An Experiment - Part 2

Already the wave structure is giving any Elliott analyst difficulty. For example, one opportunity for a true nested wave count, lower, was invalidated. We called it out when the level was exceeded. So, it may be that something else is going on. Looking at the weekly chart of the ES futures we can see several items of note.

First, we note the current weekly up channel, shown in magenta, and the price bounce off of it. Second, we note prior price peaks & troughs which are connected with the dotted purple horizontal line which is labeled as potential resistance.

Fourth, we note the value of the Elliott Wave Oscillator. It is currently at -378 compared to a prior peak value 0f +412. That is -92% of the prior peak much greater than the optimal range for a fourth wave with 113 price closes on the chart. The optimal range for a fourth wave, as I have noted many times is +10% to - 40%. This is -92% and is much greater. Could it still signify the third wave, lower, but in a different manner than the typical impulse?

Fibonacci fifth, several of us (especially including reader BBRider) have noted the herky-jerky nature of the downward price movements - even as early as the first downward moves - and suggested possible diagonal structure. Is it possible to be forming an expanding diagonal downward? It seems that it might have to be the power of a third wave (3) that breaks the channel trend line - if it does - and that it would be a C wave of a third wave, also powerful, that does that. 

We know that overall, the downward wave is longer in price than the first downward wave. But it does not seem to be longer in time yet. Therefore, where all might be trying to count a second wave up, it might only be a minor B wave, up, with a downward "C" wave to follow.

We don't know for sure, but certain indicators - such as RSI - don't look right yet for a third wave. They have not fully gone oversold, and there was little sign of true capitulation at the low. Another item to keep in mind is time. This wave is already longer in time than the drop to the Covid-19 low! And the whole correction is longer in time than any obvious correction in the prior up trend. So, the time relationships should be telling us something as well.

So, this count is something to chew on. It might be a very unexpected count, and might be just what the algo's are trying to use to further whip prices into a jumbled mess.

Have a good start to the weekend and your holiday if you are celebrating Memorial Day.

TraderJoe