Let's cut to the quick. On the ES Daily chart, the Intermediate (Y) wave can still be in play. We said that was possible yesterday. Here's how.
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| ES Futures - 1 D - Potential Diagonal |
In this case, the Minor C wave could be a potential ending diagonal. It may not be completed yet. Right now the structure has "the right look" and the right measurements. The A wave would count as an impulse with a triangle of some sort after the 'spike' wave.
Today, we did in-fact count five-waves up, as follows.
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| SPY - 5 Min - Impulse Up |
After we counted five-waves up in the SPY, the low of wave (iv) was taken out in a three-wave down move that consumed very little time. We said prices could go over the high again. We said it yesterday, and we said it today. They did that. Because of the short length of time for the correction, we were looking for a "B" wave up to make an expanded flat, and a longer correction. We said, "look for 1.382" if they want to close it up over the high on a Friday. They did, but the final up wave turned out to be more than that in the last candle!
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| SPY - 5 Min - Impulse with add-on wave. |
Because of the brevity of the downward wave, this looks like a wave in a diagonal with the last up wave part of a "C" wave within the diagonal shown in the first diagram.
Diagonals can be messy. It is extremely difficult to say if the prior high is wave (i) or (iii) of the diagonal. We'll have to stay tuned. Remember, potential diagonals are patterns that have to be proved. That means the interior waves should not exceed 100% of each other. So far, they are fine.
Until we can do those measurements later on, have a very good start to your evening and to your weekend.
TraderJoe
Thanks TJ & GW for your work. I’m surprised the VIX did not close the gap.
ReplyDeleteSPX a/d line at new high but NYAD not. Something to watch next week.
DeleteAlso VIX divergence...
ReplyDeleteThanks ET.
ReplyDeleteMay I suggest the counter rally which finished with a late surge on Friday is now over. Let's recall that a 5 wave decline from the ATH at ES 3978.50 to 3875.00 was completely satisfactory from an Eight Fold Path perspective and included a rare 4th wave expanding triangle.
Since that time we have had:
- An initial 3 wave bounce of 69.50 pts to 3944.50 (wave A).
- Then another 7 wave decline of 101.25 pts to a lower low at 3843.25 (wave B). This makes for an A x 1.457 = B relationship which is comfortably in the ball park when contemplating an expanded flat scenario.
- Wave C of the expanded flat then concluded at Friday's high at 3968.00. Wave C can be counted at 5 waves with waves 1, 3 & 5 all of similar size but with wave 1 marginally the shortest. Wave 4 within Wave C can still be counted as an expanded flat but larger in scope than is illustrated above (i.e. finishing outside the channel) whilst still keeping a satisfactory EWO signature.
- Wave C counted this way measures 124.75 pts and has a 1.795 relationship with Wave A.
- The full retrace from the low (3843.25) to the end of wave C (3968.00) is a 92.24% retrace back to the ATH at 3978.50.
- The net retrace of the initial 5 waves down of 103.50 pts (from the ATH at 3978.50 to 3875.00) back to Friday's high at 3968.00 is 93.00 pts or 89.86%. Will they push it up fractionally early in the new week to surpass the 90.00% level? That may be possible but not essential.
In summary I believe ES has provided an initial impulse down from the ATH followed by a retracement in the form of an expanded flat. As a result I am expecting a large wave C (or possibly wave iii) down to start at any moment.
No Billy. That scenario violates degree labeling. See link. You would be claiming that the 'smaller degree' subwave, b, in the down direction could be larger than the prior larger degree wave in the same down direction.
Deletehttps://www.tradingview.com/x/nPG3sEzZ/
There are 'only' two ways a valid decline could result from here. One is in the form of a diagonal, as below.
https://www.tradingview.com/x/KJ0XjqDH/
The diagonal would have to have a 'three-wave' internal structure of 3-3-3-3-3, and there is only one leg formed. Friday's high would be (ii). Therefore, the likelihood is very, very low at this time.
The second way is with a truncation of the fifth wave from the daily diagonal shown.
https://www.tradingview.com/x/P6VO3Rs8/
Then, there would be a larger five-wave decline off of the truncation to start a bear market.
Major market declines 'have sometimes' occurred on Friday into Monday as in 'melt down Monday's" or "Black Monday's" but usually the decline has already begun when that has occurred. So, while 'possible' the odds are very low as of this date. Yale Hersch even titled his book, "Never sell stocks on a Monday".
Hope this helps.
TJ
I sort of like the diagnol idea if rty is leading the market down as of now. It's below all the important ma's and tested resistance at Fridays close.
DeleteYou are absolutely correct ET. I missed that. Thus I have to anticipate at least a few weeks more before a top of any significance can form.
DeleteI think it’s possible we see higher Vol. over the next few weeks. It’s been a year now from the market low and some traders may lock in long term gains at these levels.
ReplyDeletehttps://schrts.co/kYykpmzw
DeleteI can’t buy the Q’s with VXN at lower BB.
Also interesting, thank you
DeleteCycling through some market charts this morning, I found a bit of a problem with the potential diagonal in the Dow cash, and S&P cash. The Dow illustrates it best. The simple fact is the third up movement in the Dow is longer than the first up movement. See chart below.
ReplyDeletehttps://www.tradingview.com/x/nIN2hGCr/
Also, in cash, there is no overlap for a fourth wave of a diagonal. This means the Dow simply might not be making a diagonal, and wave (v) might grow larger since wave (iii) is 'not' smaller than wave (i).
TJ
Im not at main computer till Tuesday, but the last couple of candles on the daily make me think that about that barrier triangle idea from late January again.
ReplyDeleteon /ES. Have a great weekend all.
DeleteBarrier triangle is barely possible in the ES from a length stand-point; not in the Dow. But, the problem with it seems to be there are too many complex down legs. Only one leg of a triangle should be complex, and the down leg to FEB counts best as a 'five', like it ended a flat, and not a 'three'.
DeleteTJ
T.J. a quick question if I may. You are the only E.W. analyst I know that agrees the money-lenders have any measure of control over market price. How, in your informed opinion does that square with price's obligtion to conform to the E.W. principle? Do you think it is a matter of degree with the priciple ultimately over-riding their efforts, or is it always possible to alter a developing E.W pattern and morph it into another, for exaple. making what apoears to be a contracting E.D. end up with a 5th wave that exceeds the the 3rd Quite a conundrum for my own wave~ counting efforts. Thanks!
ReplyDeleteThe Wave Principle tracks human fear & greed through their actions of buying and selling stocks, bonds and other assets. As long as there are people (including Central Banks) willing to take actions that promote buying assets, then there is no 'pre-ordained' wave count. Still, wave degrees must be accounted for.
DeleteFor those interested, I've tried to highlight some of the nuances (that I see) with what I deem to be H&S patterns. I begin with an overall view, and then show those individual ones in closer detail. First, the overall -
ReplyDeletehttps://funkyimg.com/i/3bEoe.png
Close up views:
https://funkyimg.com/i/3bEoh.png
https://funkyimg.com/i/3bEok.png
https://funkyimg.com/i/3bEom.png
https://funkyimg.com/i/3bEon.png
https://funkyimg.com/i/3bEoo.png
XLU/VTI - risk on - risk off ratio (update) -
ReplyDeletehttps://funkyimg.com/i/3bEtN.png
RSP/SPY (wkly) (unweighted vs weighted) - (if interested)
ReplyDeletehttps://funkyimg.com/i/3bECz.png
https://schrts.co/PIGEMDVN
ReplyDeleteA cup & handle. If this breaks out the SPX will follow.
A new post is started for the next day.
ReplyDeleteNoone thought Friday was a bull trap. That would be a classic f u move by GS
ReplyDelete