Driving Miss Crazy - 7

FED Spaketh, Dollar Dropeth, Stocks Riseth: based on our intraday comments and count, we were expecting an up day today. We were expecting a potential ((C)) wave, up. We did get more than that. A new local high occurred on the daily chart. And, to be honest, we were not expecting that.

The daily slow stochastic which had lost it's embedded reading yesterday regained it today. Here's what I want to know: even though I was watching it, what allows the FED Chair to pick a Brookings Institute meeting to clarify FED policy to such a degree, and, yet, as the result of FOMC meetings absolutely none of the clarifications occur in those press conferences? In the press conferences, he confuses, he obfuscates. Here he clarifies and in express detail says what he is looking for. Really. Why today? In case you don't get my drift, it feels over & over again like the fix is in. How would it be known that the this FED speech gets as much attention as an FOMC announcement (in terms of access for the public)?

Something really stinks. Do I care what the new announcement precisely is in detail? Very little. Do I care that the FED itself is creating an unbelievable amount of market volatility all by itself? I do. I really do. Some serious money could be caught the wrong way in such a move. Somebody could get royally hurt. As the chart shows, today's move isn't even the largest up move - although to listen to the financial media, you'd think that the Equity Gods had visited Wall Street in person today.

No, as I have said repeatedly, there is nothing doing to the downside until or unless that lower parallel trend line is broken, then back-tested, and then the back-test fails. That just hasn't happened yet.

And I really hope - with all the FED members caught insider trading, against the FED rules, and with the "off calendar" monetary missives - that FED Chair Powell is sleeping well at night. I, for one, have lost all respect for this organization. And for him, in particular. I listen to what they do - because I have to. I listen to what they do because, as a retail trader, they will essentially vaporize my account if they don't. I don't listen because of their wisdom, their finesse, or their skill. They are engaged in market manipulation, and worse, and I simply do not condone that.

Have a good start to your evening,

TraderJoe

Driving Miss Crazy - 6

The price structure could very well be "short-a, long-c; long-a, short-c" for (w)-(x)-(y) overall in the SPY hourly chart. The close-only chart is shown below to concentrate on form and timing. Let's see if any confirmation occurs. 

SPY Cash - Hourly Close - Loss of Momentum

I still want to see price trade below the lower channel boundary, back-test it, and fail with a lower low. The items in favor of confirmation are that the highest high is not on or above the upper channel boundary which is a sign of momentum loss, the lower Elliott Wave Oscillator, and the possible truncation high.

Have an excellent rest of the day.

TraderJoe

Driving Miss Crazy - 5

This SPY 30-min chart looks at this last wave sequence upward to see if will count as a clean "five". There does appear to be alternation in cash. And cash does not overlap, yet.

The sequence appears to start with an expanding diagonal in cash, so wave ((5)), up, should be an impulse.

Have a good start to the day and to the week.

TraderJoe

Driving Miss Crazy - 4

I'm personally not in love with any count. As I suggested in several posts & comments, a minute ((b)) wave count could be messy and full of trips & traps - especially in the light holiday volume. Here is one version on the ES 8-hr chart, which at least provides an upside target from typical technical analysis.

You could also see it as (w)-(x)-(y)-(x)-(z) and I would not say it was incorrect. However, as before, there is no downside count likely to be started until or unless the lower parallel trend line is broken, then back-tested and having the back-test fail.

Have a good rest of the holiday weekend.

TJ

Driving Miss Crazy - 3

U.S. equity prices as measured by the SPY cash (30min) index in the chart below, gapped down, broke the dashed interim trend line previously shown, then back tested that trend line and fell off a bit again. To begin to make a third wave down, the back-test would need to fail, and the down (red) fractal shown on the chart would need to be broken lower.

SPY Cash - 30 min - Expanding Pattern Currently

Today's gap (red circle) was not filled as of this time. It's hard to make more of the price movement than what it is, so far.

Have a good start to your evening and your holiday week.

TraderJoe

Driving Miss Crazy - 2

In a whippy session that we said could happen because the VIX is in the 20's (i.e. 23.8 towards the day's close) rather than in the 10's, price action created a Gap-Fill Two-For. Price as measured by the SPY cash index made a gap up, then traded down to fill today's gap, and in the process filled a gap down from yesterday. These are the two black circles shown on the chart. The gap that remains (see chart below) is from the 15th close to the 16th open (red circle).

SPY Cash - 30 min - Smaller Degree Potential Expanding Diagonal

We also suggested that analysts WAIT until the dotted up trend line shown was broken, back-tested with a subsequent back-test failure before deciding on the fate of further waves. This turned out to be sound judgement as the dotted trend line was not broken to the downside.

So, it should be clear that one downward count would be of an expanding diagonal downward off of the high. A wave v would be needed to the downside before potential wave iv invalidated to the upside. This is just the cash equivalent of the futures chart we showed yesterday. It's a little cleaner and the gaps are more prominent this way. But wait, do we really have to deal with another diagonal? Seriously? It's actually worse than that. Intraday yet another diagonal happened and we counted it in real time. Here is the final chart of that potential diagonal on the SPY 2-min chart.

Spy Cash - 2 Min - Even Smaller Degree Expanding Diagonal Upward

This is why we suggested to wait until that dotted uptrend line is broken and back-tested with a subsequent back-test failure. The trading bots are especially good at walking a trend line. Look at how little room there is between wave ((ii)) and wave ((iv)) - degree labels are just relative for illustration, here. Yes, they skin any premature trader alive if the trader acted on the suspicion that the trend line would break without seeing the actuality of it. Then they grind and grind, finally to explode to the upside in a fifth wave. 

First, notice how many overlaps there are. It's insane. Next notice the three-wave look to the sequences.  Look at the triangle that might indicate last wave ahead but does not - because it is a running triangle. Running triangles in an uptrending wave are bullish, not bearish. Fourth, notice the price extension in the fifth wave. So, even though the fifth wave is the extended wave in the sequence overall, it also put on a further extension to make the point! And Fibonacci fifth, notice price is trading back inside of the expanding pattern. If it is truly a 3-3-3-3-3 pattern then one conclusion that can be reached is that it is an ending diagonal. Time will tell.

Can we ever count an impulse? We did! Look at that wave from b to c within wave ((v)), up! It's a cleanly counted impulse. We hope to count more of them as time goes on. Right now, the diagonals are serving their purpose to keep everyone confused, and to not let you in on what the count might be. Certainly, if the market makers are going to engineer a big decline for the larger daily potential expanding diagonal downward, then they don't want you or I on board.

Back to the 30-min chart. Some technical analysts will see the price squeezed between the declining upper diagonal line and the up sloping dotted trend line and say the market is coiling. That's likely a valid assessment, and the question is which way will the coil break? Luckily, we don't have to deal with that if one just realizes there isn't a valid downward count until or unless the dotted trend line breaks to the down side is back-tested, and the back-test fails.

Have a good start to your evening and to your weekend.

TraderJoe

Driving Miss Crazy

With all apologies to the movie title, the market gapped down this morning, potentially activating the bull trap from the daily chart - with the lower daily low after the outside reversal day up - and then had no follow-though lower in the cash session. Prices then traded in an approximate 50 point range after that from 3913 to 3963. The slowness and choppiness of this hourly decline suggested the following intraday count on the hourly chart of the ES futures, below.

ES Futures - Hourly - Expanding Pattern Again

We don't know for sure, but the Elliott Wave Oscillator again suggests an expanding diagonal lower. The wave labels on this chart are just for relative reference they do not yet reflect the degree of the decline. But the EWO is on a low which suggests a wave 3, and the 62% zigzag for wave 2 is compatible with a diagonal. There appears to be an impulse  ((a)) wave, up, which started out as an expanding diagonal itself, and then converted to an impulse wave. And by the end of the day, the low held so either there is a ((b)) wave down, or just the beginning of a ((b)) wave down. Either the ((b)) wave or the ((c)) wave, up of a wave 4 could take more time so that all of wave 4 takes more time than all of wave 2. Then, a rocky fifth wave down might occur. It should also consist of a zigzag if an when it were to occur.

Like any expanding diagonal wave 4 is not allowed above the high of wave 2 or it would invalidate. If the upward wave does invalidate, alternate count is shown in red below the chart. There would just be two zigzags down, so far, labeled as w-x-y.

The time  signature of the wave is almost certain to frustrate. It's whippy and trading entries and exits have to be carefully considered. And in this environment - just like buying or selling is a strategy - just standing aside until a recognizable wave occurs can work well, too. For example, it is very difficult to tell if that ((b)) wave is done yet or not.

From the daily chart, one item of note is that downward price movement ended after price contacted the 100-day SMA again. But, there was still a lower close on the day.

Have an excellent start to the evening.

TraderJoe

ES Inside Day

While the NQ (NASDAQ 100) futures and the RTY (Russell 2000) futures made lower low days, the YM (Dow) futures and the ES (S&P500) futures did not. We'll have to wait and see if that will happen in the overnight or tomorrow.

Have a good start to your evening,

TraderJoe

Outside Reversal Day Up (ORDU)

Overnight stock index futures - as measured by the ES futures - made a higher high. Then, during the cash trading session today, we counted a potential expanding diagonal downward. The three zigzags had the right lengths and the right overlaps. You can review the count for the diagonal in the comments for the prior post. The diagonal and subsequent waves were long enough to make a lower low than yesterday's low as can be seen in the ES daily chart below.

ES Futures - Daily - ORDU

Prices, then headed higher in what is likely a Flat wave to the 62% retrace of the downward wave. Then, they fell off slightly late in the session, again, still closing higher than yesterday's close. So, we have a higher high, a lower low, and higher close: an outside reversal day up. The close is still in the lower third of the candle, however, and thus, the candle may still be classified as a doji, perhaps a spinning top type. As with all candle patterns, a significant close confirming the pattern is needed - in this case, lower.

If the low of an outside day up is exceeded lower within the next two trading sessions, the candle may be classified as a trap for the bulls. That remains to be seen. We will still want to see the lower trend line of the up trending parallel be taken out lower for better confirmation (parallel shown in prior posts).

Have an excellent start to the evening.

TraderJoe

SPY reached 62%

After the SPY cash price retraced 62% and hit a price of 400.18, prices on the day began to ease as per the daily chart, below. 

SPY Cash - Daily - 62% Retrace

This can be the end of the minute ((b)) wave, up, but better confirmation would be prices trading below the lower magenta parallel uptrend line.

In the DOW - as far as we can tell - we were able count a potential ending diagonal in real time, and the charts are in the comments section of the prior post.

Have a good start to the evening.

TraderJoe

Par = 100

After the Dollar's dump this week, and the breaking of a potential smaller triangle, I decided to look again at the longer-term three-month chart of the US Dollar Index (via the futures). The Dollar may have given off important longer-range clues this week.

US Dollar Index Futures - 3 Month - Potential Triangle

Where the Dollar decided to turn lower this week was at the top of the upwardly sloping magenta parallel shown on the right. This is one clue. And it made me wonder, "Is the Treasury just basically allowing the Dollar to range as long as it doesn't stray too far from the 100 marker?" Such action might describe a very long-term triangle because the internal counts are very challenging from the standpoint of counting impulse waves, upward. They don't work well at all since the (X) wave. That is a second clue.

A third clue is that (from the quotes on this site) the Primary ((C)) wave up would be 'just about as long in price' as the Primary ((A)) wave, up, and it is definitely longer in time, meaning the two waves might likely be of the same degree. A fourth clue is the apparent three-wave sequences in the Primary ((A)) and the Primary ((B)) waves. 

A Fibonacci fifth clue might be the rather flat Elliott Wave Oscillator on the long-term chart. 

So, is this just about Treasury policy to - let's call it - keep the Dollar relatively stable? To keep it oscillating around the 100 level? 

I can't swear to it, but it may illustrate how institutional groupthink works or implements policy. Clearly, this potential triangle has an invalidation point above the Primary ((A)) wave. But it also suggests that a break, back-test and subsequent failure of the recent up-parallel might lead to a nasty spill - whether the inflation scare gets worse or not.

This is the second post this weekend. If you have not read the first one yet, you may wish to read it also.

Have an excellent rest of the weekend.

TraderJoe

A Couple of "What-Ifs for the Dow"

An upward minute ((b)) wave has not yet formally invalidated in the Dow Jones Industrials Average but something seems quite squirrelly about it. I'll suggest what's so odd after the first alternate is presented. As an objective Elliott analyst, I can only say that this count (hold your nose) follows the rules, but it sure does not look proportional. For the Dow, if the first count, Alternate A, is the case, then we are making the Cycle V wave up - at least in the Dow - and the "optimistic scenario" of a Primary ((B)) wave up, and Primary ((C)) wave down goes out the window shortly. Here is that alternate on the Weekly chart of the Dow. (The idea for this alternate was shown way back on Jan 21, 2022, at this LINK : see the red line in the bottom half of the price chart).

YM Futures - Weekly - Cycle V?

As this chart suggests, the Dow would have a "running second wave" for Primary ((2)), Circle-2, and the current downward wave sequence would be a Primary ((4))th wave with the Intermediate (C) wave being a failed expanding ending diagonal. Plausible, but then look at how dissimilar waves ((2)) and ((4)) are in time. Too, the Elliott Wave Oscillator would be quite deep although it would be less deep at the end of the (4)th wave. A benefit of this count is that Primary ((4)) would be longer in time than Primary ((3)). Neely suggests such is often the case. Primary ((4)) does not yet overlap Primary ((1)).

In the short term, this count is optimistic because it implies a new high - and quite a substantial one could be made in short order. In the long term, of course, this count is very pessimistic because a five-wave Cycle wave down would immediately follow with devastating consequences.

A less drastic alternate for the Dow follows on what is the Daily chart of the Dow. The support for this count is more Fibonacci based.

YM Futures - Daily - Minor 4 ?

Here is the squirrely factor. IF we are in a minute ((b)) wave for the Dow, then why is the Elliott Wave Oscillator at a new local high? One would think the EWO of a "B" wave would diverge. Rather if you look at the Fibonacci ratios in this Alternate, you can see they are dead on. Wave Minor 3 would be exactly a 1.618 x wave Minor 1, and it's exactly 2.618 times as long in time! That's really quite spectacular. This would mean the current up wave would be Minor 4. As such it has a new invalidation level above Minor 2.

Yes, it is pretty dicey stuff, and it really interjects a lot of uncertainty into the local counts. Perhaps the Dow is doing a little bit on its own, and it may not affect the ES count to a large degree. This is yet another reason to remain flexible patient and calm in the back-and-forth daily swish-swash that is the field day of the algorithms right now.

To make matter a bit more fun (or a bit worse), look at the current up pattern. Yes, many of us have counted the structure as a triple zigzag. We do not know the up wave is concluded. But, as the ES 4-Hr chart below asks, is it just a triple zigzag or is it an expanding diagonal (v > iii > i; iv > ii)?

ES Futures - 4 Hr Close Only - Triple Zigzag or Diagonal

Yes, you can say it, "good grief!" this is not a level of complication that one typically sees counting waves. But let's face it. A lot of this has to do with the outright interest-rate market manipulations of the FED, the way the market is being machine-traded by the "Smart Money" algorithms, and probably the increased popularity of Elliott Wave counting itself. As I had conjectured in 2018, the era of counting of easy impulse waves may be over. The current market is 'chop-city'.

Have a good start to the evening and the weekend.

TraderJoe

Very Difficult for Retail to Compete

Here is a one-minute chart of the ES futures around the release of the CPI report. What you will note is that the ES futures prices moved 110+ points in literally one minute.

ES Futures - 1 Minute - And 110+ Points on CPI

Yes, we know the big institutions have the news-reading algorithms that read the news and respond to it to move prices. What you see here is an excellent example of why it sometimes makes sense to avoid new reports. Before a human could likely even receive the data, make a decision and respond to it with a mouse-click or two, prices had moved 110 points or more!

While this is clearly the very epitome of impulsivity it also seems to clearly show one disadvantage of the retail trader. Further, after the report, there simply is no retrace of 23%, or 38% - just a complete machine grind that the retail trader is also at somewhat of a disadvantage to deal with.  OK, so the ES moves +110 points, and without a significant retrace we're supposed to buy-in and take the risk that prices won't exceed the low? Right (facetiously).

What you have here is machines making waves and making it extremely difficult for traders to participate. This is again made possible because these "Smart Money" machines, can see the order books, and they know the depth of the market at every instant.

What does this have to do with the wave count? All we can say is that the DOW is dangerously close to invalidating its minute ((b)) wave count. The other three major indices are not. If the Dow doesn't invalidate it's possible the wave count for all the indices is a larger triple zigzag upward. Time will tell.

Have a good start to the evening,

TraderJoe

Let's Concentrate on Form

Here is the ES 4-Hr chart in close-only line form. For the moment, let's concentrate on some elements of the chart form. First, as of the cash close, there is a new three-touch trend line (dotted) up from the minute ((a)) wave low. There is also a potential new (temporary) declining parallel down from the recent minute ((b)) wave high.

The wave labels of a/i and b/ii should be currently read as being identically equivalent until some length in the waves (and a possible fourth & fifth wave) can separate the counts. 

Today, we counted a likely leading diagonal down. It may have converted to an impulse by the end of the session. Tomorrow could back-and-fill, or it could just as easily gap lower into a third wave of either a c wave or of a wave iii. Time will tell.

Again, there is no reason price could not go directly down and break the low of the minute ((a)) wave in order to form part of the minute ((c)) wave down.

If price begins to back-and-fill the upper declining parallel would likely need to be respected or an impulse lower would be questionable.

Have a good start to the evening,

TraderJoe

DOW goes it alone

Of the four major stock index futures, the DOW futures alone made a new daily high today. This is really curious as it resets the count on the DOW.

U.S. Futures Contracts - Daily - DOW new high

At the moment there is a high degree of uncertainty as to what the correct wave count is. Could it still be the minute ((b)) wave, up? Yes. But even the Dow can not travel much higher, or it will invalidate that count, as well.

The current wave structure is choppy, whippy and seems uncountable. In some of the index futures it may be a triangle beginning to form (election triangle?). Or, it may be a downward diagonal forming, except for the Dow.

There is not much use in micro-counting at the moment as even some of the internal waves make absolutely no sense. One up wave today never even had a 23% retrace until the closing half-hour. Yet, the wave retraced more than 78% of a prior wave. Can't recall when I have ever seen that.  It's one facet of the wave structure that makes me ponder if we are not in a triangle. The triangle idea is suspect, too, right now, because the Dow made a new high. But, then again, all counts are suspect at the moment.

Have a good start to the evening.

TraderJoe

Looking for an alternate?

We don't know if you are, but if you are looking for an alternate count for the minute ((b)) wave, other than the failed triple zigzag up, then we ask you to reconsider the previous post on the potential ((b)) wave at this LINK. And consider the ES daily chart, below.

We can not at this time suggest a wave pattern like this will happen. Therefore, it is just an alternate to keep in one's back pocket. But there are benefits to the pattern at this location. One benefit is that it will help to take more time relative to the minute ((a)) wave, down. A second benefit is that it could signal the "last wave set down, dead ahead". Third, we noted over the weekend how many other markets are in triangles or triangle-like patterns.

Right now, we have no reason to suspect we are not in the minute ((c)) wave down. But, prices need to drop pretty quickly in the next day or two for that to seem most likely. Perhaps the election will have something to do with that. Perhaps not. One reason we can't go with this pattern right yet is the prior upward wave counts best as the failed triple zigzag. Triangles do not typically form in this fashion for their (a) wave up.

For this reason options must be fully open at this time, with a drop below Thursday's low being of key interest.

Have an excellent start to the evening.

TraderJoe

Will They Hold ?

We don't like to disagree with what we see. It is entirely possible that the US Dollar Index (futures) are in a running triangle, as shown in the daily chart below. In fact, one form of a valid triangle has already formed because the minute ((e)) wave, circle-e, has already crossed back below Minor wave 3.

US Dollar Index Futures - Daily - Potential Triangle

There is some evidence for the triangle in the fact that the MACD is dead neutral at the zero line, and there were two humps up in the MACD previously, which could have been third wave locations. Further, the potential triangle has the right look, and the daily EMA-34 goes through each lettered wave expressing good form and balance. 

A running triangle is usually bullish and means there could be another significant spurt higher. But triangles are funny birds, and very tricky. The triangle could form more waves, expand once in a fake-out and do other things like stall out sideways to frustrate even those who might recognize it. As we have discussed earlier, the potential triangle could fail lower in which case the three-wave sequences might become part of a diagonal, lower, instead. But, if it does not fail, the best confirmation will be to exceed the high of the minute ((d)), circle-d, wave first.

And how about the three-day VIX? Triangle?

VIX Cash - 3 Day - Potential Triangle

Will a triangle in this market indicator hold? It has similar characteristics to the Dollar's potential triangle.

And, finally, a potential nested i, ii, ((1)), ((2)), down in the hourly ES futures. Will it hold?

As a reminder, in no case is micro-((2)) allowed above the high of subminuette wave ii. The market was extremely whippy as the result of the Payroll Employment report. But, so far, there are no degree violations I can see. Yet lower hourly lows are needed to better establish a daily down trend. So, we remain flexible, cautious and patient to see if some of these patterns resolve as expected or not.

Have an excellent rest of the weekend.

TraderJoe

Battle at the 18-day

As we discussed, ES daily prices were previously rejected at the combination of the 100-day SMA at the upper daily Bollinger Band. Today daily prices closed below the 18-day SMA. So, the daily bias is currently down.

Further, (the regular calculation of) the daily slow stochastic sustained the loss of the embedded status for the entire session. Also, we will note that the high of the outside-day-down two bars behind today's bar was not exceeded. Thus, a trap for the bears was not sprung.

Today, we proposed some counts for the first wave down and the second wave up. The first attempt at counting the second wave up correction failed. That was a, triangle-b, c. While we gave clear indication of where the triangle would invalidate, the market was even weaker into the close than the corrective triangle would have indicated as players likely bailed in front of tomorrow's Payroll Employment report. So, two remaining counts for a second wave include a Flat, or a w, x, y depending on whether price goes through the low or not.

We'll see what it looks like tomorrow. Right now, a second wave correction measures much less than 38%, and that would seem a bit too small. But, as I've said before, nothing to the downside will surprise me. Still, it would be nice to see a more proportional second wave. Wave i down - as far as I can tell - ended at this morning's low. And the count for that is in the comments for the prior post.

Have a good start to the evening.

TraderJoe

FED Downer

The market as measured by the ES futures was initially higher overnight, then lower, until the Federal Reserve interest rate decision and press conference. They raised rates by the expected +0.75%, and then gave the usual razzle-dazzle about the uncertain course ahead. When we counted three-down waves only until this afternoon, we suspected something was up. And prices popped on comments about considering how high rates will have been, and the lagged effects by which monetary policy occurs. As far as we can tell, that spike is the end of the minute ((b)) wave up. Under the ES 2-hour chart, below, we will offer five points of evidence in favor of this view.

The evidence that we ask you to consider is the following.

Evidence

1. We are specifically showing where we can count five non-overlapping wave sequences, up.
2. We note the rough time equality of each wave sequence (w), (x), (y) with the brown boxes.
3. We note the MACD is now below the zero line again.
4. We note the speed of today's declining wave, which Neely likes to see to begin a new trend.
5. We note the up wave today was to the 78% level, within Neely's truncation guidelines.

We have often noted that the (z) wave in a triple zigzag is the one most prone to truncation and that would fit the scenario to a "t". We have tried other scenarios, including diagonals, but the wave lengths from last night's high simply do not match them.

If the count is correct, we would expect today's high to hold. Have an excellent start to the evening.

TraderJoe

Outside Day Down - Minute ((b)) ?

As measured by the daily ES futures, today was an 'outside day down'. It had a higher high, a lower low and a lower close than the prior day. See chart below.

ES Futures - Daily - Outside Day Down

 

The high occurred against the combination of the 100-day SMA and the upper daily Bollinger Band. The outside day down means that today's high should not be taken out in the next two days or it might constitute a trap for the bears.

From an Elliott Wave perspective, the high occurred where it should have - following a triangle (see yesterday's post) - and it only made a slight new high which might indicate that it was the last wave up in this wave sequence. That remains to be proven, yet. So, it is 'possible' the ES has it's minute ((b)) wave here, and that would coincide with a 78.6% retrace for the minute ((b)) wave on the Dow futures.

Signs of the down trend resuming in earnest would include a break, back-test, and subsequent failure of the up trend line from the lows on the 4-hr chart (or daily, as above). That has not happened yet.

Note that the daily slow stochastic is still embedded. However, tomorrow is the FOMC decision and press conference that follows.

Have a good start to the evening.

TraderJoe