Each of these four scenarios is a viable Elliott Wave count at the moment, due to the topping process we are in. Look them over carefully.
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| SPY Cash - Daily - First Two of Four Plausible Paths |
The first path says that there have already been five minute-degree waves up in a wedge count - the extended first wave count - to a Minor C wave, to make a high of the Intermediate (B) wave, up, and the S&P500 will not make a new all-time high. A waterfall decline in an Intermediate (C) wave would follow, lower. The second path says that the fourth minute wave is still under construction as a Flat wave. There could then be a minute fifth wave up to follow beyond the prior all-time high before an Intermediate (B) or Intermediate (3) wave tops.
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| SPY Cash - Daily - Second Two of Four Plausible Paths |
The third path says, ok, there were five waves up in a wedge count, but it is one degree lower than a minute wave degree (perhaps a minuet wave degree), and there could be a second wave down to make a minute-degree second wave. I'm showing a different symbol here just to make a distinction. The fourth path says that a third minute wave ended at the high, and perhaps, even with further movement lower or not, a triangle is developing for a fourth minute wave which may take several days to complete yet, before a fifth minute wave up. A triangle might help even out the net point differences between a second and a fourth wave. And it might signify "last wave up in this wave-set is dead ahead."
Other than the first count, the remaining three counts could help make a higher all-time-high for the SP500 and allow the Intermediate (3) wave of a contracting diagonal for a Primary ⑤th wave, or just a slightly larger Intermediate wave (B), up.
In the shorter term, unless your market metrics are exceptionally good, any of these scenarios has roughly an even chance of working out, so that the odds are only about 25% of getting it right by random chance alone. Therefore, it might be beneficial to allow the market to sort things out until valid short-term counts are obtained. As often said, patience, calmness and flexibility are essential at this time.
Have an excellent rest of the weekend,
TraderJoe
Can anybody make an impulse or diagonal out of the move from 4743.25 to 4841.5 es?
ReplyDeleteYah, unfortunately. Although I slightly prefer the b-3 interpretation, I had studied this wave extensively, and a slightly truncated fifth wave works for a non-overlapping impulse. It starts off with a contracting leading diagonal 'i' wave and deteriorates from there (lol).
Deletehttps://www.tradingview.com/x/bnXK8Izh/
I stayed away from calling the whole structure a diagonal, because there is likely a conflict with the higher wave shown inside the expanding triangle (can't have a flat wave as one of the numbered waves in a diagonal). But, it can still be just three contracting zigzags w-x-y-x-z. Further, it doesn't have the characteristic 'look' of the diagonal with the final throw-over, and it was made on very light holiday volume. So discipline requires I have a pretty neutral stance regarding it.
It would be nice to be more confident, but I'm sure it will clear up fairly quickly.
TJ
Ruminating this week-end of the question of how fundamentals, if they do, affect market price, and indirectly our expectation of the probable wave count. Some fundamentals to chew on are the remarkable number of consecutive quarters of declining top and bottom line revenue (not revenue growth!), concomitant P.E multiple expansion ( buybacks?), increasing market price to sales ratio and most interestingly the most precipitous decline of M2 ever recorded, yet here we are at new ATHs in some indices. Failure to see a recession in 2024 will be a historic first for the market as one has followed the end of every previous rate hiking cycle, assuming of course, the FED is done. BPI and RSI at every time frame overbought. Will we see a persistent bull run in a recessionary environment? Or possibly on the cusp of a historic mean reversal in equities? Thoughts?
Delete@Tachy, or is it just the fact that AAPL had to make it's 5th wave up with a near perfect 5 = 1.
Deletehttps://www.tradingview.com/x/DdDL4rX4/
It doesn't 'have-to-be' over because it could try to make an ending diagonal or something, but it is looking suspicious.
TJ
Excellent point. Breadth is revealing. Amazing how few stocks did the "Heavy Lifting" 😊
DeleteThe 28th largest trade of all time on SPY transacted on Jan 2 at $472.65. As long as price remains below that level the bias is down.
ReplyDeleteBuy, or sell? 😊
DeleteAt best that can only be inferred by other evidence. It was an odd number lot trade, which some people would use to claim that it is more likely to be a closing trade.
DeleteThere appears to be more of an impulsive move off the highs in QQQ, it may have already topped.
ReplyDeleteThe side-by-side comparison of the hourly NDX & SPX shows no appreciable difference in gaps, shape or position relative to indicators.
Deletehttps://www.tradingview.com/x/vyDSmn6t/
Again, this just calls for remaining open-minded & flexible at this time. It could as well be an ending wave of a Flat, as well as the initiation of a new down wave.
TJ
Although market extremes can persist longer than expected, bullish sentiment at such times seems to be part and parcel of herd mentality. Truly amazing. The so-called "Magnificent Seven" are sporting a P.E. of 32 and alone responsible for 2023 positive market returns. SPX P.E. a robust 20 vs a historical average of 15. This is certainly not inside information. Absolutely how at market tops (and bottoms) virtually no one believes in the principle of reversion to the mean, even some smart ones apparently, judging from some analysis out there!
ReplyDeleteFear & Greed Index has been over 75 (Extreme Greed) for several weeks again - just like July.
Deletehttps://www.cnn.com/markets/fear-and-greed
Click on 'timeline' to see trend. It's becoming a bit easier to monitor sentiment.
TJ
Speaking of feat and greed...is anyone else wondering why there is so little discussion of what the steep rise in interest rates has done to the capital ratio of bank balance sheets? US Treasures are the instrument of choice for central bank reserves, AS WELL as a tool for hedging risk. Remember the
DeleteFED misled everyone about the inflation problem so few were anticipating the dramatic rate increases. The unrealised losses ( repeal of Glass-Steigel allows marking "to book") are said to in the hundreds of BILLIONS! Leveraged bond portfolios are way below CR 1.0 Is this why the market is pricing in SIX rate cuts in 2020? Clearly there is NO FEAR!
@Tachyon - and not just in the U.S. (Story from the weekend if you missed it). Chinese shadow banking giant Zhongzhi Enterprise Group Co. filed for bankruptcy, cementing the rapid downfall of a firm that oversaw more than $140 billion at its peak before succumbing to the property crisis that has wreaked havoc on the world's second-largest economy. (2 days ago, Bloomberg) TJ.
DeleteAnd yet, when I look across sectors off my metrics I see bearish leadership from big cap tech (FNGD) but not big banks (FAZ), nor the VOL etfs. I realize they likely won't all turn at once, but I do like to see where the nerves are concentrated. Most broadly, yeah, China is way out in front to the downside and I've seen decade long trendlines at risk if not broken. Curiously, a Chinese Canadian friend who does EW sees light at the end of the tunnel for the decade long Chinese shares correction. https://imageshack.com/i/pnZ6LCptj
DeleteIs that really a train instead?
@pedro, your friend's count is not a valid Elliott Wave count because 4 can not be above 2 in an expanding ending diagonal wave C, down, of II. Sorry, but he is breaking the 'rules' as they are currently written in the Elliott Wave Principle by Frost & Prechter and other references. Counts that break the 'rules' must be discarded, otherwise if rules are not followed, then literally any count is possible at any time. If you have not obtained or clearly digested the basic rules, you need to do so as soon as you can. TJ.
DeleteI wish I could find someone that has done some super computer work on the time ratio between a 4 and the 2. At what point of time does a 4/2 time ratio drop the probability that it is a 4.
ReplyDeleteIn the Apple chart above. I can easily look at the 2day and say we are in a 4 of a contracting diagonal as TJ suggested. I am using a 2day and it seems like the EWO violates the eight fold path methodology.
The other one always on my mind is the one from 82 were 87 was the 2 and 2000-09 was the 4. There valid from and overlap standpoint but just to not look like they are in the same wave.
Maybe with the right number of candles, a requirement could be that two has to come down to the SMA34.
First, a current thought. Is this a problematic time ratio? Aren't two and four 'often' similar in time, or four a bit 'longer' in time?
Deletehttps://www.tradingview.com/x/ROF0ealv/
Second, in my Oct 1, 2023 post, I clearly show how 87 is not related to 2009. I show readers where the Prechter error is, and I also advised EWI of the same in writing. This is the fourth error I have written them about. And it may turn out to be 'five' if SPX goes over the high.
https://studyofcycles.blogspot.com/2023/10/for-life-of-me.html
Only 82 and 2009 are related.
TJ
Also, this is the diagonal count I had in mind for AAPL, if the stock has more mojo (buy-backs, predominately).
Deletehttps://www.tradingview.com/x/rLOOnbVs/
The topping count, shown earlier, and this count are to be read as Equivalent until or unless one is disproved. The clear invalidation of the extending diagonal is shown on the chart.
TJ
Maybe a triangle completed in the overnight on ES 5min.
ReplyDeleteNow above the e wave.
DeleteSPY 1-hr: this is a reason one needs to be flexible. Nothing is proved yet, but an upside hourly fractal is exceeded higher before a downside one.
ReplyDeletehttps://www.tradingview.com/x/BAAsSA4G/
As far as I can tell, there is no major econ data until Thu/Fri, but there are US budget negotiations ongoing, and political stories to follow.
TJ
Base channel on ES.
ReplyDeletehttps://imgur.com/HuP5C4Q
Went right through it.
Delete...and back-testing....
DeleteI would think this is around the middle of a 3.
DeleteSPY 1-hr: one gap closed above the 50% level. ES might have a-b-c zigzag; SPY might have a-b-c Flat.
ReplyDeletehttps://www.tradingview.com/x/6W89XkFA/
TJ
A new post is started for the next day.
ReplyDeleteTJ