Friday, June 5, 2020

One Fibonacci Relationship

Try as I might, I can find only one, good simple Fibonacci relationship in the current wave structure on the ES 4-Hr chart.

ES Futures - 4 Hr - Three Waves

That relationship is shown as (c) = 0.618 x (a) to a very, very close approximation.  Yes, this would still be in a minute ((b)) wave count, upward, overall. Perhaps it will be a running b wave.

First, let me state very clearly that I am showing an alternate count of 1,2,3 which would be in Minor C. Don't worry. If Minor C occurs, I will downgrade those labels to minute wave status. Right now, I just want clear numerals on the chart. But, for Minor C, there should at least be a good fourth and fifth waves higher. They are not in evidence. They could be later. They are not now.

The rationale for this count is as follows: 1) as we were counting upward from the end of the flat, I remember waiting for 'days and days'  for the fourth wave, iv, of (a) to complete. There were first three-waves down, but the wave refused & refused to make the new high. Then the new high occurred, and it ground on and on. The wave iv of (a) location shown is the only one that looks like a fourth wave on the EWO. 2) There is a large sideways correction in the middle of the chart. I was able to count it as a triangle in the futures, and just a shorter triangle in cash - as you know. A triangle at this location is very, very unusual except in corrective waves. 3) Today's price spike on the employment report drove the Elliott Wave Oscillator (EWO) almost to a new high, but not quite. It may go there yet. 4) There are only 93 candles on the chart which is less than ideal compared to the desired 120 - 160 for making a decision via The Eight Fold Path methodology. But a 2-Hr chart puts 186 candles on the chart, and that is roughly equally bad. 5) If there is actually no triangle in the middle, then the best I can see is a sideways second wave.

Even though price gains are large, something just seems very 'weird' about this wave. It is very, very hard for most people to count, and that is often the very hallmark of a "b" wave. By far and away the largest gains are coming in the overnight session. That is not necessarily odd, but a gap on a cash chart used to be something of a rarity. Something to notice, and perhaps retrace into. But, there are now so many of them. If U.S. institutions are not doing the buying, is it possible some foreign interest has been told to buy U.S. equities - perhaps as repayment for creating the Covid-19 problem? I'll never know. I'm the last one they tell. Something is going on. Why all the massive evening gaps?

Have a good start to the evening.
TraderJoe

9 comments:

  1. The Fed uses the SNB (Swiss) as a proxy.Today looks like a top and the VIX held. We shall see.

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  2. They also use Blackrock as their domestic agent. Injections of $3B into one ETF is not uncommon. Velocity of $$ is falling in spite of these massive injections. Lower interest rates normally would increase money V, and the Fed will continue to lower. Free money for traders to speculate with. Not for economic growth & jobs. It will come crashing down. Deflationary and, with so many out of work: a depression to boot.

    Thanks for the analysis Joe. As you say: Patience & Flexibility.

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  3. You're thinking mostly correctly. It's hard to favor any scenario at the moment until daily reversals occur and we can measure some kind of drop. One of the biggest mistakes to make in a trending market is to 'assume' price movement in the direction of the trend is over. IF it did end here, then I can still see a ((b)) wave in the DAX too, with (c) = 0.786 x (a).

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  4. The alternate has a second wave triangle as the sole structure, unless I mis-read it....

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    1. you mis-read it, but it's a good question. The second wave alternate would stop the correction at what is currently 'c' of the triangle. Then, that next wave up would be another i, ii.

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  5. Looking only at the (c) wave in chart above, and 45min for AO, we are currently seeing the largest peak. This assumes Im starting at the proper place for (c).
    This would seem to suggest there is more upside to come?
    Thanks

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    1. ..with the momentum generated today, and possible Sunday night up gaps, etc. I definitely can not rule out another wave up of some type. If I could have, I would have. But, if any wave ends without a divergence on the EWO, it is a "C" wave.

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  6. A new post is started for the weekend.

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