I'm just asking the question because no one else seems to be, or seems to care, with a few notable exceptions from readers of this site (eg: contributor BBRider, reader marc, etc.). Here is the question:
Is it possible we had the proverbial 5th wave failure at the 78.6% retrace level in the Dow Jones Industrial Average futures (YM) on the weekly chart?
I'll let you be the judge, but it is very compelling that all waves are still in a channel, and that the failure may have occurred exactly at the mid-channel. Here is the weekly chart of the Dow futures so that all the prices are in the chart, including the overnight, etc. Note in this chart, wave (4) does slightly overlap wave (2), causing a guideline exception, but it does not overlap wave (1) and break the rule.
Much of the rationale is listed on the chart. I will reiterate that the downward count from the all-time high is impossible to explain impulsively in the Dow. There is a downward impulse variant that works in the S&P, but it doesn't follow The Eight-Fold-Path Method downward. And the non-overlapping wave upward from October to December 2022 looks like one of the most impulsive waves on the chart. And, if it were to be that (5) = (1), it would have gone over the high. It didn't. Another item of rationale is that waves (2) and (4) would show great alternation in both form and depth. That is significant.
The DOW is supposed to be the 'easiest' Index to get a count in. The Elliott Wave books (The Elliott Wave Principle by Prechter, and Mastering Elliott Wave by Neely) warn us to be on the look-out for a failure in a significant topping wave - often preceded by a deep fourth wave. Well, this is certainly a candidate.
So what is needed? First, the channel would need to break lower. Then there would need to be a back-test of the weekly channel, and then there needs to be a failure wave lower after the back-test. This would all be on the weekly chart so it might take a while.
I have not seen this analysis elsewhere. But one has to ask some serious questions: 1) WHY didn't the Dow form a legit expanding diagonal downward after the all-time-high? 2) WHY did the upward impulse wave in December of last year stop at the mid-channel? 3) WHY did the Elliott Wave Oscillator make a higher high after the running correction (2)nd wave in June - October of 2020? 4) WHY is the fourth wave uncountable as an expanding diagonal which would have made it either a (C) wave or a (1) wave? and 5) WHY is there a numbered wave on each side of the EMA-34 on this time-scale which is now 164 bars as per The Eight-Fold-Path-Method.
Is it a mess? It is. But nearly uncountable waves are often fourth waves or B waves. As a result, the option I have left open as the red alternate is that an ending diagonal (5)th wave still forms. It could. It doesn't have to.
I keep saying to myself, the Dow is supposed to be the easiest to count. Repeat endlessly.
Have an excellent rest of the weekend.
TraderJoe
Looks like a bull market to me. QQQ captures a lot of the emerging economy, That's where you want to be concentrated.
ReplyDeletehttps://capture.dropbox.com/lRrOz21Z2duQnovf
The $SP500 and $INDU are laggard indexes now. The economy is transitioning to a new energy model and AI is about to wipe out profitability in many old-line businesses.
Look at the charts for MSFT, META, NVDA and SMIC, all wildly bullish. Walmart is within a couple of dollars of its all-time high, about to break out decisively. Since last September, Fed rate hikes have led to smaller and smaller selloffs in the market. Inflation is falling. 2-year TSY yields are well below the Fed Funds rate, suggesting that rate hikes are done. There is $5T in money market funds. Where does that go once money market interest rates start falling.
A common pattern in many of the stocks I follow is a strong rally off the Sep-Oct, 2022 lows to Dec-Jan (EW1) breaking out above their 200d-sma's, then a significant pullback into the banking system crisis in March (EW2) and back down to their 200d-sma's, then a strong rally in April-May (EW3i), moving up and to the left away from their ma's.
Some big cap stocks (F, GM come to mind) are mired near their lows, holding back the averages. They need interest rates to drop some and investors are concerned about whether they can do IC, EV and AI all at the same time. In Detroit, no less. They could be boat anchors.
The red alternate is the option for that case. The chart analysis above agrees more with the market adv-dec line, the Russell 2000, the intermarket divergences and the current MACD divergences on the daily. Also, I note you haven't 'labeled' your chart with EW labels. TJ.
DeleteThe most severe market declines occur during the early stages of a FED easing cycle. I think Jeremy Grantham is right about what is ahead.
DeleteThe wave sequence from the failure (5) could evolve into a expanding diagonal. At least the measurements seem fine and clear validation / invalidation levels exist. Nice work tj, haven't seen anything likes this before.
ReplyDeleteThx PD.. TJ.
DeleteCounting an impulse down off the putative failed 5th I find difficult as well ( a downward diagonal possible?).
ReplyDeleteAren't failed moves usually followed by fast moves in the opposite direction? Nothing at all like that here. I don't know if that's any kind of rule of course. But it does seem to apply here.
ReplyDeleteES 30-min v YM 30-min: what a difference - the Dow has already taken out the overnight low. The ES is nowhere near, yet. TJ.
ReplyDeleteHere's a delay chart of the difference.
Deletehttps://www.tradingview.com/x/j1tsEzsI/
TJ
Thanks TJ,
DeleteVery difficult markets. More printing may propel the markets up as debt crisis will be resolved in ALL cases.
ES 2-Hr: trying to keep in mind the slightly higher degree channel count, now with 143 candles on the chart, a higher high is still possible.
ReplyDeletehttps://www.tradingview.com/x/gEgoroyQ/
'Maybe' we are in a 'debt-limit' triangle?
TJ
Dow 10-min v SPY 10-min: here is the contrast between the two at the moment. Both can be counted as three waves down. SPY already has a locally higher high after this morning's low. Dow is still struggling.
ReplyDeletehttps://www.tradingview.com/x/P18jKeAd/
From an EW perspective - possible flats, triangles or diagonals.
TJ
DJI 10-min: finally the Dow has exceeded that local high.
Deletehttps://www.tradingview.com/x/1MrXwBQw/
TJ
DJI 10-min: only internal (A), (B), (C)'s as everything overlaps downward. Could be a diagonal 'a' wave building. Watch the low.
Deletehttps://www.tradingview.com/x/11zuZ00Z/
TJ
DJI 10-min: must hold 33,265.64 to maintain an upward diagonal. See red line on Fibonacci ruler. A fourth wave could not become longer than a second wave in a contracting diagonal.
Deletehttps://www.tradingview.com/x/VqMa2M7L/
TJ
held.
DeleteI think it may be time for the Dems to go nuclear on the debt limit crap. The Constitution (14th Amendment) says that the debt of the United States shall not be questioned (re default). Biden should issue an Executive Order authorizing Treasury to pay the nation’s debt on time & to issue such short term debt as necessary to do so.
ReplyDeleteThe Republicans love to spend money when they are in power while at the same time cutting taxes on the rich (who pay most of the taxes, so that increases the deficit substantially). But, whenever a Dem is in the White House, they try to hamstring him/her by limiting his/her ability to spend money & thereby reduce the chances of that executive being re-elected. [Gingrich, 1994, Contract on America; Tea Party, 2011, rein in Obama -- during a mini-depression no less].
Should Biden go this route, it could well cause turbulence in the financial markets and you could get your leg down or at least a pullback. Will be interesting to see how it plays out.
Meanwhile AI's are training themselves on more & more data at an exponential rate, becoming smarter & smarter, and more of a threat to displace millions of white-collar workers. They don't care about the debt ceiling crisis.
DeleteWizard your comments are political and honest idiotic. Dems are biggest spenders ever but both parties stink. don't try to paint this as Dems good people and GOP bad. what's going on in DC is beyond corruption. Dem party have been highjacked by communists with their radical views. We spend more and Hunter makes more money. Big guy (Joe) gets his 10%. all corruption !!
Deleteall of 3 not above 0-2?
ReplyDeleteTrue. That is a Neely guideline, and the EWP never stated that as a 'rule'. IF we are in the latest stages of the advance, how is one to know if it applies 'hard & fast' or not? We've not been here before. TJ.
DeleteDoes spx still count as b wave from covid low, while dow is a third wave? Do you agree These longer term counts are as unclear as the shorter ones? Thanks joe
ReplyDeletemarc,
DeleteSee the second chart in this post:
https://studyofcycles.blogspot.com/2022/01/year-end-review-of-s.html
And see the red line below prices (the alternate count in this post) https://studyofcycles.blogspot.com/2022/01/long-term-wedge-has-clearly-broken-down.html
A fifth failure plays into these scenarios. It could still happen in the SP500 with the alternate red diagonal shown in the main chart in this post in the Dow. It could still happen with a similar diagonal in the SP500.
I'll re-emphasize these charts were developed in January 2022, over a year ago. They are what keep me calm, flexible and patient.
Joe
Indexes will head lower once unemployment rises. This is the progression. Look at all previous bear markets as far back as 69'
ReplyDeleteA new post is started for the next day.
ReplyDeleteTJ