Sometimes I think Elliott Wave analysts are so keen on looking at the short-term price squiggles, they miss some overall context. This is particularly true where 'time' is concerned. I have not seen this relationship even mentioned elsewhere so I will bring it up. Below is a comparison of the 'time taken' in the 2020 Covid-19 decline versus the time taken in the recent decline as measured by the S&P500 cash index.
From the above charts, it should be clear that the 2020 decline took 23 days. It was quite the drop in price, but it was relatively quick. Now note that the current decline in 2022 (even if it ended at the lowest low) exceeds 40 bars, and it may have more to go.
From a degree labeling perspective this should mean that the two declines are at least of the same degree, or else, the 2022 decline is of a larger degree. Said differently, if the 2020 decline is an Intermediate (C) wave of Primary ((A)), then the 2022 decline should at least be of the Intermediate degree, so far.
So, you will note that in yesterday's chart (and previous ones we posted) we are showing the sub-waves as Minor degree, symbols 1 - 5, waves that would make up such an Intermediate degree wave. Thus, the Intermediate wave down will be either (A), (1) or (4). We'll say more about which later.
This is one way an Elliott analyst can verify the degrees of labels they are choosing for the wave structures they draw, and not just pick them at random or eyeball them on price alone. You will continue to see few analysts deal with the 'time element'. We hope you are getting more comfortable with it.
Have an excellent rest of the weekend. This is the second post this weekend, and if you have not already, you might like to read the first one, too.
TraderJoe
Very helpful, thanks
ReplyDeletewelcome.
DeleteTJ
So, the late 2018 selloff was about 57 days, more than twice that of the covid selloff. Would that suggest that the covid selloff is of lesser degree than the 2018 selloff?
ReplyDeleteThanks
No. For two reasons: 1) the price decline in 2020 was 'much larger' than the price decline in 2018. That should be a key clue that the 2020 decline is of the same or larger degree. 2) since the two waves differ in time they can still be of "the same degree" as written above. The 2018 decline is the Intermediate (A) wave of the Primary ((A)), larger degree, decline. The 2020 decline is thus of the same degree and is Intermediate (C) of the Primary ((A)), larger degree decline.
DeleteThe two declines, 2018 and 2020 are of the 'same degree', and thus degree definitions are not violated.
TJ
So, a smaller wave (in terms of price movement) can still be the same degree/or larger degree of a larger wave (price movement) if it is longer in time?
DeleteAlso, because the 2022 decline is longer in time (in spite of being lesser in price movement), it can be >= in degree to covid selloff. If true, then a smaller wave in price can be larger degree than a larger wave in price?
If so, then how do we definitively determine whether its larger or same degree?
Hope I've asked these clearly enough.
Item1 - EX1: smaller wave in price movement is 'same degree', not larger degree, wave and it is longer in time. i & iii are of the 'same' degree.
Deletehttps://www.tradingview.com/x/pEAMQN9o/
Item 2 Ex2 - they can be equal degree. The smaller wave can not be larger degree. Here wave iv exceeds wave ii in time. Wave ii can not be of larger degree than iv.
https://www.tradingview.com/x/sAg3Icwp/
I know this is not easy; you have to think simply about both factors together. And you can't always tell immediately.
TJ
Very very good!
ReplyDeleteThis is an explanation with so much depth, it clicks more and more with me to “see” the waves as labeled as potentially correct.
Thank you for all your endless afford to teach us
very welcome!
DeleteTJ
My observations - 1 - if we are in wave 4 of V and have not bottomed at 4114 SPX then my fib targets are between 4053 & 3947. Open gap at 4020. Measured move from ATH at 3999.
ReplyDelete2 - if we go lower than my target it’s possible we are only in a wave 2 of diagonal higher to finish V with 2961 hitting .618 retrace.
3 - if we are finished with w4, upside targets for w5 are 1.382% of w1 at 5050 and 1.618% at 5823. Also .618 of w1&3 = 5484. I think that is most probable
4 - we are in TJ’s crash to much lower levels.
Tim, there is no 4 of V. Try to read up a bit on EW degree terminology and symbols. It would be ((4)) of V. Please see this quick reference on StockCharts.com. I'm not making this stuff up.
Deletehttps://school.stockcharts.com/doku.php?id=market_analysis:identifying_elliott_wave_patterns
Further, I've thought of two types of diagonal pattern for wave V (if it is truly at Cycle degree) - expanding and contracting. At the present time, there is not good evidence for either. And the contracting type relies on that funky (1)/(A) wave being a 'five' from the start of rally in March 2020. In the 'expanding type', that funky son-of-a-gun can be a :3. Hmmmm??!!!
Lastly, please try not to put words in my mouth. The Primary ((C)) down to Cycle 'a' is as much of an 'IF" as is each one of your four forecasts, above. Being an objective wave-counter, I can not claim any scenario lower until and unless there is a retrace that does not go over the high, and then there is objective evidence of the lower low. In short, I did not yet use the word, 'Crash' anywhere. You did. In fact, I have been noting the halting nature of the price declines, so far. I have 'purposely' resisted the 'crash' terminology.
One of the few objective statements I can make, is IFF we come off the high with a leading diagonal, then the next wave down would likely be an impulse.
IFF the diagonal is ending (and especially if it truncates), then we go over the high. That's why I have posted the alternate scenario in 20 Jan post.
TJ
Again very clear and helpful!
Delete👍
Sorry for the crash word. I left out one other observation, the upper channel from ‘09 bottom intersects in the 4000 area.
Deletewelcome & no worries!
ReplyDeleteTJ
Thanks for another valuable and excellent presentation. I've been staring at waves for 38 years and have to always look at degrees of trend. Thanks for the extra reminder. Cheers.
ReplyDeleteGDXJ - Observations [if interested]
ReplyDeletehttps://www.mediafire.com/view/ogrycj3mp3gd8pu/GDXJ.PNG/file
SPY 1-min: here is an excellent example of waves expanding to make a third wave with acceptable degree labeling caught in "real time" this morning.
ReplyDeletehttps://www.tradingview.com/x/zpuFZx2D/
Note that the lower degree waves internal to the expansion of 3 are smaller in price and time than i, the larger degree wave.
TJ
This is likely how the wave finished; note that the sub-waves of wave v ARE NOT longer in time or price than wave i. It's just a complicated iv.
Deletehttps://www.tradingview.com/x/r12tGzUH/
TJ
Now there is a decline to the 38.2% Fib, likely indicating the onset of correction or larger wave lower. But the decline is very, very choppy; not as impulsive as the wave up.
Deletehttps://www.tradingview.com/x/Oq8FxUgL/
So, being choppy we have to 'give more weight' to at least another wave up until that is proven incorrect, somehow.
TJ
Was that 5 waves up a c of a flat? Its low just got taken out I believe.
Deleteyes.
DeleteTJ
SPY - 100% high pole, triggered DBBO.
ReplyDeleteSPY1m - Appears the 5 waves up was the end of something.
Deletehttps://www.mediafire.com/view/jnf4izw7nfez7d4/SPY1m.PNG/file
The move back down took less time than the move up.
Delete..yes, likely end of a failed flat; very negative at the moment.
DeleteTJ
Failed flat or running flat? What would be the difference?
DeleteThanks
Could be wrong on this, but the "b" wave of the assumed flat [looked] like a 2.618 external retrace. This would [seem] to suggest that "c" would not reach "a", so it could/would be expected to fail.
DeleteSPY - update
ReplyDeletehttps://invst.ly/xno24
Negated vertical - informational
Deletehttps://invst.ly/xnoly
SPY 5-min; now very possibly the ole x((1)) wave structure, with ((3)) < ((1)).
ReplyDeletehttps://www.tradingview.com/x/KmLUQbnF/
TJ
SPY 5-min: wave ((5)) has a lower low .. should remain shorter than ((3)).
Deletehttps://www.tradingview.com/x/X4AOECK1/
TJ
SPY 5-min: now up & out of wedge; warning: either ((4)) is a triangle or ((5)) is done.
Deletehttps://www.tradingview.com/x/0K77b78C/
TJ
SPY 5-min; now up and over prior wave ((4)).
Deletehttps://www.tradingview.com/x/vteZibdB/
TJ