Things in the equity market have toned down a bit, and today was a whippy day which challenged wave counting skills, but perseverance provided some clues. They are noted in the chart in the comments section of the prior post. On the daily chart of the ES futures, the regular calculation of the daily slow stochastic lost its embedded status as of the cash close as below.
Today was a lower low day, but price is still above the 18-day SMA, so the daily bias remains up even as price corrects. This is just a reminder that the only day price can gain back the slow stochastic over the 80 level is tomorrow, otherwise it has to go through the whole three-day rebuilding process. If the embedded reading stays lost instead, then price might head for the 18-day SMA as a first target.
It certainly feels like we are getting a fourth wave, (iv), reference the NQ chart shown in prior posts. Also remember that in some fourth waves, it is possible to go over the prior high in a running triangle or expanded flat wave. So, do not be surprised if that happens. Calm, patience and flexibility remain the name of the game.
Have an excellent start to the evening,
TraderJoe
Hi Tj,
ReplyDeleteDo you have any views on the Vix.
Sure my thoughts come from how to calculate the VIX, as in ..
Delete"The VIX Index calculation takes the variance of two sets of SPX options with expiration dates between 23 to 37 days in the future. Then, it interpolates the variance between both. Finally, it takes the square root of that and multiplies it by 100. That’s the final VIX Index value."
As you can see, since the calculation is 'blending' the results of two different options series, including interpolating between them, it is a 'derivative' or 'once removed' calculation from immediate market trading. If you are an options trader, it might tell you something. For me, it is not predictive of the market and generally follows after what the S&P does, though sometimes diverges from it. To me, it is not very useful or forward-looking, just because of the 'muddiness' of what it is calculating. TJ.
ET, Thank you for posting this. After reading Trent Gardner article in TASC magazine "using VIX to forecast s&p 500", I added to TOS. So far results are mixed and I see why you don't like using it. However longer term trend lines have worked. Now that VIX has broken a longer term trend line we need to establish a base line which or course will take time.
DeleteES 1-Hr: before the open; the low of yesterday's diagonal has been exceeded lower.
ReplyDeleteTJ
SPY 15-min: here is the updated chart. Because there was only ever a 23.6% retrace, the count is either a simple a, b, c down with b as the shallow retrace or it is another extended first wave scenario (because 'most-often' extended third waves have their second waves retrace 50 - 62%).
ReplyDeletehttps://www.tradingview.com/x/x7AiGLKu/
I favor the first scenario at the moment, and it may take us down to the 18-day SMA. The slow stochastic on the daily seems to have lost it's embedded status. I don't favor a larger flat at the moment because the failure at last night's high seems to indicate something more serious downward, not a resumption upward (BUT, it IS 'possible' just very low odds from here).
TJ
SPY 30-min: here is the simplified picture on a slightly larger timeframe with a new wave-counting-stop added.
ReplyDeletehttps://www.tradingview.com/x/hIvu9tia/
TJ
SPY 5-min: price now up over the prior local high. Diagonal or flat? ES 'did' just barely reach 90% down. Could also be just the expanding triple zigzag version.
ReplyDeletehttps://www.tradingview.com/x/sYpcooRw/
TJ
Head and shoulders pattern on both es and qqq. Buyers keep showing up at the neckline
ReplyDeleteSPY 5-min: Expanding diagonal or triple-zz validated by wave ⑤ being longer than ③ and wave ④ being longer than ②, with wave ④ overlapping wave ①, without wave ④ traveling below the low of wave ②. And, so far, all three-wave sequences.
ReplyDeletehttps://www.tradingview.com/x/csvxbfMJ/
I would say that if the up wave adds a fourth and a fifth wave, then it just might be a flat wave, instead. So far, it has reached over the 50% Fibo level.
TJ
..having reached the 50% level tends to support the idea than a third wave of a 'c' wave down could be the extended wave in the sequence and go to 1.618 or beyond. TJ.
Deletewith the higher high; it is now possible to get the Flat construction.
Deletehttps://www.tradingview.com/x/bCn9c1hQ/
TJ
SPY 5-min: now below prior wave ④ and overlap warning has been triggered.
Deletehttps://www.tradingview.com/x/Lk6Rv1Pe/
TJ
SPY 2 min: for those of you looking for one, this is an example of a true 5th wave extension as far as I can tell. (Can go a bit further if it wants). And you're seeing it in 'real time'.
ReplyDeletehttps://www.tradingview.com/x/YTOIT0Fa/
TJ
ES new low below morning low. TJ
DeleteNDX lagging. Who will play catch up?
ReplyDeleteAssuming NDX will not truncate. In which case, more downside methinks...
ReplyDeleteAlso, downward over-lap warning...
ReplyDeleteSPY 2-min: here is how that 5th wave extension wound up, as best I can tell in real time.
ReplyDeletehttps://www.tradingview.com/x/HOvU63qc/
TJ
..last update on the close; after a while you begin to see "it's not all noise"..
Deletehttps://www.tradingview.com/x/mnZ9WUKS/
TJ
Joe, thanks for taking us through the day with sharp analysis and an easy way of explaining it. Always have appreciated you.
DeleteVery welcome Andy. Nice of you to say. TJ
DeleteYes! Much appreciated. Nothing like real+time tutelage to make principles sticky...! 😊
Delete🙏 Thx!
DeleteIf we get A=C, it looks like around 426 (also area of prior 4th), may be in the cards. Have a great week-end all!
ReplyDeleteA new post is started for the next day.
ReplyDeleteTJ