Yesterday we indicated we had only three-waves down, and laid out scenarios from there. Today became a "risk on" day after the Payroll Employment report showed fewer jobs added than the ADP report. Of course, of the two, it is probably the government that can't count, or "is behind" in catching up to those private sector jobs added. As a result, stocks neared the old all-time high, but futures didn't go over it yet. They could at some point.
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| ES Futures - 1 Day - Green Day |
In the process of making their run higher, the ES futures invalidated all downward diagonal scenarios, as did the cash SPY by making a slight higher high over the 1 Jun high, and in the case of SPY a slight new all-time-high. IFF (and that's a big if) price were to stop moving up here, then the up move to (b) could be counted as a triple zigzag, in a wedge, as in the chart below.
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| SPY - 2 Hr - Slight New ATH |
Such a wave is still acceptable for a barrier triangle, where (b) and (d) could be level to the prior wave ((iii)). But, there is no guarantee price has stopped at this level, and it will simply have to be monitored. Right now, with a Fibonacci (b) = (a), the structure could also be a regular flat wave in progress. Higher prices could lead to an expanded flat or maybe a diagonal, although at this time such a diagonal would be much too premature to speculate on, and the wave structure doesn't look quite right for it.
In any event, a down trending wave is not even indicated until the wave marked as the second 'x' is exceeded to the down side.
Have an excellent start to the evening.
P.S. Wyckoff Method for a Distribution Top with Elliott Wave Labels applied.
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| Wyckoff Method For Distribution Top With Elliott Wave Labels Applied |
TraderJoe
ATHs likely ahead. Money flows around 4200 signaled it would be defended. Have a great week-end everyone!
ReplyDeletePlease just examine this study in relationship to the "round number theory". Notice from the Volume Profile peaks, it is "hit or miss". In particular, in this last instance, the volume profile actually indicates 4,168 (the 'c' wave low) which I called as "three waves" was the support. I just fail to see how 4,160 is included in the definition of 4,200.
Deletehttps://www.tradingview.com/x/3LLdihn8/
Now look at other locations on the chart. Yes, 3,400 was a prior top and a volume profile node. But, 3400 is also a major Fibonacci as the product of 34 x 100. Whereas 4,000 (see red line and label on the left) which should be a "round number" of importance is on an absolute volume low, and was sliced right through.
Yes, you can easily pick 3,900 as proving the case, but then there is more support resistance on 3,675. I fail to see how 3,675 defines a 'round number'.
So, again, unless you are able to 'show' something I honestly think what you are doing is 'cherry picking' data; somewhat after the fact.
I don't mean anything at all by this other than an academic discussion on a supposed method.
TJ
If 4200 was defended by money flows as you claimed on Wednesday, then how did it go down to 4165.38 Thursday morning? What kind of defense is that?
DeleteOnly the first leg down to 4100 of course!
DeleteI am a trader T.J. not an analyst. I wish I could write a definitive. paper on why making trading decisions around closing price at these RN but concededly I cannot. I do not post my entries and exits as the site is not about trading, but two days ago based on some other indicators I use I expressed serious doubts tbat a third down was imminent, and said that Powell was still in charge. Without being crasss, I would be willing to privately provide you a list of trades based on my "gheory" along with account screen-shots.
DeleteAnd yet Bill Williams is a trader, recognized around the world as a "Master Trader". Yet, his trading method is so simple I can summarize it on one slide.
Deletehttps://www.tradingview.com/x/B8IPaDx7/
No mystery. No "round-number" voodoo. No "gheory". Just simplicity.
TJ
FWIW, I monotor price action around round numbers on the 15 minute chart. Last week it was clear price was not being allowed to move much below 4200
DeleteCan't explain why, price action is wbat it is. I would ordinarily wait for two consevutive closes above a contested rn but on Wednesday it was clear, at least to me that the bears were going to loose that battle and so SPY bull put spreads with a stop below 420 on a closing basis were deployed. Short 420 puts were exited at the close on Friday for substantial gains, while I remain long 418 puts of the 2 point spread. NOT trading advice and for illustrative purposes only.
Again, how is 4,165 not 'much below' 4,200? And 'how was it clear'? Again, I am not saying you are incorrect. It's all in the method. To, me, it was the issue of price simply not closing below the 18-day SMA which was at 4,162 which kept the price bias positive; the "non-personal way" or more methodological way of saying, "it was clear price was not being allowed to move ...".
DeleteTJ
SPY (15min) - e.o.d. -
ReplyDeletehttps://funkyimg.com/i/3ccpq.png
DXY (4hr) - thoughts
ReplyDeletehttps://funkyimg.com/i/3ccpP.png
TNX still holds above RSI 40 (Daily) any thoughts?
DeleteTBT also at support shelf around 20. It should follow T.J.'s recent TNX chart analysis imho.
DeleteTNX count update is below (June 5, 09:58 am).
DeleteT.J. have you ever considered penning a concise primer on correct degree labeling? If presented in e-book format I imagine it could be published with minimal expenditure of resources and would be a valuable addition to EW literature.
ReplyDeleteNDX/SPX (dly) - Wyckoff distribution model applicable here? (uncanny resemblance) -
ReplyDelete(Would be interesting to compare to a wave counting)
https://funkyimg.com/i/3ccvb.png
After the close, I added a chart with the appropriate Elliott Wave labels applied. See above in the post.
DeleteThe Buying Climax (BC)is the top of wave 3. After wave 3 is a very clear and whippy Elliott Wave triangle as wave 4. And, wave 5 is the UTAD.
TJ
Appreciate this post. Here’s another warning sign I was reading the other day. It’s from tradingview.com under the title “An Uncanny Observation” (Can’t paste the link so here’s all of it)
ReplyDeleteThe last two major stock market retracements occurred in 2000, and in 2007, respectively. Each of these was assigned an underlying cause and an overarching title. Yet, it could just be that both of these were caused by the same de facto trigger; rather than the convenient set of societal circumstances surrounding each at the time.
Nomenclature and true cause aside, there seems to be an uncanny mechanism embedded in our broader financial market system that can be actualized when described in time units. That is, the number of calendar days in between the first local instance of US Government Bond yield curve inversion and the next major corresponding top of the S&P 500 Index is strangely consistent, at least when comparing the lead-time between that of the 2000 Tech Bubble and the 2007 Mortgage Crisis.
Approximately 640 Calendar Days (440 Trading Days) separate the first day that the 10-Year/2-Year rate inflects and the subsequent orthodox high of the equity markets.
Now, it is fairly known that since 1955, this 10Y/2Y yield inversion has set the stage for an incumbent recession. In fact, there hasn't been an instance where such an inversion did not lead to a significant pullback in equity prices 6 months - 2 years thereafter.
While this fact above is astonishing, in and of itself, the observation regarding the two most recent equity crashes is almost too weird to accept. However, what would be even more extraordinary is if it proved out for a third time in a row. It just so happens that the same yield inversion occurred for three days in a row back in late August of 2019. When you add ~640 calendar days to this date, you arrive at a two-week date range that starts on 05 /26/2021 and ends on 06/04/2021.
That means that if the uncanny pattern, is in fact, uncanny, then we should expect a major market top to have already occurred last week or that will occur by the end of this week. We would then also have to expect a major, subsequent selloff - the likes of which have only transpired twice in the past 20 or so years.
Time will tell.
-UncannyPig
There’s a bit more info on the author’s posted chart as well.
DeleteExcept you don’t have an inverted yield curve now. I do pay attention to the yield curve and that’s why I’m bullish. When they invert it again in the future you better be prepared. I pay more attention to 3month/10year, and that inverted a long time in ‘19.
DeleteThanks, I'm in and out of the market be it up or down, with everything I've got based on my own trading signals so whatever it's doing I'm usually and/or eventually on the right side of things. Elliott wave is helpful in anticipating highs and lows and also with holding postions when things look tough. I started trading as a permabear and my biases constantly rear their heads and occasionally influence my decision making - almost consistently to my own detriment. That's why I appreciate every ones informational posts here so much. They add perspective and competing arguments to the mix. Believing in something that hasn't yet occurred is the surest way to get burned over time. I wonder if anyone has ever tried to relate Elliott Wave to the psychology of trading in a systematic way, Talking heads always mention euphoria at highs and blood in the street at lows but how much, EXACTLY, euphoria or blood on the streets is always the question. It's an endlessly fascinating question at all time frames.
DeleteIn case you haven't seen the story (CNN): G7 Back Global Minimum Corporate Tax
ReplyDeletehttps://www.cnn.com/2021/06/05/business/g7-biden-global-tax-intl-gbr/index.html?utm_source=optzlynewmarketribbon
TJ
Also, I think the CPI # comes out on Thursday and it will be a hot # Y/Y because of negative #’s last year. SPX could sell off before and or after it’s released. We shall see.
DeleteA chart was added to the above post showing how a Wyckoff Method Distribution top converts to Elliott Wave labels.
ReplyDeleteTJ
Additionally, what I was really curious about is if the count of the ratio chart from the '02 lows would ultimately support (or not) the assertion that the NDX/SPX has indeed topped, and would support the Wyckoff distribution model. :o)
DeleteThanks!
TNX (10-yr yield) still within the realm of an Elliott wave fourth wave triangle. Chart below.
ReplyDeletehttps://www.tradingview.com/x/V9GDR4fs/
Alternate would be a flat fourth wave only if triangle breaks down. Invalidation is overlap on Minor 1.
TJ
Apply Weinstein to Hogs? When pigs fly! :o)
ReplyDeletehttps://funkyimg.com/i/3ccKC.png
Oops - typo - should have been falling for 1 1/2 yrs.
DeleteThat wykoff topping pattern looks a lot like BTC from a few weeks ago.
ReplyDeleteSpeaking of the Eiffel Tower -
ReplyDeletehttps://funkyimg.com/i/3ccLX.png
https://funkyimg.com/i/3ccLX.png
ReplyDeleteThe NDX/SPX ratio really does look similar to Wyckoff's model but is it a consolidation or a top distribution? Here's a long term weekly look at ratio. Unlike 2000 price has dropped below the 200 HMA. It does not look like this ratio is in danger of going parabolic until it can struggle it's way back above the 200 HMA which would take multiple weeks. I could count out 9 waves on the rise from July 2002 but I think TJ can see better what's going on there.
Just looking at the moving average and envisioning scenarios it seems the ratio needs to move further down and then come back to a down sloping 200 HMA for a retest. A failure on the retest would imply a much larger drop in the future.
Here's a discussion of a very similar question - StockCharts (Wyckoff) -
Deletehttps://www.youtube.com/watch?v=2bq3ufDlgXQ
https://www.tradingview.com/x/tcpgufXG/
ReplyDeleteHere's the right chart I meant to post
Notice also that we might be consolidating above the 2000 high.
ReplyDeletehttps://www.tradingview.com/x/yoVo2ZR5/
ReplyDeleteThe daily NDX/SPX with 200 HMA looks quite a bit more ominous. This market is not out of the woods yet.
"Star Power" TSLA and "lowly" F -
ReplyDeletehttps://funkyimg.com/i/3ccQo.png
ES (dly) Volume (let's get our stories straight) - [if interested]
ReplyDeletehttps://funkyimg.com/i/3ccTG.png
BBBY (15min) - This is one of the top "meme" stocks. Here's a look at last week's run up and trading prior. [if interested]
ReplyDeletehttps://funkyimg.com/i/3cd71.png
https://schrts.co/YQeKbfPD
ReplyDeleteWhich one is correct? NYAD or stocks above 50 dma
Watch another YouTube video for 5 minutes, and you can watch the analyst completely break the rules of an ending contracting diagonal for his own convenience. Wave three in a contracting diagonal 'can not' by rule be longer than wave one.
ReplyDeletehttps://www.youtube.com/watch?v=3rc66WLi658
Why do these people do this stuff?
TJ
I watched one of theirs, and it was my last. Doesnt take long to look over a hot horseshoe (so to speak). :o)
DeleteQQQ (mthly) Two key measures (tightly confluent) -
ReplyDeletehttps://funkyimg.com/i/3cdaM.png
👍 yes
Delete