Overnight the ES futures were higher after only a very shallow retrace. As a result, the cash SPY opened with a gap upward. After opening higher, prices traded higher until about 11 AM. Then, on as light a volume downward as cash prices made their upward move, they began heading downward to ultimately close the gap before the close. The SPY daily chart is below.
 |
| SPY Cash - Daily - Spinning Top Candle? |
Three things can be noted:
- Today's candle qualifies as a "spinning top" candle but needs closing lower validation.
- The SPY got up to the resistance of the prior November lows, crossed the 50% Fib & 50 SMA.
- The MACD has not crossed above the zero line yet.
So, first things first. Let's see if the high of this daily candle holds, and if gets a substantial closing lower candle. If so, the next step would be to see if the December low is exceeded lower. If so, it may be possible to get a 1.618 wave because the potential wave ii up exceeded the 50% level - at least in cash. Then see if the MACD crosses lower beneath the zero line again.
In a similar situation with Gold (GC) futures which made a higher high and a doji on the upper daily Bollinger Band.
This would seem to be a good time to pay close attention to these markets. Have a great start to the evening.
TraderJoe
Joe, I would be hesitant to call today's candle a spinning top given the lack of any lower wick. I would classify it as a shooting star which makes a stronger statement towards a reversal as compared to the indecision of a spinning top. However, both signals require a confirmation bar so it puts the assessment of the market in the same position either way.
ReplyDeleteI accept your analysis. A lot of the examples for the shooting star showed the gap remaining open at the end of the day, so I chose not to go that route. But, you can be correct here, too. TJ.
DeleteHow are you counting the 'ii' wave? a (3) - b (3) - c(5)? Today (after 11 am) looked like a 4 of 'c'. QQQ is up 15 points over two days (3 of 'c' ?), gave back 5 pts this afternoon for a 1/3 retrace. It's close to oversold on the 30-min RSI & SloSto.
ReplyDeletePersonal opinion (largely based on measurement) is there was indeed a triangle in the mix - one that pointed upwards and not downwards. The usual technical target for a triangle is shown by the arrows (widest-width of the triangle added to the breakout point). Pretty darn close.
Deletehttps://www.tradingview.com/x/YrLR9kvf/
TJ
Thanks. Interesting. Complicated correction.
DeleteThanks TJ. Regarding this - "If so, it may be possible to get a 1.618 wave because the potential wave ii up exceeded the 50% level - at least in cash."
ReplyDeleteIs this guideline in the Frost & Prechter book?
It is explained on page 136 of that book in a poor way saying, "when wave 1 is the extended wave, then it is wave 2 that quite naturally often divides the wave into the Golden Section". By converse reasoning then, if wave 1 is going to be the extended wave, then wave 2 is often only 38.2% or less. So, IF wave 2 is 'greater than' 38.2%, the odds increase that wave 3 or 5 will be the extended wave in the sequence.
DeleteNeely says it much more explicitly on page 11-2 of Mastering Elliott Wave. For Trending Waves, "When wave 1 is the extended wave, then wave 2 'cannot' retrace much more than 38.2% of wave 1." Lower left of page. And again on page 11-3, for Wave 2: "If wave 1 turns out to be the extended wave, then wave 2 can not retrace much more than 38.2% of wave 1". Whereas for Wave 1 not-extended, then wave 2 can retrace up to 99% of wave 1. Therefore, by simple logic, the "odds increase that wave 3 or 5 is the extended wave, if wave 2 is greater than 38.2%" - like the 50% we just saw in the SPY. TJ.
Reminder: Chair Powell scheduled to speak at the top of the hour (Reuters). TJ.
ReplyDeleteSPY 15-min: this ((A))-((B))-((C)) flat might avoid failure, or it might not.
ReplyDeletehttps://www.tradingview.com/x/A5upOx95/
Volume is still pretty punk, and the waves whippy.
TJ
From what I can see, max for a diagonal would be 3,942.00 futures. TJ.
DeleteES / SPY wave above prior morning high. Did not fail. TJ.
DeleteSPY 15-min: only if price again goes up over the high of the diagonal, then the diagonal 'might' be leading, and wave red ((1)) moves to the low.
Deletehttps://www.tradingview.com/x/AfnyoMJL/
TJ
Diagonal exceeded higher. TJ.
DeleteTJ if diagonal exceeded, does that mean ES will rally higher above monday's highs of 3,972
Delete@Jim .. possible to make a deeper retrace on ES more towards 50% or 62% in ES futures. But, not required. TJ.
DeleteA new post is started for the next day.
ReplyDeleteTJ