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
Thanks Tj.
ReplyDeleteThere is no top but thr is always a short lived bottom/corrections from last so many years.
Was cleaning bookmarks and got this link to Tony's SPX weekly/monthly charts( not updated). He is used to a big fan of yours before he died in Feb 2019.
https://stockcharts.com/public/1269446/tenpp
The blue triangle count (ES futures) can call 'five waves up' to Minor A at this point. BUT there is no confirmation yet. So downward lengths and overlaps become critical.
ReplyDeletehttps://www.tradingview.com/x/lUp7xILj/
This count is shown for completeness. Again, as on the chart, I will re-emphasize that an extension in the fifth wave is still possible, and a further diagonal is possible (not using the triangle count). In the diagonal case, this would be wave 1 of the upward 5 of a diagonal. Again, it depends on lengths and overlaps.
TJ
..now below prior wave ④. TJ.
DeleteES/SPY (CFD): as far as I can tell we had an x① count down, with ⑤ < ③ < ① in a channel, and a divergence on ⑤.
ReplyDeletehttps://www.tradingview.com/x/mDtIv32O/
The count suggests watching the overnight high and the morning low.
TJ
ET: Which symbols do you track on tradingview for ES and SPX?
DeleteFutures -> ES Emini S&P 500 Futures ?
Indices -> S&P Index Cash CFD ?
ES = ES1! (symbol) and/or for just the current front month ESZ2025 (symbol); these are both delayed 10-min unless one registers a CME account (extra, beyond TV plan).
DeleteCFD = SPX500 (symbol) which is real-time but combines futures & cash price. Comes pretty close without a CME subscription.
ETF = SPY (symbol) real time without CME subscription, but only during cash market hours.
These are included in the base TV plan. Hope it helps.
TJ
For SPX500Z2025, I measured from the high of ① to the end of wave circle 2 & projected it from the high of the intermediate swing in ③. I see that the minor retracement in ③ exceeds the length of wave circle 2. Is that a degree violation for this chart ?
Deletehttps://www.tradingview.com/x/bkZQI8Wp/
@EDT .. advanced topic. In expanding diagonals & expanding triangles one may see what look like degree violations. That is because they are specifically designated as expanding patterns. But one can reason that this must be allowed. For example, in order to make the 4, down, much longer than the 2, it might be necessary for one of the sub-waves of 4 to be longer than all of 2, down - the larger degree wave in the prior direction, otherwise if both waves were as long as only the prior 2, it might not make the overlap needed with 1.
DeleteBUT .. there is also a way to configure the wave sequence this way without degree violation as b-3 is shorter in price & time than all of 1.
https://www.tradingview.com/x/ieuLYiyu/
And there are ways to still configure the count as a "five-up", but here the b-3 wave is so out of proportion to the a-3 wave, it that strains credulity, even if it works. So, I additionally used the Principle of Alternation to govern, with expanding diagonal "a" overall, and impulse "c", and the "right look" to suggest the expanding diagonal. Part of the 'right look' is the exceptionally short sub-wave ④ in the contracting leading diagonal version. But both were considered by The Principle of Equivalence.
No wave count is perfect (meaning as simple as we would like it to be), and there is only so much time during the trading day when in the 'heat of the moment'. Hope this helps.
TJ
Thanks ET, very helpful. Yes, I had the 2nd count in mind because of possible degree violation. But after seeing a weird flat 2, that too after a contracting diagonal gave up on counting. Your "right look" concept helps.
DeleteMGC: A wave up ?
ReplyDeletehttps://www.tradingview.com/x/tDb5sCmj/
SPY (cash) 1-hr: in the non-triangle count, this can start to look very "fifth-wavy" but there is nothing disqualifying yet. It's Friday, and it depends whether the biggies 'pour on the coals' at the end of the day, or there are downward overlaps, lower lows, etc.
ReplyDeletehttps://www.tradingview.com/x/Sj53J364/
Trend lines are tentative and will be adjusted as needed.
TJ
ES 30-min: from the intraday wave-counting-screen. There is 6,800 in the DEC future. TJ.
ReplyDeletealso, above upper daily Bollinger Band. TJ.
DeleteWow! Some serious selling at these levels. Remarkable volume on display...
ReplyDeleteSPY 1-Hr: there is some downward overlap, and a 'possible' top. Need to check it out in futures, tho.
ReplyDeletehttps://www.tradingview.com/x/I97JobNE/
TJ
Here's the pattern with the overnight waves. Best I can say is there is a 2-hr wedge. And it 'may' follow as a last wave after the triangle count. But the day isn't over yet.
Deletehttps://www.tradingview.com/x/kc6VN34Z/
TJ
Likely a 4th wave.
DeleteES/SPY (CFD) 2 hr : morning low broken and a longer wave down in CFD. Could be a turn of degree.
Deletehttps://www.tradingview.com/x/snoEggPw/
TJ
@Roy .. because on the hourly chart there is insufficient overlap on SPY, yes, that is one good possibility. So is a downward diagonal to just the 'a' wave of a larger 2nd wave of a larger diagonal (like if they announce re-opening of the gov't, or something later next week). In short, nothing is fatal, yet. TJ.
DeleteSPY 5-min: the biggies are doing everything possible to slow this down. Because of upward overlap, the only way down is by expanding diagonal, which is not valid until 5 > 3. Not yet.
ReplyDeletehttps://www.tradingview.com/x/cXeMBKcY/
TJ
A new post is started for the next day.
ReplyDeleteTJ