Although this week did see a lot of downside price movement, there still seems to be something missing. What's missing? How about those "kick-off" levels in the advance-decline line. You know those days where the declines exceed advances by 1:8, or 1:9 or 1:10. Those. We haven't seen one yet. Now we both know that they could come next week on FED announcement day, particularly if a significant tapering is announced. But, the opposite could equally happen depending on the announcement and who agrees with what.
So what is the best alternate if the market stages one more large rally? As I have been saying for weeks, I think the Dow provides the clearest clue.
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| Dow (YM) Futures - 1 D - Slightly Larger Diagonal |
It is entirely possible for the Dow to complete it's ending diagonal by indeed getting that minute ((v)) wave higher high and possible throw-over of the upper diagonal trend line as is often expected. In the above scenario, wave ((iv)) is still shorter in price and time than wave ((ii)), and wave minute ((iv)) would be shown by the Elliott Wave Oscillator traveling below the zero line again, and on a divergence.
Again, this is if the September high is not the top. Now, I need to show the same chart with a price measurement on it, so as not to confuse you.
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| Dow (YM) Futures - 1 D - Fibonacci Measurement |
Here you can see the the Fibonacci ruler shows that if price goes below 33,436 in the Dow futures (YM), then wave ((iv)) would become larger than wave ((ii)) in price, and that is not allowed by the rules! So, IFF price goes below 33,436 before a wave ((v)) goes over the high, then that means the slightly larger diagonal invalidates and the early September high is "the" high.
Additional technical evidence comes from the daily Bollinger Bands. As we know price is down to the lower band, and this is the place where the so-called Smart Money often, not always, takes profits.
Is there any other way the Dow could head up moderately higher for FED day and keep the previous diagonal with the high in early September? Sure. We could get several up days from here as the "c" wave of a flat second wave as was discussed in the prior post.
This is the second post this weekend, so be sure to read the first one, too.
TraderJoe
A few things about DXY (mthly) - [if interested]
ReplyDeletehttps://www.mediafire.com/view/grnd2i1r4e78fmt/DXYm.PNG/file
It is a judgement call, but I don't think the Dollar has broken the channel to the downside, yet. Or, if it did only slightly to redefine the channel a bit.
Deletehttps://www.tradingview.com/x/uvVJBpNF/
TJ
Rsi on weekly very similar set up to Jan of '18.
DeleteVery interesting observationg T.J.I as well have that "something missing" sense because of mixed volatility signals and think the E.D. is a very strong possibility. I still expect a powerful signal from VIX to confirm we ate done, like a big gap higher. A great time to be alert, and I expect 4K to hold.
ReplyDeleteES (dly) - Pretty sure.
ReplyDeletehttps://www.mediafire.com/view/4bcjszjm0mqljqn/ESd.PNG/file
Correct, and we'll done!
DeleteTJ
BTC (wkly) - observations
ReplyDeletehttps://www.mediafire.com/view/4q2vlb4n0i5gzhw/BTCw.PNG/file
Cash - I’m watching 4376 area for possible reversal area. That would be a measured move from 4486 in some type of ABC or WXY? if we get a VIX spike next week with positive divergences we probably get a bounce. Then we need 5 waves up, or we start crashing from here,lol.
ReplyDeleteEqual Weighted FAANG (mthly) - [if interested]
ReplyDeletehttps://www.mediafire.com/view/z3zqvqphme8pqq8/FAANGew.PNG/file
This count does not tally with sp so maybe sp and dow acting differently
ReplyDeleteAny chance that in dow we had a barrier triangle from may to start of August
Delete..don't think so; the timing coincides better with the failed diagonal.
DeleteTJ
CL (8hr) - 5 down and retrace?
ReplyDeletehttps://www.mediafire.com/view/picsvdd9c7v6b78/CL8.PNG/file
Interesting we are getting a VIX gap higher only AFTER the onset of a clear third down; hard to believe the so-called "smart money" was csught un-awares,but we are after-all un un-charted waters from a market price-action petspective.if indeed the Flash Boys are caught on the wrong side of the market, the the absdence of shorts to cover and potential margin calls make for an imteresting combination. We all know what they're thiking: "Powell has our backs...!". We shall see if he does, or not.
ReplyDeleteYour observation is just not true; there were three unfilled VIX close-to-open gaps prior to this one. It is a question of what you pay attention to.
Deletehttps://www.tradingview.com/x/gABAIMc4/
TJ
I follow the VIX and it's cousin, the CBOE SKEW index closely. The SKEW has been historically high recently. It indirectly measures the demand for deep OTM crash protection. The market rarely has deep drawdowns when everyone is conveniently protected, so I'm looking for SKEW to drop on a wave 2 retrace to impart max pain.
DeleteThe working assumption is that the current structure is confirmed as an impulse down over the next week or two.
Not all gaps are the same when it comes to VIX T.J. Anyone who trades volatility knows exactl what I am talking about, namely, you will NOT see deep retraces in a third wave down. The point may be be moot, as the big boys do not yet appear to me to be really too concerned, fwiw...
DeleteYou can argue 'till you're blue in the face because that's what most people do. It's so nice to know you speak for the Smart Money.
DeleteTJ
Have overlapped the 8/19 low.
ReplyDeleteGood morning all. This is just to cover the observation shown in the post below that the down wave at 4,340 is longer than the prior wave (iv) in the ES daily diagonal count to the top.
ReplyDeletehttp://studyofcycles.blogspot.com/2021/09/lower-low.html
This, along with the time taken in the down wave, provides a second level of confirmation that 'the degree has turned'. Another level would be if the Dow (YM) futures can invalidate their fourth wave - alternate - in the red count which is shown as the chart in this post.
TJ
New 6mth low in DJT
ReplyDeleteThat's the way to do it. Good work!
DeleteTJ
SPY (5min) - current
ReplyDeletehttps://www.mediafire.com/view/54ygb7f5lr8brf3/spy5.PNG/file
Sure has the look of a third wave, let’s see if we get to 4306 area cash, the 1.628 extension.
DeleteThere is no 1.628 extension. It is 1.618; and I'm showing cash SPY is there right now.
Deletehttps://www.tradingview.com/x/bOpc6JEH/
TJ
I use SPX not SPY. A lot of charting services don’t adjust for dividends.
DeleteThanks TJ, great observation concerning Dow and alternate count.
ReplyDeleteES daily - Just fyi - 100-SMA is a 4,322; price so far as been 4,323.50; pretty close.
ReplyDeletehttps://www.tradingview.com/x/SStq63DY/
TJ
..just confirming ES has hit the daily 100-SMA.
DeleteTJ
VIX has reached the minimum level I expected and now has a gap that will get filled at some point.
ReplyDeleteJust fyi - advance/declines on the NYSE today, so far, are 320 / 2,978; this is almost 1:10 and represents the 'kick-off' being looked for. If it holds. Some people call this the 'breadth thrust', which also has a more formal definition.
ReplyDeleteTJ
..just fyi .. there is ES 4,300-
DeleteTJ
Currently, about 1/4th of SP500 stocks are above their 50ma.
ReplyDeleteThere is a new post started for the next day.
ReplyDeleteTJ