Cycle Degree Over-Throw

Back in 2022 we published the chart at this LINK that indicated one of the two likely monthly scenarios was that we were in a Cycle V overthrow of a long-term channel. Please remember that - with these even higher prices - we are now even further into that over-throw. In this Friday's price action, higher all-time highs were made even as twice as many stocks declined as advanced! With that in mind, we focus in on the two-weekly closing price chart. This chart has about 109 candles on it, and it may come in around 120 - 160 when the chart is completed.

This recent up wave has been dynamic, even though it started out with overlapping sequences. Given the new all-time high price action, it registers like a 'third' wave and that is the way it is labeled above as Intermediate (3). Again, the advance-decline line is really diverging here. So, it may mean that a fourth wave will begin sometime in the next week. If a fourth wave begins, then the EWO would also put in a divergent high, as well.

If that occurs then wave (4) 'must' be a zigzag, although the B wave in the zigzag could be a flat or a triangle. But, overall, the sequence must count like a zigzag. So, now let's focus in on the Minor Y wave since the October 2023 low of the Minor X wave using the ES 8-hr close-only chart.

If we use the following factors in the analysis 1) degree labeling, 2) shallow depth of retraces for extended first waves, and 3) RSI divergence along with advance-decline divergence, we see we might count the Y wave as a zigzag. Note that wave minute ⓑ is the deepest retrace on the chart, and so - by degree labeling - it should be the largest downward degree label. On this chart it is.

As we said on Friday, the NQ futures have not yet gotten over the all-time-high. It would be great if they did to put the major indexes in gear. So, wave minuette (v), up, may still be unfinished. But cracks are starting to appear, so be alert.

Have an excellent rest of the weekend.

TraderJoe