Saturday, May 14, 2022

Nesting?

The cabal that is running the financial markets (the Federal Reserve, the large banks, the exchanges, the Treasury, and the large hedge funds) are using A-I against the retail trader. A-I just means Artificial Intelligence, and it is really nothing more than a computer and a sophisticated set of algorithms that monitor account balances in real time and have a goal seeking procedure to limit trader profits. If you have been trading for many years, you've heard it expressed as 'maximum pain'. In Elliott Wave terms, let's call it a point of significant uncertainty in the wave count.

You are at a disadvantage. Why? You don't have access to everyone else's position to know minute-by-minute what they are doing. The Exchanges do. The Clearing Firms are charged with knowing your balances and insuring margins are met at all times. In Arby's terms, "they have the beef".

If you are a frequent reader of this blog, you know by now, that one of the algorithms used is the daily Bollinger Band and the relationship of price to the 18-day SMA. Ira Epstein's (Broker with the Linn Group) videos explain this concept on a daily basis. The evidence is clear, frequent and cogent. Friday, prices bounced off of the lower daily Bollinger Band. Is that a surprise, especially after a Fibonacci 89 days of decline? 

From an Elliott Wave perspective, we were attempting to count a wave upward, within limits and, so far, it has held. Why didn't it bust? We don't know yet. It still could bust on Sunday or Monday. Like many, we know that, at least temporarily, some trader sentiment (like AAII, and to some degree put-call ratios) were getting a little stretched. So, there could be more rally. 

Then, from an Elliott Wave perspective what is one to do? Yes, like many on our Thursday post we showed how you can count two sets of five Minor Waves down. Could they be (A)-(B)-(C) and done? Well, that is 'possible'. But we also noted how the market could make a true extended third wave down, and we simply want to show some measurements that will help confirm or deny it in the ES 8-Hr chart, below.


The first item to note is that the Elliott Wave Oscillator is on both a local and daily low. That, by itself, is not definitive. Some C waves do not end on a divergence. So, the bottom is labeled ALT: C. Next, we look for the largest correction in terms of price in the decline. In the nested count, that must be the second wave, labeled 2. We note that it just barely exceeds a 38.2% retrace and note how it could be located at a prior fourth wave, minute ((iv)), circle-iv. And this, coupled with degree labeling definitions, gives us an objective measurement. IF the downward wave is to further accelerate in a nested pattern, then it must remain shorter in price and time than wave 2. That means - as an absolute limit - a minute ((ii)), or circle-ii, wave may not travel beyond ES 4,102 - as shown.

Importantly, we note that minute ((i)), circle-i, does not have to be done at this location, particularly if the expanding diagonal potential we were tracing out on Friday comes to pass. But it could be done. Yet, the first minute ((i)) in wave 3 could be as long in price as Minor 1 is long. It is nowhere near there. We also note that the Thurs-Fri up wave in only in three-waves at this time. Why not five? Could minute ((ii)) be over? It could, but we do not know, and this is the significant uncertainty referred to above. 

For now, we note the EWO on the 8-hr time frame is on green bars. And second waves can do some wacky things like form a double zigzag, instead of just the single zigzag we have now. And this points to another thing to watch. Minor 2 in the nested count is a maximum of nine 8-hour bars. And this suggests that if the if up wave passes ten eight-hour bars (or the price limit noted above), then the nested count is likely not working.

If this seems complicated, let's boil it down to its ultimate simplicity: over 4,102 or more than 10 8-hr bars in the making and a nested minute ((ii)) wave is temporarily off the table - at least by degree labeling definitions.

How simple is that? Have an excellent rest of the weekend.

TraderJoe

56 comments:

  1. Spot Gold (20x3) Update-

    https://www.mediafire.com/view/8m3pfas8zav60ov/Gold20x3targets.PNG/file

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  2. Thanks TJ - I like your reference to the cabal controlling this mess. Volume on a up gap day was weak. Still looking for 5 waves up off the bottom.

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    Replies
    1. So, do me a favor. Please, show me how you count these waves up to get 'five' considering the rules & guidelines. Maybe I'm tired/burnt out and just don't see it. Maybe you are suggesting the count is incomplete. But the largest retrace on the way up is 23.6%?! Use the ES 15-minute from the low.

      https://www.tradingview.com/x/1aEEVnUj/

      P.S. If you don't do this exercise, it will inform me going forward. Please link your chart in the reply.

      Thanks, TJ

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    2. TJ - I never implied there were 5 waves off the bottom, that is what I’m looking for to change the direction up.

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  3. ES (5x3) Watching Sun eve/Mon -

    https://tvc-invdn-com.investing.com/data/tvc_610c6913fc5e75b89dca7ff00da8a422.png

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    Replies
    1. just curious why three blue columns ago, false breakout isn't listed as a 'bull trap'; certainly, you labeled many a 'bear-trap'.
      TJ

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    2. If I'm seeing what you're seeing, there were 4 Xs before price reversed and triggered the DBBO. That qualifies the reversal as a 100% high pole. If there had only been 1-3 Xs then reversed, would have been a bull trap. Because there were 4 Xs, the 3 box reversal still allowed for an exit at B.E., thus the buyer was never "trapped". Hope this clarifies.

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    3. Addendum: 4 Xs above the breakout level (double top).

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  4. Luna (swoona) -

    https://www.mediafire.com/view/72dvz5z0r0mgl7o/LunaSwoona.PNG/file

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    1. I remember having quite a few ust back in the day going in and out of trades on binance before I got out of crypto altogether. Horrible situation for many.

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    2. Indeed. It wouldnt shock me to learn that some had all their money in it. :o(

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  5. Your comments about the nature of equity markets, sadly, will be lost on most readers. It is remarkable how few traders understand, or even recognize that there forces trading against them, both human and machine!

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  6. Thanks so much, a great read and extremely helpful to my trading plans.

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  7. The last weekly ma to hit is the 200 at around 347 on spy right now. It sure seems like that's where it wants to go. Interesting we couldn't close above the 100 weekly ma Friday.

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  8. Joe I see u are counting bars. So why wouldn't 2 start at circle 3 it seems too short. But then you need new count. That would be an expanding diagonal and it can end where your first wave ends I believe. If the lower degree wave gets too long it's degree violation but we see a higher degree second wave shorter than the lower degree preceding it.

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    1. If you are counting this as the expanding diagonal, then wave ((iv)), can not, by rule, be a flat. It has 1) either a lower low - making it a flat, OR, 2) it's wave ((iii)) doesn't contact a diagonal trend line.

      https://tvc-invdn-com.investing.com/data/tvc_3530e56ca424d0d5fa33898ff2dc54dc.png

      So, it doesn't have the 'look' or else it doesn't have the right measurements. So I didn't do that.

      TJ.

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  9. AAPL (wkly) Support area ?

    https://www.mediafire.com/view/pc8vc3csg2hvlso/AAPLtlsup.PNG/file

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    Replies
    1. While I agree this 'could be' a support area, from a daily perspective it is pretty weak with only a couple of daily candles there. What I think is more cogent from a wave-counting perspective in AAPL is the outstandingly precise contracting diagonal from the high, and the "deep retrace".

      https://tvc-invdn-com.investing.com/data/tvc_e10e51598ff6b98e44965b9f213ede6f.png

      Each of the legs ((ii)) & ((iv)) of the diagonal is beyond 62 - 78% as per the EW guidelines.

      The following down leg is at a 1.272 Fibo extension, however, 'often' diagonals have an extended wave (i.e. 1.618x) following them. And, price is not there yet. Further, there are only 'three-waves-down' labeled as (i)/(a), (ii)/(b), (iii)/(c) from the up wave that is the largest retrace in price. So, if up movement occurs rather than a (iv), (v) down - as I have been saying for several days now, the down move would have to be some kind of "B" wave as it is only in three waves.

      TJ

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  10. Copper/Gld vs 10yr (wkly) -

    https://www.mediafire.com/view/w77cxk0w8q07vn3/comparecopgld10y.PNG/file

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  11. Am I the only one curious about how divorced from geo-political and macro-economic reality is the market analysis of the myriad talking-heads purporting to know what comes next? I understand the liquidity river and supressed rates of the last 14 years that allowed P.E. multiple expansion in the face of steadily declining top and bottom line revenues through relentless stock buy-backs, and a stock market that refuses to tolerate any kind of mean-reversion had the masses convinced the FED put would remain. We have had one hike and not a single penny yet rolled of the bloated FED balance sheet yet we are already in bear markets for several indices. The folk glee-fully pointing out the failure of VIX to notch a new high at the recent lows may be over-looking an important point, namely, how VIX behaves during nested first and second waves at multiple degrees.

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    Replies
    1. Vix looking awfully like a cup and handle to 55 area target.

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    2. The FOMC has raised the Fed Funds rate twice so far this tightening cycle, 25 bps on March 16th and 50 bps on May 4th. The Fed's balance sheet normalization program will begin June 1st.

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  12. ES, RTY (8hr) -

    https://www.mediafire.com/view/rcrrbwx2rwczt47/ESRTY.PNG/file

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  13. NDX, SPX - BPIs - bull alerts

    https://www.mediafire.com/view/jdrito9fmzsybim/BPIndxspx.PNG/file

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    Replies
    1. Interpretation -

      https://www.mediafire.com/view/yliy4i5s8b9507i/bullbearalerts.PNG/file

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  14. ES (107min) - Opening range/pivots

    https://www.mediafire.com/view/w0l99qkk21wh08e/ES107.PNG/file

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    Replies
    1. RTY (107min) Early look -

      https://www.mediafire.com/view/4wfu9oxb26qekf2/RTY107.PNG/file

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  15. ES-RTY (107m) Updates

    https://www.mediafire.com/view/2jlgrlcjoq819pk/compare107s.PNG/file

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  16. ES (5x3) - Current

    https://tvc-invdn-com.investing.com/data/tvc_e38f8dc2f6ff7e459e185b8eda9cc9b7.png

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    Replies
    1. Continuation TTBO triggered

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    2. With a TTBO, there's always a [possibility] of an ensuing bullish catapult. Perhaps we can conjure one up.

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    3. We've moved up too far from TTBO for catapult. Retesting prior bull trap peak.

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  17. all cash indices looking like solid B waves on the 5 minute charts

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  18. SPY 15-min: market is currently 'coiling', watch the fractal breaks.

    https://www.tradingview.com/x/JoFN8CuU/

    TJ

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    Replies
    1. ES/SPY 15-min, price is now over the first up (green) fractal back.

      https://www.tradingview.com/x/f6TLmpfM/

      TJ

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    2. ES/SPY 15-min: now up over the second up (green) fractal back.

      https://www.tradingview.com/x/rqrc6LhF/

      TJ

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    3. ES/SPY 15-min: now marginally over the prior high.

      https://www.tradingview.com/x/Qx1fm8CY/

      TJ

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  19. ES/SPY 15-min: watch the ((E)) wave of the triangle location.

    https://www.tradingview.com/x/slPITeot/

    TJ

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    Replies
    1. ES/SPY 15-min: according to these quotes the SPY defeated the ((E)) wave of the triangle, lower, by -0.03.

      https://www.tradingview.com/x/rMMDXWZT/

      TJ

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    2. If ((E)) was defeated, shouldnt price be heading down in some form of correction?

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  20. ES (5x3) Before trading starts -

    https://tvc-invdn-com.investing.com/data/tvc_a9d9dfb9583a2d9627fc2260c4788dba.png

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  21. SPX (mthly) Observations - (run its course ?)

    https://www.mediafire.com/view/nzf1u2riifq1azu/ObservationsSPX.PNG/file

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  22. DJI (15min) (75x3) Quick peek -

    https://tvc-invdn-com.investing.com/data/tvc_9516a1afe70b3e1071138c00730a15fc.png

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  23. Courtesy of The Chart Report - A good sign.

    https://www.mediafire.com/view/jo3tdcc2mmxf1g7/BearsGalore.PNG/file

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  24. To JC
    And anyone else that was following this thread.
    I am happy to say that I have solved the mystery of the divergence of Stochastic readings in Ira Epstein's charts compared to ours. In tonight's video Ira finally did a scan back for a few days and I was able to get the readings. In analysing the data I discovered that the problem is not the stochastics formula but the fact that Ira is using different closing data than the Thinkorswim platform does. Ira is using the 4 PM price as the close for the day and Thinkorswim is using the 4:15 PM Price. The bad news is that I can't think of a way to deal with this issue. Suggestions and comments welcome as always.

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    Replies
    1. Thanks for this, I'll try to figure this on tradingview's charts

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  25. ES, RTY - (107min) Early update -

    https://www.mediafire.com/view/19x05tz8v90e7qz/One_reached.PNG/file

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  26. From Jay Kaeppel via SentimenTrader - [if interested]

    https://www.mediafire.com/view/yw8sci9b3dc4pim/Newsignal.PNG/file

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  27. Im reading QT was a bluff due to duration on the balance sheet.

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  28. SPY 15-min: Powell comments have created some volatility.

    https://www.tradingview.com/x/PI75IPEQ/

    First breach of trend line, and a 'plausible' not definite count. Watch the high.
    TJ

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  29. A new post is started for the next day.
    TJ

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