Day Three

Today is the 3rd day of the daily slow stochastic re-embedding in the ES E-mini daily futures, as in the chart below. Price is still above the 18-day SMA so the bias is still up.

The sole active up (green) fractal was hit. There are three local active down (red) fractals and numerous gaps below the market. Up progress can still be made by triangle or diagonal. Downward progress could only be made at this point by a failure top (today) but this is less likely.

Have an excellent start to the evening,

TraderJoe

An Original Fibonacci Study

Here's an original Fibonacci study done today on the Dow. I have not seen this idea elsewhere - just to expand the Dow 1929 top from its origin in the first prices available and 1932 bottom in "log Fibs" and see what that gets us. So, I worked this one up this morning and it has some interesting 'hits'. They absolutely are not 'precise', mind you, but they are very much in the neighborhood.

Keep in mind, regardless of the degree symbols used (I just chose these as if I was preliminarily studying any other chart) that the peak RSI is usually on the third-of-three, and the divergence is on five-of-three.

Further, we are up to and slightly past the 2.618 "log" expansion not to mention that price is squeezing out of the upper log trend line, depending on how you draw it (Gulp!).

Have an excellent rest of the weekend,

TraderJoe

Non-fatal Daily Dogi - Yet

With the government shutdown, the non-farm payrolls were not announced today. In the lack of serious news, equity prices - as measured by the ES E-mini futures - headed higher and attacked the upper daily Bollinger Band, exceeded it, and touched the 6,800 level, exactly, before backing off in the oft-cited round-number psychological something-or-other. The day created at Dogi candle, but didn't have a lot of power to it, yet, as on the chart, below.

The problem is that nothing significant has been downwardly overlapped, no significant prior daily lows have been exceeded, and no downward daily fractals are broken. While the daily slow stochastic is still over-bought only, price is still above the 18-day SMA. And so, yet again, the bias remains up.

There is an interesting pattern that might develop Monday morning. It is an expanding diagonal - if it forms properly with a longer fifth wave than third wave. The problem with that, of course, is that these patterns can be ending patterns as well as beginning patterns. So, even if the pattern forms properly, there could be a stiff partial or full retrace following it. So, higher highs might still be possible, and such might happen if important announcements occur, like the re-opening of government, etc. You can see this potential pattern in the comments for the prior post

Further, while it is speculative, it is also possible that NVDA is in the third wave of its fifth wave higher. This might drive other prices higher without the need for announcements.

So, we're taking it slowly and wave-by-wave. Also, we like to examine some of the data over the weekend, but it certainly appears like we are in the neighborhood of a top. Even though higher highs are possible, our assessment remains that the risks are skewed to the downside.

Have an excellent start to the evening,

TraderJoe

ODU

U.S. equity prices - as measured by the ES E-mini futures - declined overnight on the news of the government shutdown. On the daily chart, they closely approached the 18-day SMA, as in the chart below.

As we suggested yesterday, the "first-of-the-month" money had been front-run yesterday after the window-dressing. Then, today, after the cash open, the passive inflows began in earnest, and the ES futures made an outside-day-up (ODU) to a new higher high and near the upper daily Bollinger Band on a divergence with the slow stochastic, which is not embedded.

The higher closes are dragging the 18-day SMA up with them. And, yes, there are ways to be considering a top in this vicinity, but the daily bias is still up - until it isn't. In this instance, the low of an outside day up should not be taken out in the next two trading sessions, or it constitutes a trap for the bulls.

Because of length considerations, it is possible to consider a ivth wave located on the 25th Sep low, or a triangle in the futures that ended this morning as a ivth wave. It is also possible to consider an upward diagonal starting anew from the 25th Sep low, but this will have to be monitored in terms of overlaps and depth of any retraces.

In any case much better reversal signals are needed, along with a close below the 18-day SMA to consider that prices are serious about trading lower for a period.

Have an excellent start to the evening,

TraderJoe