In the prior post I referred to further analysis this weekend. That work is below and what is shown are the three-touch trends lines on the NDX with all the available historical data. The crux of this count is that we know the SPX made its low in March 2009, but the NDX never made the lower low. So, perhaps that wave is a truncated zigzag in the NDX. That's just a zigzag where the C wave (Ⓒ in this case) never quite makes the lower low. But the truncation would be a harbinger of the strength of the significant up wave to follow. The six-monthly close-only log chart of the NDX shows this as follows.
So, the alternation in this case might be two-fold. First, there would be a truncated zigzag versus an expanded flat. Second, there might be the alternation of "long-Ⓐ, short Ⓒ to short-Ⓐ, long Ⓒ". Note that the current Ⓐ down looks a lot like the prior Ⓒ down on a log scale. That is not proof positive, but it certainly is curious.
A second attribute of this count is that it might explain three current anomalies in the recent up wave. First is the fact that 1) the current up wave is extraordinarily difficult to count, 2) the Dow has not made a longer wave up yet. It could, it just hasn't yet, and 3) the Dow does seem to be vibrating around the 1.618 exterior retrace on the down wave. (See chart as this LINK).
None of these criteria are necessarily fatal for the Dow. Enough market experience has shown the Dow can wander on its own for a while if it wants. But, taken together, and in view of the possible form of the NDX it must cause one to raise an eyebrow. Recognition of this for months prior is why I am sincere when I say, "there is no amount of downside that will surprise me". This is true even as we patiently count to see what the local direction is.
This is the second post this weekend, and if you have not seen the first one yet, you might like to read it now.
Have an excellent rest of the weekend,
TraderJoe
That RSI is ugly
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ReplyDeletehttps://studyofcycles.blogspot.com/2025/03/patience-patience.html
I find it interesting that on both of these charts, I have the same question as an Elliot practitioner. Is the whole thing a diagonal or is it an ABC with the diagonal as the C wave?
On the 3 month sp500, we could either by in a expanding diagonal as TJ has reported or only completing 1 of a contracting diagonal if it wants to chew up more time.
On the yearly we have not had a triangle or diagonal to suggest an end of the move from early 40s [II].
On the monthly, I simple see an impulse I call the QE wave from 2009 till Fall of 2018, than the covid flat, and now the covid response wave with 3 waves so far.
On a fundamental note, it is the most expensive market of all time. I completely agree with Stan Drunkenmiller on this, liquidity first, stock selection second. If we throw more money at the economy, new highs would be a safe assumption. I do not see this on the horizon at this time.
I lean towards the ABC idea because the 2's of the diagonal would retrace towards an area that is more common for diagonals.
Thanks!
One scenario that many forget is that maybe we're "fighting the last war". That wave ⑤ already 'ended' as an impulse at the 2021/2 high. This impulse would have ended after the flat or expanding triangle wave ④. The down wave in three waves could be a short Ⓐ wave which is too short in time and price in and of itself to correct any of the prior waves, and so the expanded flat is needed to complete the job. That 'might' explain the short length of the Dow if we do not go sufficiently high enough over the top to make a longer wave. It might also explain the NQ downward overlap, but not the ES, etc.
DeleteThat said, it is not possible to take the diagonals off of the table yet.
TJ
How would you have a flat fit into the yearly count. Would it still be part of V or a weak start to [IV]?
Delete'probably' the weak start to [IV], like cycle a of SuperCycle [IV]. TJ.
DeleteES (SPY/CFD) - there are some awfully nice Fib ratios here. Watch the parallel channel and the gap.
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If a turn up is going to happen it should result from a scenario like this.
TJ
The ratios are 1) 62% from low to high, and 2) 1.618 x Ⓐ in the Flat that went marginally over the highs. TJ.
DeleteBack inside the 2hr ES wedge tonight does not look particularly strong.
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