Thursday, December 30, 2021

Making the Right Stuff?

The Dow's daily pattern is 'making' all the right stuff for a potential diagonal, especially if that is a 78% wave ((ii)). 


It is, of course, way too soon to call it such. In fact, we don't 'know' that wave ((iii)) is done to the upside. And, then, of course, a fourth wave, ((iv)), would need to be confirmed.

But this is a way to work slightly higher into the New Year, and to keep the whippy guessing-game going. So, I just thought I'd bring it to your attention. In this case, since wave ((iii)) has, indeed, made a higher high, it is not required - although it is typical - for wave ((v)) to make a higher high. In other words, the last wave in an ending contracting diagonal can fail.

Here is the progress made on the ES futures count: which is the same as I've counted in SPY cash.

ES Futures - 2 Hr - Probability of a Top

Yes, there is a high probability of a top. Still, a retrace that does not go over today's all-time-high is required. Also, this up wave may only be part of a diagonal in the S&P500.

Have a great rest of the day.

TraderJoe

Friday, December 24, 2021

B Wave ?

Perhaps a "B" wave resolves the differences between the ES and NQ futures, as per the previous post. 

ES Futures - 1 Wk - Divergence Continues

There is no immediate conclusion that further progress in the (Z) wave can't occur. The waves at the top do appear to be impulsive. And until we see a completion pattern, we must err on the side of further highs. Daily price is still above the 18-day SMA and so the bias is still up. Price is not yet near the upper daily Bollinger Band, but the daily slow stochastic is still over-bought and is not embedded.

However, sometimes the Z wave of a triple zigzag does fail as a sign of the weakness of the pattern. And making wave below the recent Minor B wave would be of significant concern.

Have a very nice Holiday to all readers and contributors.

TraderJoe

Wednesday, December 22, 2021

Some Confusion

The stock market is now showing confusing signs. In the daily chart of the NQ futures (left pane), prices are showing a lower daily low, and not a new daily high.


NQ vs ES Futures - 1 Day - Mixed Messages


And in the chart on the right, the daily ES futures are showing a higher daily high, and no lower daily low. Further, neither chart is showing typical triangle measurements. At approximate 50% retracement levels, neither is near the more typical 62 - 78% retrace levels of the prior up leg to suggest a triangle from that bottom.

It is difficult to reconcile these patterns at the moment. I don't want to guess at this time as further study is needed.

The market over the last three days up can be counted as most of all of an impulse wave as we showed in this chart of the cash SPY.



There is still more room for wave (v) if it wants it as it is not as long as wave (iii), but wave (iii) is shorter than extended wave (i) in the above count.

Have a good start to the evening.
TraderJoe


Saturday, December 18, 2021

Chop City

The choppy price action since the March 2020 weekly low is still best explained by this wave labeling. An alternate is shown below the price bars, but the alternate has a problem - which makes it the alternate at this time.


The problem with the alternate is that if wave x(1) is the extended wave in price - because the retrace is so shallow, then - usually, most-often - wave (3) is shorter in time as well as price. We are showing it because wave (3) is shorter in price, but it is not shorter in time. That is a conflict which makes it the alternate.

Whereas IFF price comes back down to the parallel in December/January, it might be doing so in an expanded flat wave (overall) which would alternate well in both price & time with the prior Intermediate (X) wave zigzag correction. At present the chart shows (Y) = (W) and that is a 'typical' relationship for corrective waves. 

Another reason for counting this way: where is that unbelievably strong wave 3 of (3) gap up on the weekly chart? Like Sherlock Holmes in The Hounds of Baskerville, we have to at least ask the question: "why didn't the dogs bark?", or - in this case - "why don't we see a huge recognition gap?" Further, we must recognize that the ES futures made a higher high this week. Those who just plot the cash indexes might not be recognizing such at this time.

Lastly, readers of this blog should have the interest and curiosity to plot the FTSE 100, and the DOW/Gold to determine 1) are all stock indexes world-wide making economically driven new highs in indexes at the same time? 2) is DOW/Gold saying that stock indexes are at all-time-highs in terms of real money? or 3) is this wave being driven more by a) free money provided by the government precisely because the economy is not doing well, b) mindless speculation at all-time fever pitch levels, and c) excessively low interest rates allowing an explosion in margin debt balances, and record stock buy-backs by corporations?

You should decide how you see it. You can see the way I am leaning even though I am patient, calm and flexible in what I count day-to-day.

Have an excellent rest of the weekend.

TraderJoe

Thursday, December 16, 2021

Expect Whippy Price Action

The VIX is currently at 18, not at 9. For this reason, one might expect more whippy price action than normal. The ES futures made a marginal new all-time-high today. The SPY and the SPX cash did not. The ES 4-hr futures chart is shown below, along with the potential for further volatile price movement.


It is entirely possible that a barrier triangle is being formed near the highs, but it is way too early to call it such. In one such count, the December low is the minute ((a)) wave of such a triangle and today's high would be the minute ((b)) wave of such a triangle.

In today's intraday price movement there appeared to be five waves down from the high. This might be an 'a' wave of the minute ((c)) leg down of the triangle. We don't know for sure, confirmatory price action will be needed. Certainly, there was MACD divergence again at the high.

Have an excellent start to your evening.

TraderJoe

Wednesday, December 15, 2021

Flexible, Patient and Open-Minded

Yesterday, well before the FED meeting blog contributor Greywaver and I were having a discussion about the potential of the expanding triangle fourth wave scenario. As Gw pointed out, Neely said he has not typically seen them in fourth wave positions. Further, we both understood that the wave (v) from an expanded triangle should try to approach the wave (iii) in height, even if it did fail. And, still, it should measure at least 0.618 the length of wave (d). As Gw pointed out, it didn't. Therefore, the high of that wave provided as a warning in a down count. Further, this alternate was quickly developed and clearly presented.


As noted at about 1:06 PM, wave (v) could have already occurred with wave (v) on the 8th. That would leave the remaining structure as an expanded flat wave with the low at the 'typical maximum' for an expanded flat of c = 2.618 x a.

That measurement held today. Then, before the FED meeting at 12:05 pm, we further showed an internal measurement, much lower than the failure of the expanding triangle at SPY 461.72 and said to watch that level closely because it would likely mean the down wave in progress would likely be ending. That level was beaten twice: once shortly before the FED report, and once after. 

The reaction to the FED's intended actions caused an initial up wave, and then a 1.618 wave following it - all totaling 100+ S&P points from 6,602 to 6,706 in two hours' time. With this, the daily bias shifted to upward, and the daily slow stochastic is still currently over-bought.

The market is especially volatile in both directions. It requires flexibility, patience and an open-minded attitude to count waves under these conditions. What makes me happy, is that we could engage in a real discussion of wave characteristics. We did not get an expanding triangle fourth wave. And this is a good review for all, that under the right conditions an expanded flat can mimic most of the characteristics of an expanding triangle as an alternate.

Can new highs be made in the ES futures? Yes, it is possible, and even probable. We will continue to count waves as best we can as we see recognizable structures. What do I mean by that? I mean specifically that major tops are typically accompanied by either a triangle before the last wave-set or the fifth wave forms a diagonal. We have our antennas up for both, but at this time (if new all-time-highs are indeed made) it is too early to see anything of this type on the daily chart.

Have a good rest of the evening.

TraderJoe

Tuesday, December 14, 2021

Bias Shifts to Down

Yesterday was an outside day down for the ES futures. Today was a follow-through day and the close is likely to be under the 18-day SMA.

ES Futures - Daily - Follow Through

The daily slow stochastic is in over-bought territory and tomorrow is the FED report day.

Have a good evening.

TraderJoe

Monday, December 13, 2021

Test ?

For those who are into the details of wave counting, we may be about to test this Glenn Neely observation.


The observation (Rule #7, Page 5-31) is that the thrust wave out of an expanding triangle is not necessarily the same as the thrust out of a contracting triangle. Neely suggests that very often, the thrust wave of an expanding triangle falls short of the widest width of the triangle (the e wave), and this may result in a failure.

If the potential expanding triangle we've been monitoring over the last few days plays out, then we may get a chance to see a live test of this hypothesis.

Have an excellent start to the evening.

TraderJoe

Saturday, December 11, 2021

Waiting for Answers - 3

While we wait, I think this chart is the simplest explanation I can find. It doesn't mean we've necessarily topped. But, there is something very interesting in the measurement.

NQ Futures - Weekly - Nearing 100%

 

The Fibonacci next likely relationship would be quite a ways away - which is why I mention it now.

Separately, you should have a look at a DOW chart, and confirm that the last leg down was longer than the previous one. I'm note sure what this means yet. Is it a sign of a triangle or a diagonal in the Dow? It is way too early to tell yet.

Have an excellent rest of the weekend.

TraderJoe

Thursday, December 9, 2021

Waiting For Answers - 2

Using The Eight Fold Path Method for Counting an Impulse (see the Featured Post in the Upper Right Hand Corner of the main blog page), it is entirely possible to count a completed impulse, upward, which includes a truncation in the ES, and no truncation in the SPY. Here is the ES 30-minute futures chart with 150 candles.


The Elliott Wave Oscillator (EWO) indicates the peak for the third wave (it is possible to locate (iii) one or two shoulders to the right, also). And the wave is traveling within a parallel. We know that wave (iii) exceeded the 1.618 extension level, and wave (iv) is longer in time than wave (ii) by quite a bit. The EWO for wave (iv) travels below the zero line, and yet maintains the guidelines of +10% to -40% of the peak reading. Then, there are a clear five-waves-up for the ES to a potential truncation high before the parallel is broken substantially and further downward movement begins. Next, the EMA-34 indicates good form & balance with a significant numbered wave on each side of the moving average.

Yes, it is possible that this is all of the deep retrace of the potential expanding diagonal downward from the all-time-high, and the potential flat wave that followed it.

Still, while we confirmed today that a triangle count no longer works in the ES for a fourth wave, it is also possible, albeit with lower odds, to see a fourth wave anywhere down to the 50% Fibonacci retrace level. Price is nowhere near close, yet. But, the odds are beginning to decrease on that scenario because a parallel has been broken fairly substantially already.

So, keep your eyes on the Elliott Wave Oscillator to see if it starts making lows below -40% of peak. If peak EWO is 51, then (-.4 x 51 = -20.4) below -21 would be a cause for concern. For now, the weekly count remains as it is in the 30 November post.

Have an excellent start to the evening.

TraderJoe


Wednesday, December 8, 2021

Waiting For Answers

If you are a decent Elliott Wave analyst, then there are just sometimes when one needs to wait for their answers. Today is such a time. Based on the down count in the previous post (a 'possible' expanding diagonal, followed by a 'possible' flat wave), we were indeed expecting 'five-waves-up' off of the low. Most of that five-waves-up is complete, as charted below.

ES Futures - 1 Hr - Flat Wave or Not

Over on the left, in the tan box, you can see what might be the ((a)) wave up, and the ((b)) wave down to a marginal new low of what might be a flat wave. From that sequence, we were expecting five-waves-up, and you can see that labeled inside of the upward blue parallel.

The up wave has exceeded a 1.618 external retrace on the potential ((b)) wave of the potential flat. That does lower the odds a bit that what we are seeing is a flat.

IFF the all-time-high holds, then it is possible there is a diagonal down and a flat wave up to a deep retrace of the potential diagonal. IFF the all-time-high does not hold, then the down pattern is some sort of strange double-bottom which is difficult to fit into any count although somehow it might be a weird triple zigzag second wave or possible wave of a triangle from the all-time high.

Arguing against the flat wave are 1) momentum - there has been little retrace thus far, 2) bias - price is above the 18-day SMA and 3) stochastic - while over-bought it has not curled down yet.

So, these are the factors to consider. A good analyst does with it little bias or concern for the outcome. Why even consider the diagonal and the deep retrace? Why would someone take the time and effort to write about it in their Elliott Wave book (The Elliott Wave Principle by Frost and Prechter) if such outcomes were not at all realistic? And, why write about a potential flat where the ((c)) wave may be pushing on 2.0 x ((b))? Because why then would an author write about extended flats in his Elliott Wave book (Mastering Elliott Wave by Glenn Neely), if such outcomes were also not realistic?

For our part, we will watch and learn and count. Have an excellent evening.

TraderJoe



Monday, December 6, 2021

Higher Daily High

The higher daily high - after an outside reversal day down - might constitute a trap for the bears. There isn't a good way to tell, and price is not yet over the 18-day SMA, the 'line in the sand'. That being the case in terms of the Elliott Wave Count, this one comes closest to meeting the rules and guidelines. I need to emphasize, I do not know that this count is correct. It 'is' suspect.


IFF we've made an expanding diagonal downward, then it is being followed by a flat wave. Again, to emphasize, this count BEST fits 1) the expanding trend lines, 2) the EMA-34, with numbered waves on every side of the average, and 3) the Elliott Wave Oscillator shown below, and also mimicking the expanding pattern.

And, IFF the pattern is correct then the only way I can think of that it might work is that the net distance traveled by the b wave of wave (v) is less than the total length of wave (iv).

This is a key reason that I do not know if this count is correct. I have not run into degree labeling situations of this type before in the past, so it will be a learning experience for me as well.

Have a good start to the evening.

TraderJoe

Friday, December 3, 2021

Outside Reversal Day Down

Yesterday, it was clearly stated that we didn't know the short term direction of the market - especially in the face of the Payroll Employment Report. We said there were ways to count higher, and ways to count lower. Appropriately, today did both. After an initial rally on the payroll report, when the cash market opened, prices began to sell off and the selling continued throughout the day until about an hour from the close when prices got very choppy, and then headed up a bit to finish the day.


As you can see from the chart, prices reversed from up to down right about the level of the 9-day SMA (or the half-cycle), and then headed lower to make a new daily low. In the process, price traced out a 114 pt range! A volatile market.

The new lower daily low keeps the swing-line down, and under the 18-day SMA, so the current trend remains down, and the bias remains down, but the daily slow stochastic is also over-sold. 

Price couldn't quite tag the 100-day SMA and while the futures have not closed as of this writing, price is flirting with closing near the lower daily Bollinger Band.

In terms of the Elliott Wave count we presented an idea for a contracting diagonal downward in the comments for the prior post. You might like to read them if you have not. But, please remember, these are lower probability patterns that must form correctly in every detail. We're simply not there yet.

Have a good start to the evening and the weekend.

TraderJoe

Thursday, December 2, 2021

Inside Day

There are just some times when the count is murky, and it is best to say so. This is one of those times. For now lets just refer to some measurements on the daily chart.

ES Futures - Daily - Inside Day

That today was an inside day is not in dispute. After making a 1.618 external retrace, upward, on the September down wave, prices rolled over and overlapped the prior September high, making a 50% retrace on the up wave. Those facts are not in dispute. Further, after closing two consecutive days outside of the lower daily Bollinger Band, prices had 'roughly' only a 3%  chance of closing outside of the bands again today - especially with an over-sold daily slow stochastic. So, prices closed inside of the lower band and reset the number of consecutive closes. 

Tomorrow is the Payroll Employment report. It is hard to know if the news-reading algo's will try to tag the 18-day SMA ('the line in the sand') or not.

Being in the middle of a range like this with numerous overlaps on the way down is what I call 'no man's land'. There are ways to count lower, and there are ways to count higher. Any lower count requires taking out yesterday's low. Any higher count should at least exceed the 4,700 level - even if it is to make a truncation.

This is a good time to make local counts and see how they work or fail to work. Today's up wave for example seemed to invalidate a nested second wave within a third wave count. A good option remains an expanding diagonal, downward. In that option, then likely price would still come up and tag the 18-day SMA. Another good option - because of the downward overlap on September's high - is a triangle, but there is currently insufficient downward movement yet for that to be fully in play yet.

So, we'll have to try to see where the so-called Smart Money is going with this one and count as best as possible when we recognize what we see.

For now, the daily bias is down, the swing-line is down, and the daily slow stochastic is still over-sold.

Have a good start to the evening.

TraderJoe

Wednesday, December 1, 2021

Failure and Acceleration Noted

In an interesting change of circumstance, after the usual 'first-of-the-month-money' flooded the market, both a failure swing and downward acceleration were noted today. The SPY 30-min chart, below continues to document the count.


The failure swing is a double-combination w-x-y failure. This wave is not a triangle, and this indicates that downward movement can continue.

In general 'C' waves opposite the direction of the trend should not show acceleration. If the trend was up and the latter wave down was a "C" wave in an overall (a), (b), (c) down count then the last wave should not have shown such acceleration. This tends to indicate that the wave being formed downward is a third wave. It can continue if it likes, and it might make a 1.618 or greater wave downward (subject to the usual backing and filling).

Similarly, a second wave of the third wave should not be longer in time than all of (ii), and neither should it exceed the maximum price travel of wave (ii), as well. 

Have a good start to your evening.

TraderJoe

Tuesday, November 30, 2021

Daily Lower Lows and Lower Highs

There are the signs of a down trend. (Please note this chart lags a bit on the day and does not represent the cash close or futures close, yet). Still, the weekly chart notations indicate why the chart is considered as it is right now.


The futures and cash markets are whipping around quite furiously these days. And while volume to the down side has approached or is approaching 1:8 or 1:10, the advance decline ratio on the NYSE is more muted. It would not be out of the realm of the ordinary for price to come down and touch a parallel, in the area of a prior 4th wave.

The alternate for the count remains (1),(2),(3) but, again, there is currently a near equal relationship between (C) and (A) at this time.

Have an excellent start to the evening.

TJ


Thursday, November 25, 2021

Impulse or Not?

In the very short term on the SPY 5-min chart, the upward correction to the right appears too complicated to be the simple zigzag of a diagonal. With the current movement upward - and perhaps with even more from the overnight futures - the correction appears to be in the form of ((w))-((x))-((y)) a double zigzag. These are not 'typically' contained within diagonals. See chart below.


Therefore, if the high is not crossed, then the downward wave might be an impulse in a wedge. One could argue there are five movements there, and the fourth wave alternates at least in time with the second wave - if not in extent. If the wedge should be an impulse, it might be followed by five more waves down or more. (There is one way it doesn't have to be if it is a larger c wave of a wave (iv), but that would make really a huge wave (iv) in time, and has lower odds.)

So, it might make some sense to monitor the cash channel shown on the left and see if the channel is broken to the down side after the holiday.

Enjoy the holiday, and have an excellent end to the week.

TraderJoe

Tuesday, November 23, 2021

62% or Better Retrace

I am only observing that there is now a 62% or better retrace from a possible wave (i) of a diagonal. This means nothing else at this time.


This could be a second wave lower (ii) of a diagonal if additional minor new highs are made. Otherwise (i) is 'the' high. Price also came down to touch and exceed the 18-day SMA as we mentioned was a possibility yesterday.

Have an excellent start to the evening.

TraderJoe

Monday, November 22, 2021

Mixed Equities - 2

Stocks index futures initially started out higher this morning, then wavered. Then they gained again as President Biden renominated Jerome Powell to another term as head of the US Federal Reserve. Then they sold off on the likely prospects that the renomination would likely mean a further continuation of the cut back in asset purchases. Here is the quick survey of financial markets.



The ES, the NQ and RTY (Russell 2000) all sold off. The Dow futures ended the session higher. GOLD sold off in a significant way - and in a way consistent with the potential expanding leading diagonal in the yellow metal. This was likely in-sync with the increase in the 10-year (and other Treasury yields as see in the end block). Crude Oil rose slightly and the VIX revisited the highs.

There are ways to count "five up" in the ES/NQ, but the certainty level is low without further downward overlaps. In the ES, price hit the upper daily Bollinger Band but the reversal caused the daily slow stochastic to lose its embedded status, so a trip back to the 18-day SMA is again possible.

Have an excellent start to the evening.

TraderJoe

Friday, November 19, 2021

Mixed Equities

Some equity markets started off a lot higher on the continued prospect of the passage in the U.S. House of Representatives for the next phase of the stimulus bill. The ES for example was initially up +17 points in the overnight markets, then reversed fully to be down -18 points. The NQ was up all day. Here is a brief survey of markets.


The ES/S&P closed the day lower, the NQ higher, the Dow and Russell futures also closed lower. Both Gold and Crude Oil also had lower low days. The VIX was up slightly and interest rates fell off a bit.

The possibility of an ending contracting diagonal remain in the ES futures. We diagrammed that in the comments for the prior post along with the hourly count. The ES today made the first higher high which might be wave (i), most likely of a diagonal - IFF it forms properly with 62% retraces. If it doesn't we may only be making another 'b' wave. We're not sure yet of anything except all the overlaps.

Have an excellent start to your evening and to your weekend.

TraderJoe

Thursday, November 18, 2021

Trillions More?

In a lesser reported - but still important - story House Democrats were poised to vote on the second of the Administration's stimulus bills (see story at this LINK). The market likely got wind of this today, and much of the market headed higher. Like it or not, the market has now created the situation that we must reconcile in terms of degree.


Until three weeks ago, the up leg since November 2020 was shorter in price but yet longer in time than the leg from the March 2020 low to the August 2020 high. But now, the second leg can also be viewed to be longer in price, too. That means the two legs should be of the same degree or the second leg is of a higher degree. But, yet, in price, only a rough measure of equality exists; there is not a 1.618 relationship. Therefore, until and unless there is a clear fourth and fifth wave higher, as per The Eight Fold Path Method, we will label the legs per the Principle of Equivalence - just as I would do on any smaller degree wave.

At this point, one can only talk about probabilities, and the probabilities are only slightly favored for the (A),(B),(C) count because in a (1),(2),(3) count then wave (3) breaks a trend line from (0) to (2). The (A),(B),(C) might still be to a larger Primary ((B)) wave.

Could there be a turn lower soon? There could, but, so far, it is not on the board. The signs of excess abound. Will one man and one woman (Manchin & Sinema) stand between the American people and their trillion or so dollars? It's hard to know.

Meanwhile, back at the chart, the ES daily slow stochastic has embedded again. There is a divergence of the Dow and Russell from the rest of the market. And daily price is not in contact with or over the daily Bollinger Bands. Price is over the 18-day SMA, and any higher all-time-high, like what happened in the NQ futures today, will also turn the swing-line up. Today was an outside-day-up forming a hanging-man candle in the ES. 

As we showed in the comments, it is possible a barrier triangle or diagonal might be forming IFF (if and only if) a new high is made in the ES - like it was in the NQ.

Have an excellent rest of the evening.

TraderJoe

Wednesday, November 17, 2021

GOLD - Status

It is now possible to see a completed up count in GC (GOLD futures) in the daily time-frame. Yesterday was a pin-bar against the upper daily Bollinger Band. There are no guarantees, of course, but a minute ((b)) wave would be located against the 78.6% retracement level.


Importantly, the up move would have taken more time than the down wave, and it would have also closed the apparent gap left in the middle of wave (iii) on the way down. 

This count is only looking for a minute ((c)) wave down to finish an expanding diagonal larger Minor A wave down within an even larger triangle count.

Obviously, the pattern invalidates over the June high. And, yes, price is still above the 18-day SMA, so the daily bias is still UP, so be careful what you do with this information as any down wave could start out by being very, very, bumpy. In the short term, I would place a wave counting stop above the current high, and reassess as needed at that point if the stop is hit.

Have an excellent rest of the day.

TraderJoe

Monday, November 15, 2021

Not Embedded

Just checking after the evening session resumed, and the daily ES futures remains with a slow stochastic reading that is no longer embedded. This could presage a trip to the 18-day SMA. If, instead, prices  head higher it would take another three days to rebuild an embedded stochastic.


Today's down close was friendly to the possibility of a downward diagonal, but by no means was it definitive.  Here is that potential diagonal on the ES Hourly chart.


Note that wave iv did obtain a level of 78.6%, with 62 - 81% typical of diagonals. Therefore, I would place a wave counting stop above this morning's futures high for this pattern.

Have an excellent start to your evening.

TraderJoe

Saturday, November 13, 2021

Devil's Advocate - 2

In the effort to play "Devil's Advocate" the issue that bothered me most was the first move off of the 2020 Covid low. On daily charts, it looks like a 'three'. And it certainly was another one of these 'grinding' waves up. I took a very long hard look at it this morning, and asked the question what could be the error? The only "Elliott compliant" count I could determine is a slightly convoluted Minute extended first wave within an Extended Minor first wave. While I don't care for it much, there are no Elliott Wave rules violations I can find. The ES 12-hr chart is below, not cash, to insure that all price movement and time is accounted for.


Again, I freely admit this count was done after the fact. It is done in an attempt to learn and to see if there any degree violations. As far as I can tell there are not. Wave minute ((ii)) is the longest correction in price and time, and it is the larger degree wave after minuet (iv).

The wedge shape is clearly outlined. There is a thrust over the wedge which results in a minute fifth wave which is shorter in price and time than minute ((iii)). So, the overall sequence is ((v))<((iii))<x((i)). And that does fit the extended first wave guidelines. There is no overlap between minute ((iv)) and minute x((i)). And, no part of minute ((iv)) travels into wave minute ((ii)) territory.

Next explored is the Neely 0 - 2 trend line. And in this case, the 0 - ((ii)) trend line clearly cuts off a third wave ((iii)).

So, if this count is correct, the conclusion I come to is this: the 0 - 2 trend line works for the case where wave three is the extended wave in the sequence. (This is similar to the situation for The Eight Fold Path Method). But because in the extended first wave case the pattern is expected to form a wedge, then the 0 -2 trend line may not, and likely will not show all of wave 3 above it, and that makes sense from the shape of the pattern about to develop.

It needs to be clear, I do not fault Glenn Neely for making the generalization. Rather, it is highly likely that there were an insufficient number of extended first wave cases to study to recognize how there could be a difference.

P.S. I have shown the above count at the Minor wave 1 level. It could very easily be upgraded to the Intermediate (1) level simply by adjusting all the wave degrees up one level, and so in the lower right it shows or (1).

This is the second post this weekend, and yesterday's post should be read to better understand this one.

Have a good rest of the weekend.

TraderJoe

Friday, November 12, 2021

Devil's Advocate

The chart below is a best attempt to play 'Devil's Advocate' with the up wave since the 2020 Covid-19 low. Below the chart is a discussion of some Pro's and Con's.


The rationale is listed on the chart. Since wave 2 is less than 38% both Prechter and Neely would tend to agree that this should indicate an extended first wave. We know from the futures - that where 3 is located - results in a shorter wave in price than wave x1. The highest point on the MACD might be for wave iii of 3. And since wave 2 was a simple sharp (zigzag), then wave 4 might be a more complex sideways or 'flat' wave. For alternation, it's b wave may have gone over the top. This chart would still indicate that there would be a lower low than the 'a' wave. Then, there would be a fifth wave higher.

Certainly, the overall extent of the rise gives concern to the Primary ((B)) wave scenario.

There ARE still problems with this line of thinking. First, it is extremely difficult to count five waves in x1. It sure 'looks' like three waves. I have looked for leading diagonals - can't find them. I have looked for running waves that allow five-waves-up to x1 and I can't find them either. 

The next problem is pure Elliott - and by that I mean Ralph, himself: that is that a powerful wave 3 never breaks a 0-1-2 base channel to the up side. This is roughly equivalent to Neely saying that the third wave breaks the 0 - 2 trend line.

A further problem is the lack of true 'impulsion' in the third wave. The third wave is currently a 'grinding' wave with lots of overlap. Rather than traveling up & to the left, it bends over and travels more to the right.

Why play devil's advocate? Perhaps none of these analysts have fully analyzed the case when the first wave is the extended wave in the sequence. Or perhaps when Elliott Wave was developed there was no concept of what quantitative easing might do to a market. Yet, in both cases a significant down wave is called for. Yes, there are enough problems here to say that this count does not rule out the Primary ((B)) wave higher. Yet, it is interesting, and still problematic. But, in the spirit of having an open mind, the count is presented.

Have a good start to the day.

TraderJoe

Wednesday, November 10, 2021

Equivalent and Not

While we are waiting for a more complete description of recent down side price movement in the ES daily futures, I thought I would tackle this issue. (Yes, so far prices have declined as expected).

Logic is necessary for making analytical decisions. And if market analysis is to provide a basis for market decisions, then logic must be used.  A core principle of logic is that two things can not be the same unless they are identical in every way. Let's take as an example, two mechanical springs. IF two springs have the same part number, coil diameter, coil length, wire gauge, and tension when stretched five inches, then we may say "they are the same". IF they do not share all of these properties, then they simply are not said to be the same.

Let me at the outset distinguish, "being the same" from being a member of a set or of a category. Five types of plants as in 1) an oak, 2) a maple, 3) a pine, 4) a birch, and 5) a willow are all clearly not identically the same. Yet, they are a member of the set of trees, or the classification of trees. I am not referring to things which are members of sets or categories here. I am referring to knowing when a pattern is one pattern and NOT another.

Applying this same logic to Elliott Wave analysis, we need to find a way to distinguish clearly these contracting types of patterns.

Elliott Wave Logic - Two Types of Contracting Triple Zigzags

Each of these two patterns can have zigzags for each of the numbered or lettered legs. And yet, they are both contracting patterns - or volatility compression patterns. In practice, how is one to distinguish these patterns? The Elliott Wave Principle by Frost & Prechter sites "guidelines" for the diagonal as having waves ((ii)) and ((iv)) retrace between 62 - 81% of the prior wave.

This analysis is now suggesting that term "guideline" for this measurement is too soft, or too inconclusive to have practical use in decision-making. In the markets we need to make good decisions or it can cost us money. Therefore, I am proposing - based on logic alone - that any triple zigzag compression pattern that does not meet the 62% retrace requirement for the second wave can only be labeled as the triple zigzag - when over the prior wave 3 or A high - and not be labeled as a diagonal. In these cases the pattern would most likely be a B wave or an X wave.

What makes the difference? The measurements - just like the tension measurement when the spring in the above example is stretched the five inches. Hopefully, this can prevent unintended incorrect labeling of waves in the future.

Have a good start to the evening.

TraderJoe

Tuesday, November 9, 2021

TL Break

Today - amidst a lot of noise - we showed that this ES 4-hr trend line broke to the down side. As soon as the cash market opened, there was an impulse to the down side, and then consolidation the rest of the day.

ES Futures - 4 Hr - Break of Recent Trend

For those who care, we suggested at least noting where the 23.6% and 38.2% Fibonacci retracement levels are located. For those who don't care - oh well. Note the EWO is red and declining.

On a slightly tighter time frame, there may be some benefit of recognizing a crossover in the 1 Hr EMA-13 versus EMA-34 and seeing if prices follow that lower, as below.

ES Futures - 1 Hr - EMA Cross

Currently the count is just viewed as incomplete - like that math class I didn't finish in high school. We may be making a triangle on the ES 5-min chart, but that remains to be seen - subject to all the usual requirements. There certainly is a bunch of overlap in the consolidation, and it has been taking a fair amount of time.

Since the Dow (YM) futures made a high on 8 Nov, it is possible that same bar is the high on the ES.

Have an excellent start to the evening.

TraderJoe

Monday, November 8, 2021

You Failed the Test

Sometimes I draw a chart with a twist or two in it to see who is watching, and who cares about counting waves. Yesterday, I posted a chart with a clear and obvious error in it to see who gives a toot. No one apparently. Everyone wants to draw their own charts - with legal counts or not - or point to their favorite website that tells them that prices are going higher forever. Or they want to show some other way to make a technical indicator work on the market. Apparently, very few people are interested in conversing regarding wave structure. So, no matter who you are - you failed the test. Why bother to read this site, or any other Elliott analyst if you are not going to engage with it? The boredom and complacency are palpable.

Yesterday's chart showed and referenced five "minute waves" symbols ((a)) - ((e)) as a triangle between two clearly marked intermediate waves. That obviously is not correct. It simply does not follow degree structure. The triangle wave should have been labeled at Minor degree as A - E. It is Minor degree waves that make up Intermediate degree waves. Intermediate degree waves are made up of Minor degree waves.

Really. No one - with few exceptions - cares a whit about degree or what it means. No one cares to lob a comment back like ("hey! I know I am right about these degree labels are you are just incorrect, TJ!").

So be it. So today there is no chart. You can read the comments for yesterday if you like.

Weekly Bias - Up
Daily Bias - Up
Intraday Bias - Finished lower.
Daily Slow Stochastic - Still Embedded
Candle Pattern: Inside Day

Have a good start to your evening.

TraderJoe

Sunday, November 7, 2021

Best Alternate at this Time

Look over at the "trend line of interest" on the right hand side of the chart. This line has not been broken yet. This suggests that even if the line is broken it might only be a fourth wave yet. So, this is the alternate to the Minor B wave of (X2).

ES Futures - 1 D - Best Alternate

 

On a four-hour chart, if we are counting with the trend, we should allow the market to prove whether this up wave is an impulse or not. It could turn into one if there is a fourth wave down and a fifth wave up.

Further, we know that the wave up to alternate minute ((b)) in the ES futures overlapped like a diagonal but did not function like one. The low of the potential ending diagonal was not taken out in less time than the diagonal took to build. And, in the Dow, it did not even form a proper diagonal, with a higher fifth wave so it may not be a leading diagonal - plain and simple. This would break the rules in the Dow for a contracting leading diagonal.

Others have a suggested a triangle for this internal movement to the end of September, and this was not lost on my eyes. It was just hard to figure how this would enter into the count. With the most recent movement and highs on both the EWO and RSI, it would now appear that IFF this current up wave can impulse, up, then it may not be Minor B of Intermediate (X2), and it may be Minor A of Intermediate (Z) instead.

I do not yet see this up wave as "ending a move" because the internals (A/D line, technical indicators, etc.) are too strong at the moment. So, there could be a Minor B wave lower in this alternate count, and it might overlap the prior high - by a little or by a lot.

Again, this alternate is operable IFF (if and only if) the current up wave can form a proper impulse. It hasn't done so, yet.

Let's see how it goes. Have an excellent rest of the weekend.

TraderJoe

Friday, November 5, 2021

'Typical' B Wave Measurements Met

Weekly Bias - Up
Daily Bias - Up
Intraday Bias - Turned Lower
Daily Slow Stochastic - Embedded

IFF the up wave from the October low is a Minor B wave, then today the 'typical' Fibonacci levels for a B wave have been met. Referring to the daily chart below, the market 'put tails' on the B-3 = 1.5 x A-3 external Fibonacci retracement level - very near the upper daily Bollinger Band.


The futures market hasn't closed as of this writing, but the current situation looks like the tail candle (pin-bar?) will persist. As with all potential reversal candlestick patterns, this one must be confirmed by a significant lower low & low close candle. That hasn't happened yet.

During the day, the intraday bias turned lower, and it is now fighting with the daily and weekly bias. The daily slow stochastic is still embedded. Again, the candle could only be a profit-taking candle so caution, patience and flexibility remain desirable until better confirmation is obtained.

Regardless, as regular readers here know one broker, Ira Epstein, urges in his YouTube & client videos that clients never buy over a daily Bollinger Band, and he is quite emphatic about it - even when the slow stochastic is embedded. Rather, he suggests that is where the so-called Smart Money is often taking at least partial profits. He recommends waiting for a much better pull-back before buying again.

If you have a question about Ira's trading guidance, you can refer to this paraphrase I put together several years ago at this LINK.

Have a very good start to your evening and your weekend.

TraderJoe

Wednesday, November 3, 2021

Nearing in on B Wave Measurements

The question always with B waves is, "Will They Pan Out?". Price is now approaching the 1.382 Fibonacci external retrace of the down wave. There is more room if the market wants to push it, but the up count is getting quite mature.

ES Futures - 12 Hr - Near 1.382
 

Today, the FED announced its program of tapering which is slightly faster than the last version. Often, the Asia session adds to FED day gains, at least in the overnight. Maybe one of you might comment on why I listed the minute ((b)) up where it is located.

Have an excellent start to the evening.

TraderJoe


Friday, October 29, 2021

No Urgency To Sell = NUTS!

ES futures just hit new all-time highs. SPY has not as of this writing. Yet, the put-to-call-ratio (see second chart below) is back down in 0.36 region as of last night. There is No Urgency To Sell, and this is otherwise termed complacency. Is it possible that the market is merely extending out this fifth wave of Minor B as an ending contracting diagonal (chart below)?.


The first step necessary, of course, is for SPY/SPX cash to register the new all-time-high. If it can do that, it might back off a bit in a wave iv, then pop up to make wave v to finish the minute ((c)) wave of Minor B.

Here is the put-call data with the latest reading at 0.36, the likes of which have not been seen in months.


Have an excellent rest of the day.

TraderJoe

Wednesday, October 27, 2021

Minor B ? - 2

The case for the Minor B wave at the high got a little stronger with the lower daily low today. Although today's initial internal waves were tortured and twisted (good pre-Halloween theme?) prices let loose at the end of the day and broke a revised base channel downward. This after further upward corrective waves refused to go over the 62% retracement in a failure, as below.

ES Futures - 30 min - Waves i & ii

Now we need to see if the prior wave (iv) is broken lower. If it does it would add to the evidence for this case. Within wave ii, the internal sideways triangle portion of the correction, may be correcting for the internal degree violations in time.

Have an excellent start to the evening.

TraderJoe

Tuesday, October 26, 2021

Minor B ?

IFF we are making a Minor B wave, up, after three-waves-down to a Minor A wave at the 1 Oct low, then this one fits the bill on the ES 4 Hr chart, below.

ES Futures - 4 Hr - Minor B

The relationship would be Minute ((c)) = 1.618 x Minute ((a)), with Minute ((a)) as the expanding leading diagonal. The clear alternate is shown below the price on the red line.

And, here is how the last wave up was counted out today on the ES 30-minute chart.

ES Futures - 30 min - Wave (v) Up

Today's up wave - after the initial drop - should it hold tonight, would be one of the first to hold below a 0.618 close on the retrace up. The low of wave iv has already been broken in the above chart, and wave iv is a triangle or a failed combination - difficult to discern.

Have a good start to the evening.

TraderJoe

Friday, October 22, 2021

No Change to Prior Waves Counted

Here is the weekly chart. There are no changes to prior waves counted. The new information is that stocks and futures (with the exception of the Russell 2000, yet) have made a new all-time high. Also, the NYSE advance-decline line made a new all time high. Along with several other FED-related factors this suggests that upward stocks movements may not be over.


From a technical viewpoint, using the weekly chart 1) there is no wave two signature on the Elliott Wave Oscillator. 2) Price could attempt to form a better channel. 3) There could be alternation in the wave (X)'s. 4) Wave (Y) was not as long as wave (W), but a brief turn lower occurred at exactly the right time, and 5) IF wave A is in 'three-waves-down', one simply had to wait until price got to 90% of the high to suggest that maybe wave (X2) will be a Flat or Expanded Flat. It did.

I could be wrong.

On Saturday morning, an update of the 4-hr chart was added to this post. The chart shows that this up wave whether minute ((iii)) or minute ((c)) is best paired with the leading expanding diagonal off of the low.


The rationale is that the pairing results in a near 1.618 relationship at this time. Now, "most often" leading diagonals are "a" waves. And, if so, one might expect the tentative up channel to break and not support a fourth wave down. But that remains to be seen.

Have a good start to the evening and to the weekend.

TraderJoe

Thursday, October 21, 2021

Up Wave Without A Substantial Pull-back x((1)) ?

This is the best hourly count I see. There is nothing yet to imply that the up wave is over. It would be quite a short wave ((5)) if the wave ended here. But, it bears watching. Price has not gone over the all-time high yet on this index, but it could.

What we can see is that the 0 - ((2)) trend line has been broken to the downside, and that is likely the wave ((4)). The location of ((3)) is not precise. There is one way to count in which ((3)) is at the 0.618 extension of wave ((1)). There is also a way to count wave ((4)) as a triangle - which was shown in the cash market in the comments.

The hourly EWO did drop below the zero line meeting the requirement of +10% to -40% of the largest prior peak. There is also a smaller probability that wave ((4)) is further to the right on the chart as a flat. Again, this depends on any overlaps. But at this point the up move exceeded a 1.382 of the prior high and low.

Have a good start to the evening.

TraderJoe

Wednesday, October 20, 2021

Internals

The $NYA has made a new high. The advance/decline line has made a new high. The Dow (YM) futures need to be watched to see if they exceed their truncation high. The ES futures have exceeded the 90% level of their decline. Internally, there is now more than a 1.272 wave up off the low with a higher high on the EWO.


The situation suggests drawing this tentative channel and looking to see if the channel holds or not. As I said previously, it is possible to go over the high. The $NYA has done that - as was commented yesterday.

The symbol (c)/(iii) > means this wave is continuing until a clear reversal is seen. And a wave (iii) is as likely as a (c) wave; but a 1.618 wave has not been attained yet.

Have a good start to the day.

TJ

Tuesday, October 19, 2021

Smart Money Target Hit

In previous posts we noted that the upper daily Bollinger Band might be a target for the Smart Money: those with position sizes large enough to move prices. This morning that target was hit and then some.


Today being Tuesday, prices might 'turn around' some. The question is how much and what it means for a wave count.

Have a good start to the day.

TraderJoe

Friday, October 15, 2021

Count Not Useful at the Moment

Today, we said the Smart Money might target the upper Bollinger Band at 4,472.50 and price got to 4,468 not quite making it. Why? Maybe it will on Monday/Tuesday. Maybe not. If not, there is a potential failure lurking, as we showed in the comments for today on the ES 8-Hr chart, below.


Price has not yet crossed up over the 27 Sep high. It could. That would be a common expectation. Price could also continue up to the 78.6% Fibonacci ratio or beyond. Could it make a new high? It could. 

The wave count is relatively useless at this point. A lot depends on that issue we we having with the first wave down. Is it a "five" or a "three"? If it's a 'five' we might just have had a large flat following it. Or, if it's a "five" the wave structure to the low might be ((a)), ((b)), ((c)) to Minor 1, with a second wave, Minor 2 for the month of October. Or the a-b-c could be part of a triangle, somewhere.

If it's a "three", then the wave structure to the low might count as w-x-y.

Another confusing item: the SPX/SPY and NQ futures made lower lows the first day of October. The ES did not. So, this might support some sort of "b" or "x" wave at the early October low. But, again, it does not add to the clarity. 

Too, neither is the situation with degree labeling able to answer many questions. But, because the late September wave down is shorter in price and time than the early September wave down, it can count as a sub-wave - like a "b" wave or an "x" wave.

Dubiously, the situation requires flexibility and willingness to use technical indications such as the Bollinger Bands until we see if a new high is made first or a new low. Right now, the Bollinger Bands do not exactly look like they are in a position to support new all-time-highs right away. But, stranger things have happened.

Have a good start to your evening and to your weekend.

TraderJoe

Thursday, October 14, 2021

Trend Line Broken

Today the down trend line was broken (and, hence, the upper parallel trend line). The upper daily Bollinger Band might be a 'Smart Money' target, but it does not have to be.


The count is temporarily in a state of limbo until we see how far the up wave pushes. At this point one can speculate until blue-in-the-face about triangle, and where they start, etc. We will avoid that for now while admitting a triangle is possible - but so it a Flat wave.

The one thing we will note, is that if this is the whole correction, it is just less than 23.6% from the Oct-Nov 2020 low. And it is only 14.6% from the March 2020 low. More downside - which has not been ruled out yet - could make those numbers more proportional. Such shallow corrections are almost unheard of.

Have a  good start to the evening.

TraderJoe

Wednesday, October 13, 2021

Back to the Line In the Sand

Yesterday, we suggested that maybe a second wave wasn't done yet to the upside. Today tended to bare that out.


After making a 90% retrace needed for the 'b' wave of a Flat wave, price then headed higher to the combination of the 100-day SMA, and the 18-day SMA. Keep on a watch out to see if the 18-SMA crosses under the 100-day.

Have an excellent start to the evening.

TraderJoe

Tuesday, October 12, 2021

Still in Channel - 2

Today posted some lower lows versus yesterday. We could count a new wave i down as an expanding diagonal which still fits degree labeling because it is shorter in both time and price than all of (a) - the prior higher degree wave in the same direction (down).

ES Futures - 8 Hr - Still in A Channel

Therefore, wave i counts as a valid subwave. It now seems largely a question of whether wave sub-minuette ii finished today or wants to make one more series of highs above today's interim highs. It certainly can do that if it wants, but just not exceed the (b) wave high.

This is also just a reminder than wave minuet (c) can either be an impulse or a diagonal. Why? Because it is in the (c) wave position, and therefore may be either if minuet (a) was an impulse.

The market may be perceived to be moving like molasses to the the down side. I did not order such. It is just what seems to be happening - for now. Regardless, wave iii of (c) should be a fairly dynamic affair if this is counted properly.

Have an excellent start to the evening, and thanks for reading.

TraderJoe