Trillions More - Dow at 61.8% Extension of Intermediate (W)

Stimulus was passed and signed off yesterday in quantities of more than a trillion dollars. The Dow is now at the 61.8% extension of the Intermediate (W) wave - which we have written before was a real possibility. No one has been more of a proponent of the Primary ((B)) wave, shown below, as this blog, since June of last year.

Dow (YM) Futures - 2 Day - Wedge

Diverging all the way against the Elliott Wave Oscillator (EWO) we argued that impulsive counts are nearly impossible except in discreet local areas. The price action has been wedging the entire way and the conformance to the wedge lines is truly exceptional. But more than that, we noted that the Dow can no longer overlap wave (W) with a shorter wave than wave (X). This entirely rules out the possibility of an ending contracting diagonal wave - for a supposed Primary ((5))th wave - that many might have been hoping for. We tossed out that idea long ago!

Currently, the symbol ((B))>, means the Primary ((B)) wave is continuing forward. We have little evidence of its having ended. It may stretch out to be longer in time than the Intermediate (B) wave of the Primary ((A)) wave, down.

On a more local level, intraday today, before the open we noted only "three-waves-down", and saw likely corrective possibilities. All day in the ES futures was backwards-and-forwards overlapping waves. Here is an ES 15-min chart.

Hopefully, the three-waves down is plain enough as ((A))-((B))-((C)). The ((C)) wave did not reach 1.618 times the ((A)) wave. The real lesson in the down wave is how - if one is expecting divergence to signal the end of the wave - it never happens. Up they go with a scrambled mess - leaving the possibility of a fourth and fifth wave in doubt for quite a while. This is one of the market's current favorite tricks: not making fourth and fifth waves.

Then, if one thinks they can count the up wave without use of a diagonal structure, I'd say they are sorely mistaken as this chart shows. Any other count would have incorrect measurements and/or overlaps that break the rules.

This is difficult wave counting: some of the most difficult I have encountered. Three items that are currently the most difficult are 1) no significant down wave will be made except in the overnight market, 2) all day long the algorithms are turned on to grind on every single tick, so that ...3) price increase occurs for the close.

Regarding item #1, yes, there are exceptions: down waves have definitely occurred during trading days. There are many examples. However, one must question this concept: why do all significant gaps occur as the result of overnight activity? Who has permission to do such things on the lower volume? Some of us really want to know.

Thus, there are many things to ponder into the weekend. Have a good start to it, and to your evening.

TraderJoe