The Golden Section may have been made today. The ES weekly chart, below, shows what this means. It is possibly (a Fibonacci) 21 weeks down, and 34 weeks back up.
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| ES Futures - Weekly - Golden Section? |
The up wave may be a failed double-combination before a strong third wave down. A tentative new base channel has been sketched in. If we go into a strong third wave, downward, it should break the lower parallel trend line and perhaps make a (3) = 1.618 x (1) in length. In order for a channel to fit the points at (1) and X, it seems as if there should not be much more price movement upwards, or the lower channel boundary would begin to cut off those markers. Let's see how it goes.
Have an excellent start to the evening.
TraderJoe
thanks TJ if this is start of wave 3, it will be very ugly and painful. This rally up since October has scared most of shorts out of the market. Many are buying longs in stocks, which is what has to happen for another leg down in the market. I know many believe October was the low and we're at the start of new bull market. ha bull markets don't start with 500 bps rate hikes. add in - this is one of the most expensive markets in USA history.
ReplyDeleteI still think this has merit. Maybe c of a large triangle I think TJ sketched out or it is 1 of a diagonal.
ReplyDeletehttps://imgur.com/HAjOGUq
failed double combination since Y didn't exceed the W high?
ReplyDeleteIf upward movement has ceased, then yes, that would be the case. TJ.
DeleteTJ, I know you don't much care for my comments since you deleted the last one, but ...
ReplyDeleteWhy can't you read the S&P 500 chart as a head & shoulders bottom with June, 2022 as the left shoulder, Oct as the bottom and December as the right shoulder. You don't show the 200d-sma on your chart, but we have broken above it. You had a trendline through the Dec highs, but now you have decided to move the goal posts and run your trendline through the current rally high. Why, since we broke above the previous trendline?
It is true that the TBill -TBond spread is forecasting a recession. But that will bring inflation down. It's not clear how bad the recession will be. If it's moderate, what did we discount in 2022 with the market down 20% and many stocks down 80%?
I think you should stop trying to forecast the big picture and focus on counting the short-term waves. It was helpful to me today to see your idea of a triangle consolidation here. I expected the market to open higher today and after a brief consolidation, run sharply higher in a fifth wave. Didn't happen, and your analysis provided some insight as to why.
If we're still in a bear market, why is Tesla up 100% since December? I could have made some serious money on a positive call on that stock!
"I think you should stop trying to forecast the big picture and focus on counting the short-term waves'. I do not believe I have ever taken the time to comment on another reader's post. This quote was so remarkable as to demand a response. Getting the main trend right ( "big picture" ), is what makes his work more accurate than 99% of so-called EW analysts. You've been around awhile. Surprised you do not give the man his due...
DeleteAbsolute best! Has been my mentor for over 10 years!
Delete1. Re: Inv H&S, 'you' can read it that way if you want to, but the two shoulders are not symmetric. The left one is much deeper than the right. But, more importantly, Inv H&S have higher probability at an all-time-market low, rather than quite near an all-time market high. (Not 'impossible', just lower probability.) Yes, the 200 MA is interesting, but price is 'also' below the 18-month MA (see Ira Epstein videos) and still in a 'down bias' on those charts. Which moving average do you follow and why, given that they are all lagging indicators by definition?
Delete2. Do stocks forecast the recession, or the recession forecast stocks? Which is the 'leading indicator'? Why are stocks in the 'Index of Leading Indicators'?
3. Every Elliott bear market is either a :3 or starts with a :5. For the long term I'm just trying to figure out which. It's a relatively simple exercise, and it shouldn't cause you so much grief.
4. You can always make money in either direction in the market depending on what you buy or sell. Those decisions are not up to me for your account. You do what you want when you want to. It is more probable one will make money buying in a bull market and being out or going short in a bear market. Tesla is one stock in a universe of stocks, and not solely representative of the entire economy. That's why Elliott chose an 'average' and not just GM, say.
In short, you don't give the impression of knowing much about EW. And I'm specifically 'not' here to provide you with trading or investing recommendations. So, you have to do what you will given that information. I'm thus not sure it's worth your time reading this blog. But, it's up to you.
TJ
https://www.tradingview.com/x/7BHXERx4/
DeleteTSLA on the weekly was at it most oversold and hitting the bottom rail. Yeah people gonna buy, machines say buy but look at the trend and all the money trapped at higher prices. IF we do have a recession people are not going to buy more Teslas they will be forced to sell TSLA, chart says $64 by August is not out of the question. The masses will decide. There was some serious hate thrown toward Elon a few months back reflected in the chart. It seems to have subsided, good chance he becomes a bear market villian if this trend stays down time will tell. Must have patience in all time frames.
He probably doesn't care, because your comment is not even related to EW counting. Thus, there is simply no need for here.
ReplyDeleteIn EW, there is no chart pattern stuff like H&S so why even think about? 200 d sma is just a number. As u are interested in trading, do me a favor: write a small script which calculates the gain or loss in the following x days after a 200d sma cross. You will be disappointed, trust me. And just think about who creates those patterns (I know, the market, so big money decides there has to be a bottom) and which intensions they might have. Maybe luring retail into the market? But that's also no EW stuff...
I don't even want to write something regarding the bottom of your comment....
Just my 2cents
Thanks for your work TJ
Just don't like the probabilities in here either way. Have a great weekend all!
ReplyDeletehttps://imgur.com/kcqxtKp
ES Hourly - for the first time in quite a while there is now a 1.618 wave downward, with the RSI dipping into over-sold territory. Possible for a whippy fourth wave today? Chart below.
ReplyDeletehttps://www.tradingview.com/x/MJCC5fy1/
TJ
Thanks Tj for the update. Whenever possible update the main chart with line in the sand:)
DeleteHere it is, but by now you should be well able to generate the chart for yourself?
Deletehttps://www.tradingview.com/x/ByPTCbhm/
TJ
Thanks. Was not able to do on the chart from nov 2021.
DeleteThe hourly DJIA 'cash' index might be slightly out-of-synch with the ES. It does look like it has an ending triangle in acceptable form. But, the truncation locations would be slightly different.
ReplyDeletehttps://www.tradingview.com/x/9THdyTGD/
Watch the (a) wave low, marked 'prior low'.
TJ
Yep!
DeleteHere's the Midcap Index for comparison. Looks like time for a rally. I think we have had an A-B-C correction digesting. the 'hot' January jobs report. I think the rally will carry pretty quickly to new highs. The alternative scenario is that it stalls & turns out to be a wave 4 rally and the more bearish scenario plays out. Should be interesting. Note that the Midcap reflects the U S economy better than the S&P 500 which is heavily weighted toward big corporations with extensive international operations.
ReplyDeleteChart: https://schrts.co/JRPBybyZ
This is what I see in the midcaps; not much different than the ES, except maybe a more perfect expanding diagonal.
Deletehttps://www.tradingview.com/x/ohfbCyZy/
I'm not quite sure what indicator tells you there is going to be this magic rally, but if one happened, it might only be to complete an overlapping ending diagonal to finish Y (or equivalently C).
TJ
Your Minor X has to be an impulse, so your count appears to me as invalid. I see your Minor W as Minor A of an Intermediate (B) running triangle, with your Minor X being the triangle's wave B (can be an impulse). I see wave C as being already in, in which case Minor C would be underway.
ReplyDelete* ... in which case Minor D would be underway.
Delete'Can be' five waves or 'can be' three waves. Notice in the three-wave a-b-c count there is no 1.618 wave, nor is there overlap in wave ((4)) of 'c'.
Deletehttps://www.tradingview.com/x/zJ5tPyij/
TJ
..and, if needed for length, just move wave ((3)) of 'c' down one trough to the right. TJ.
DeleteEven in the futures (which I don't consider anymore), it appears to me a clear five - I mean, if that's not a five, I throw my EW towel!...
DeleteBut going back to the cash... it's not an easy one, cause, after a contracting diagonal (A), one is expecting a sharp correction into the end of wave 2 of (A) followed by an explosive impulse (C), and none of them occurred, so now we have to come up with less likely alternative counts... but that doesn't mean forcing counts where there is no room to do so... as per my analysis (as faulty as it may be), whether we already had (A)-(B)-(C) to complete [Y] of the [W]-[X]-[Y] sequence for Cycle II, or we are in the triangle (B) of [Y]. And, actually, comparing [W] (a flat) to [Y] in terms of % net correction, they are already equivalent (~25,5% to ~27,5%, respectively), so maybe we are heading to new ATHs already.
For me, the only lengths needed are the waves' 2 and 4...
DeleteDon't throw in any towels yet. As I said, it 'can be' a five. I will try to address this more on the weekend, but now other matters call. TJ.
DeleteThe idea: https://www.tradingview.com/x/RfcJM3yU/
ReplyDeleteThree points: 1) first good original work. It is very clear what you are trying to express, 2) this must represent the 'soft landing' scenario for quite a while. It seems to put-off debt, interest rate problems for quite a while, 3) your bear market does not end at a fourth wave of lower degree. TJ.
DeleteRegarding your point 3), in fact, I've always heard it was an EW guideline on impulses, but I've just went to check it out and, actually, the guideline applies to waves 4: "Wave 4 typically ends when it is within the price range of subwave four of 3.".
DeleteHaving said that, wave (C) may extend, especially after a running triangle.
Where's the Like button?
DeleteWhat if that B wave in the proposed triangle is a 5 wave structure...?
DeleteKelly, it's just an image.
DeleteDavid, I can only count it as an impulse.
Thanks, the triangle makes the most sense to me as you have major support near 3700-3650. Weekly bb, weekly 200, monthly 50 mas are all there. It would make sense it would ping pong for a while. Weekly BBs are starting to go sideways already.
DeleteYep, and as per my criteria, the bull market's (since the 2009's low) line in the sand is at 2914 (at this moment), which is in confluence with my target for the triangle's thrust.
DeleteA new post is started for the next day.
ReplyDeleteTJ