After an initial 62% retrace, lower, from wave (i) it is now possible to count the DJIA Futures (YM) as this following diagonal.
Such a count may not be completed yet, but there is one way to see it as there or very nearly there and to follow the rules for such a pattern. It has been a long, long wait to see this pattern unfold. We will still be patient to see if the post-pattern behavior is what should be expected. The alternate pattern, if not, is a series of nested (i), (ii), i, ii ..
Have an excellent rest of the day and evening.
TraderJoe
Hourly, Daily, and Weekly SPX, all with an embedded slow stochastic and latched on to the upper BB. Monthly SPX now overbought and approaching the upper BB.
ReplyDeleteweekly BB hit, not sure if the train is going to notice
ReplyDeleteIwm - if that's a triangle on the weekly - it may see some trouble here.
ReplyDeleteWhat I like about that YM count is we will soon have irrefutable evidence of its validity. 🙂
ReplyDeleteES daily - here is another different style analysis for you all. In years and years of watching prior runs in the stock market, the futures market always tended to fill its gaps faster. Usually, in the overnight, some backing-and-filling would cause the gaps to close if not that day within a couple of days (like the black circle on the chart).
ReplyDeletehttps://www.tradingview.com/x/JIzrV0Ir/
Look at the sheer number of futures gaps that remain open. I honestly do not recall such a sequence in many, many, many years of looking at markets. It 'might' be due to the FOMO of zero, one-day-to-expiration options or something like that, but, save the contract roll-over gap (marked), something very, very odd appears to be going on and may eventually have to be corrected. Does it show 'excess' optimism? Meaning willingness to buy at any price? It might.
TJ
A VIX print of 13 is suggesting to me an "all-in" mentality with large orders being placed at market price, hence the remarkable gapping price action, Series gaps usually signal the start, or end, of bull runs.
DeleteI'm wondering if the Saudi PIF is front-running the bull market. If you take a long-term view, you know that interest rates will be coming down. Either because the Fed overdoes its tightening program and causes a serious recession, or it engineers a soft landing & inflation comes down because it was caused by a black swan event - the Covid pandemic and subsequent QE. So growth stocks will be more valuable in the future. So why not buy the big cap growth stocks ahead of the recession while they are cheap? You've got $5T in U S money market funds which will move when rates come down. But that's too late, because the big cap growth stocks are no longer cheap. Admittedly, just a wacko theory.
ReplyDeleteSo next week, aside from the usual BS, the Fed will either watch and wait (market goes bonkers), raise by 25 bp (what everyone expects, so can't be much left to discount) or raises by 50 bp (unexpected, nasty, likely would lead to a serious correction). Given the CPI drop to 3%, the 50 bp raise would be pretty hard to justify. Put the odds at 25-70-5 and the returns at +10, 0, -10 so the game theory expectation is +2%. So, for the time being, looks like the game goes on. Meanwhile earnings calls are happening and companies will be offering 'outlooks' for Q3 and their stocks will respond accordingly.
One last observation ... your wave i was 25 days; wave iii was 30 days; and wave v is now 7 days (if I'm right about that small triangle correction being wave iv). So wave 5 may have another 15 days or so to go, right up into some of the key big tech earnings reports. After that, we should get a 38.2% (or more) correction of the summer rally. Or if the big bear scenario is correct, the summer rally ends a protracted B wave in the bear market (the Fed has to mess up big time for this to come true).
TJ, are you still working on your book? I have a full time job and enjoy wave counting, but can't seem to put it all together with rules vs. expected retracements, etc. I truly appreciate this blog and your insights. No one else comes close to your analysis
ReplyDeleteThanks Walter. Yes, it's still in progress. I decided to do something different to what is out there. TJ.
DeleteTJ, can you give us the long term of spy and NDX?
ReplyDeleteES 1-Hr: (I'm not saying, 'it's done', just yet. Clear reversal indications needed.) But I am saying the wave can be counted as a clear impulse, with the alternate of a zigzag, as shown along the red line.
ReplyDeletehttps://www.tradingview.com/x/8lwWYbpV/
In the impulse, there would be 'extreme alternation' between waves 2 & 4. Possible. But, because the deepest and longest correction came back down to the channel, a zigzag can not be ruled out just yet.
TJ
What about an extexded 1st wave impulse and three is about done? Seems to have the look.
Delete'Possible' see the Principle of Equivalence, in the chart comments at 11:34 am. It 'could' run that way, too, on a larger time scale (like 2 hr or 4 hr). So, we are patient, calm & flexible. TJ.
DeleteAgain, while not impossible, one thing not to like about the x1, is that retrace for 2 would be less than even 23.6%! That seems like more the b wave in a zigzag (or a fourth wave). TJ.
DeleteIsn't the wave 2 in an extended 1st wave impulse often shallow as the 1st wave creates FOMO?
DeleteYes! Yet Neely says 'waves of the same degree typically vary by at least 30%'. So, while not impossible the x1 wave is 'usually' followed by a 35 - 38% wave. Again, <23% is not impossible. Few things are impossible .. just much less probable. Again, this is a game of probabilities. TJ.
DeleteThx for the responses!
DeleteThanks tj. Amazing run from March in Spx.
ReplyDeleteES 1-Hr: The EMA-34 has been added as a cross-check as per The Eight-Fold-Path Method, and it seems to hold, with every major numbered wave on an opposite side of the EMA-34 with about 120-160 candles on the chart.
ReplyDeletehttps://www.tradingview.com/x/qLvLq42p/
The Principle of Equivalence is illustrated as well. Still nothing says we are definitively done just yet, so I'm watch for a smaller triangle, diagonal, or gap fill,
TJ
APPL - daily - this Magnificent One stock has 'finally' eeked out a higher high which might allow an expanded flat or other fourth wave (..or larger) lower. TJ.
ReplyDeleteSPY 5-min: has a divergent higher high on this time frame, which makes us play the 'triangle or diagonal or top' wave counting game: The Fourth Wave Conundrum occurs at every degree of trend.
ReplyDeletehttps://www.tradingview.com/x/Ku12tU0t/
TJ
A new post is started for the next day.
ReplyDeleteTJ