Over the weekend, we said there was a risk that the downward channel could break. Sunday night the futures were initially lower, then higher. The cash market opened higher, the downward channel did break, and upward overlaps were created. Prices scurried higher but we showed how thin the rise was getting in terms of volume and divergences. The interim effect was that the cash market closed its gap and left a daily tail candle.
As a result, the only remaining down count we can see in involves moving the truncation position as shown below, as it is the last up wave still in the prior channel.
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| SPY Cash - 4 Hr - Truncation Moved |
If the wave we experienced was a Flat - as it appears to be - then it is possible the retrace is a second wave ii, as shown above.
There is nothing definitive that says the Ⓒ wave of ii is completed yet. There could be overnight hijinks. So, the probabilities really look only 50-50 going into the close. There was not much down movement - just the closing of today's gap. Maybe Chair Powell can help bring some urgency to the situation in his testimony before Congress in the next two days. Until some further clarification occurs, we remain patient, flexible and cautious. As the chart says, there are upside options.
Have a good start to the evening.
TraderJoe
Thanks TJ.
ReplyDeleteAmazing work and explanation. The truncation location change makes sense and i looks like a flat.
..and ii looks like a flat. TJ.
DeleteSPY 15-min: update of yesterday's chart. Watching to see if a wedge forms, is busted, near the anchored VWAP. Right now such a wedge can be counted as a diagonal, and can be counted as a valid leading diagonal or an ending one.
ReplyDeletehttps://www.tradingview.com/x/tHavp2xD/
TJ
SPY 5-min: the blue wedge is good enough. There is a wave-counting-stop for a larger wedge. The larger wedge is not necessarily needed, and the most recent up move might be part of a correction.
ReplyDeletehttps://www.tradingview.com/x/D1szhLn7/
TJ
So far so good. I (like most) was hoping for the 3990 - 4000 area. Then what next is the bigger question. Thinking / hoping this is 2 150 pts upward that ends around 4140 area. My WAG or hope anyway.
ReplyDelete2hr rsi is on the floor, bears need to be careful
DeleteSPY 5-min: there is clearly a wave after the blue diagonal. It was 'leading'. The down wave has just broken the 1.618 external retrace on the up wave. Could go further. (Corrected a drawing error only).
ReplyDeletehttps://www.tradingview.com/x/WiEqklmN/
TJ
SPY 1-Hr: there is a gap fill potential just below 62%.
ReplyDeletehttps://www.tradingview.com/x/zYUohCEY/
TJ
SPY 1-Hr: gap has filled.
Deletehttps://www.tradingview.com/x/iYE9YO22/
TJ
SPY 15-min: counting as follows in the link. Since there was a lack of a significant rally at the end of the day, any further lower low before overlap would likely be 'five-down' from the high. Possibly there is an extended first wave. In any case, so far, it is a 'three', and Powell is on tap again tomorrow.
ReplyDeletehttps://www.tradingview.com/x/WxWUrBgQ/
Let's see how it goes.
TJ
A new post is started for the next day.
ReplyDeleteTJ