was a meaningful low.

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    1. @Todd, this site is not about 'your biggest fear', or a market that continues to 'disappoint bears'. Really? Disappoint? With over 1,000 points drops in the Dow? Keep this nonsense up, and all posts like it will be deleted. This is a site about about 'wave counting'. If you can't participate or don't know how, then leave no comments.

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    2. Don’t worry. That will be my last comment.

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  10. YM and ES have overlap with what would be 1 in a large Contracting Diagonal from the ATH.

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    1. An attempt to close the gap would be most visibly appealing.

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  11. This comment has been removed by the author.

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    1. @Matteo .. I asked you to post no more charts. The pattern you are showing is not correct as wave iii can 'never' be the shortest wave. Not in an impulse. Not in a diagonal. Please STOP posting charts until you have re-read and understand the basics.

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  12. ET, Is there a minimum ((c)) needs to travel?

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  13. IF there is a new lower low, today, then we can not rule out this pattern.

    https://invst.ly/q2n2v

    TJ

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    1. Hi TJ, the above chart indicates wave 1 is the longest and the 4th wave overlaps with 1. If so, does this mean that this count is not impulsive?

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    2. It would not be an impulse, if it completed today, but it did not complete today.

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  14. The pattern is some kind of triangle...possible running imho...

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  15. Last night I showed how to count the first five-waves up. Then, notice, that a downward wave did not 'take more time' until the b location. Finally, c = 0.618 x a, which is a common relationship inside of triangles and diagonals.

    https://invst.ly/q2o29

    TJ

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  16. WSJ, 5 min ago: NY/NYC is quarantining New Rochelle. When do they shut down the subway??

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  17. Here is the count from the high, so far...

    https://invst.ly/q2ok2

    TJ

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    1. IF we go over the high, instead of under the low, then that would tend to indicate the flat - rather than the diagonal - on the larger count.

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    2. ..there is now a 1.618 upward wave that went over the prior high. If it forms a decent channel and a fourth and fifth wave, upward, then, we might look to start a significant upward wave.

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  18. so we have not made a meaningful bottom yet ET ?

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  19. Gold chart looks like a bullish falling wedge at the moment, maybe it's a hint.

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

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