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
Nice
ReplyDelete👍 thanks for the explanation and education..
ReplyDeleteVery good point. I thought of the same. Here's my thinking (fwiw) -
ReplyDeletehttps://www.mediafire.com/view/hetc5vzrinoeirg/extended_waves.png/file
On you last point. Avi has us in larger wave 3 not 5. But I agree w1 and w5 usually are the same length. Nobody seems to even agree on where wave 1 ended off ‘09 bottom.
DeleteThis comment has been removed by the author.
DeleteCfd (dly) - update -
ReplyDeletehttps://www.mediafire.com/view/um9b940u4x5rzdq/dailycfd.PNG/file
Neat! 😊
ReplyDeleteEt, If this is a impulse since covid bottom. It would be a 3rd wave of some sort since 2009. That would cause degree problems going back to 1982, is this correct?
ReplyDeleteI can't answer that quite yet.
DeleteTJ
As John Oliver likes to say, "And Now This ..." It was correct to use the Principle of Equivalence on the interior wave, 'until there was a clear fourth and fifth wave lower.' The fourth and fifth waves never materialized.
ReplyDeletehttps://www.tradingview.com/x/v84VDd3K/
TJ
Where you have iii, could it also be wave A or W? And now in B or X up.
Delete..up wave has now reached 62% in the futures: qualifying for another leg of the 'potential' diagonal. Can go higher, of course. And, it doesn't have to be a diagonal. It 'could' count as just w-x-y down.
DeleteTJ
I think you are confusing the two terms, "extended", and "sub-divided".
ReplyDeleteTJ
You're going to hate this, but let me remind you all of this wave in 2010 - 2011, which was counted in real time, and topped just beyond B = 1.618 x A, and which resulted in a 'failure' of the C wave low to drop below the A wave. Even EWI counted the wave this way - until later in life when they 'revised' their count.
ReplyDeletehttps://www.tradingview.com/x/BApU2CjI/
TJ
Why count the wave this way? Because a full fifth wave higher was never made, and because nothing happened to the down side until the channel was broken. Can you count it differently? Yes.
DeleteTJ
If my measure is correct, we're beyond the 2.00 fib already, with potentially more to come.
DeleteI find use of the term "failure" when it comes to Elliott waves quite fascinating. We would expect in an era of CB determination to keep prices elevated to see impulsive declines arrested and reversed,resulting in truncation. While I am not sure if EW rules require a C wave to exceed the A wave low, it seems reasonable to expect that "failure" waves to the upside will also ultimately be seen.
DeleteWhy are there 'any' declines in an era of CB stimulation?
DeleteI can think of a few, like 10K boomers retiring daily and requiring distribution. MRDs in an ageing population also a factor. Quite a few hedge fund managers continuing to close shop, Clark being the latest casualty
DeleteI almost forgot..,insider selling! 😀
DeleteExtended 1st wave variation - seems quite viable.
ReplyDeletehttps://www.mediafire.com/view/3w1yc1s9jnf83kn/extended_1st.PNG/file
constaints = constraints :o)
DeleteES -Daily - just fyi - after losing the daily slow stochastic embedded reading yesterday, today was the only day it could be regained. It wasn't.
ReplyDeletehttps://www.tradingview.com/x/gjn1V513/
That 'doesn't mean' the market can't go up; it only means in order to regain an embedded stochastic, it would take another three days.
TJ
ES 1-Hr: this is just one arrangement that works. There could be another smaller extension into Sunday/Monday, but there doesn't have to be.
ReplyDeletehttps://www.tradingview.com/x/wPEmYWoK/
And, of course, any expanding diagonal would invalidate above the 'official' high of wave ii (using OHLC charts).
TJ
Hello TJ, In order for this to work, doesn't wave 1 have to overlap the previous wave? I don't see wave 1 from 4711 to 4674 overlapping anything so I'm assuming this is a wave 4 or is my analysis incorrect. Thanks in advance.
DeleteThank you for bringing up "quantitative easing might do to a market". I wonder does this change the "Three Steps and a Stumble Rule"? I'd assume step 1 is quantitative easing. Markets look to react negative as 10 year moves higher. I'm unsure if chart looks like 1969 or 2003, periods of higher inflation. Yield curve is starting to flatten.
ReplyDeleteA couple of questions on the chart you posted from 2010 (link below)-
ReplyDeletehttps://www.tradingview.com/x/BApU2CjI/
1. Would we want to see ((X)) overlap a of ((W))?
2. And b of ((Y)) overlap ((W))?
Thanks
From the following past post:
Deletehttp://studyofcycles.blogspot.com/2018/11/to-flatlanders-and-double-ziggers.html
I have attached a screenshot which seems to answer my first question above:
https://www.mediafire.com/view/hukzcpni8oop2db/NotWXY.PNG/file
This would seem to imply a problem with the 2010 chart initially referenced.
No. I was indeed correct in that case, there were lower waves to November 30, following this wave. So, they were wrong. See chart below.
Deletehttps://www.tradingview.com/x/8cT1oHit/
Further, the pattern may count better this way, with the lows that follow, and where (x) does, indeed, overlap a.
https://www.tradingview.com/x/MMFUZTdd/
TJ
Im not sure that addresses the issue. On the 2010 chart, the first ((X)) does not overlap 'a' (in july/aug '10) of ((W)). Would that not be an issue?
DeleteThanks
I said there were other ways to count it.
DeleteTJ
I guess the question is, with this obvious lack of overlap, why was it counted that way then, and presented again yesterday as being counted that way? Perhaps that's why EWI changed their count afterwards?
DeleteThanks for responding.
1) because it was obviously Fed created. 2) Can't you figure out the obvious 'other' way to count it that several of us used as 'the alternate' back then?
DeleteTJ
Sorry for the belated reply but thks for sharing apple cbart in your previous post. That is my precise point becuase you are considering the degree and size so you are forced to use expanded Ld or expanded B. It precludes the 1,2 i ii count. I have seen so many cases now that keep the degree sanity one has to use not so common counts and it becomes one confusing secnario. And in the end simple nested count would have explained everything. I don't kmow wbere and bow the emphasis on degrees/sizes came from.
ReplyDeleteIt would help a reply to show what you think is the simple 1,2,i,ii. Use a chart link if possible.
DeleteOf course, the problem is that it's not only "extremely difficult" to count a 5 wave subdivision in x1, it's impossible...unless you throw EW rules into the trash.
ReplyDeleteSee next day's post.
DeleteTJ
..see the next day's post.
ReplyDeleteTJ