The Dog Didn't Bark

In the short story The Adventure of Silver Blaze by Sir Arthur Conan Doyle, Sherlock Holmes helps solve the mystery of the stolen racehorse by noticing for Scotland Yard, that "the dog did nothing in the nighttime." When one would have expected the dog to be barking - with the theft of a horse underway - it didn't. And one had to wonder why. Here in the markets, on the long-term count, we are faced with a similar clue. Ask yourself the following question as you look over this 2-weekly chart of the S&P500 cash index, "Is there anywhere on the chart that even remotely looks like a properly formed sideways triangle?

SP500 Cash Index - 2 Weekly - Potential Diagonal

If you answer the question honestly, you'll likely arrive at the same answer I have. A curt, "No". At this scale, there is no grinding sideways pattern that can clearly form an overlapping a,b,c,d,e which has the characteristic 62 - 78% wave retraces. So, since triangles often (not always) precede the last move in a trend, could it be that - for some period of time - this potential Minor B wave down will form as a triangle prior to the last move up? Maybe. It does not have to, but it is one of the good possibilities.

Degree Labeling

Notice in this count that within Intermediate (3) then Minor A is shorter in price and time than all of Intermediate (1), the previous higher degree wave in the same (up) direction, so that that this wave can qualify as a true subwave. Also, the notice the same is true of Minor C within Intermediate (3). Next, we also note within the potential Intermediate wave (5), then this Minor A is also shorter in price and time than all of Intermediate (3), the previous higher degree wave in the same (up) direction, so that this wave, too, can qualify as a true subwave.

So, what does this mean for potential Minor B? Well, within this wave there is a choice of two prior degree waves in the same (down) direction. So, in terms of price Minor B must be shorter in price than Intermediate (4) down. But, in terms of time, not having been in this situation before at such a high degree, it may be that a triangle for Minor B might have the option of being as long in time as Intermediate (2). Maybe longer because of the nature of triangles to move price sideways, but that remains to be seen.

One's wave counts should try to respect degree labeling to the extent possible. If the degrees are unclear, then it is likely that something hasn't meshed properly in the count.

Have an excellent rest of the weekend,

TraderJoe