U.S. equity prices, as measured by the daily ES futures contract, headed lower overnight and continued lower into the open until about 11 AM. At that point, as the chart below shows, the 100-day moving average was tagged, slightly below the 6,600 level, meeting our Target #2 price. And then there was a bounce.
As of the cash close, the bounce occurred in three-waves, missing a five-wave-move by fractions, and then price headed lower breaking the lower trend line of an upward parallel, and then price again closed below the lower daily Bollinger Band.
Price has not closed the daily futures gap yet (as Target #3), but it could. The market is still quite bouncy in the sense that there is a lot buying on the way down. We suggested whippy action, and we appear to be getting it.
With two closes below the lower daily Bollinger Band, the odds drop to about 4 - 6% that the next close will be below the band (not impossible, but lower odds). The greatest number of consecutive closes below the band as reported by broker Ira Epstein, is typically seven - and a grinding lower scenario like that cannot be dismissed out of hand.
The hourly SPY can still be drawn in a downward parallel, and readers of this blog are encouraged to perform that exercise. As long as it is in a parallel, it suggests downward continuation.
Tomorrow is NVidia earnings after the close.
Can the bulls rescue the current downtrend? Well, at the moment, the wave down today from 13:30 to the close is longer in price and time than the wave down from 11:40 to 12:35. And the up wave from 12:35 to 13:30 is longer than the prior one this morning. This suggests the primary up path would be by a low probability expanding diagonal. However, keep an eye out if price gets below 6,614 either in the overnight or tomorrow as such a diagonal would invalidate below there. If it busts it would not surprise me in the least. Again, no amount of downside selling would truly be unexpected at this point.
The daily slow stochastic is in over-sold territory, and that bears watching. If price has "latched on" to the lower band, it may force the stochastic to embed. But we are a way from there at this time. So, a word of caution is worth its weight at this time.
Have an excellent rest of the evening,
TraderJoe
Thank you, looks like another abc correction here. C almost finished. Nvda head and shoulders target is around 150.
ReplyDeleteNvidia (from CNBC)
ReplyDeletereported fiscal third-quarter earnings on Wednesday after the bell. Here’s how the company did, compared with estimates from analysts polled by LSEG:
Earnings per share: $1.30 adjusted vs. $1.25 estimated
Revenue: $57.01 billion vs. $54.92 billion estimated
TJ
Not much of a pop after hours. Market still feels heavy. Demand for compute appears to be increasing, not decreasing as the AI Bubble Bears would have it.
DeleteGoogle’s new Gemini 3 AI model is pretty incredible. They leapt way past ChatGPT 5.0/5.1. So, more compute still buys better models. GOOG is now my #2 holding. Oracle was damaged by OpenAI’s looking for government loan guarantees.
Both can easily achieve $10T market caps. Both are heavily weighted in TOPT. That takes away some of the downside during this B wave correction.
See @ 7:37, below. TJ.
DeleteCorrection: the downside during this C wave correction.
DeleteIs the end of B near? I've got a lot of individual stocks in my watch-list that look like they're itching to break out of 4th waves.
ReplyDeleteSee @ 7:37, below. TJ.
DeleteES 30-min: in the after-hours, the measurements of a 3-3-3-3-3 expanding diagonal can be seen. Although the timing is off just a bit for wave iv, more than likely that is related to NVidia's earnings timing.
ReplyDeletehttps://www.tradingview.com/x/xk5Seg9F/
There is a way to see this as the start of minute ⓓ leg of a Minor B triangle, or as the start of a minute second wave. More on those possibilities later. But if you've been following the blog, you know what I mean.
TJ
Bear in mind that the wave 'v' of an expanding diagonal can get quite aggressive; often 1.618 or more. TJ.
DeleteThanks tj. What level is around 1.618 for Nasdaq futures ?
DeleteWelcome. The measurement is in the link below. Why are you not able to perform such?
Deletehttps://www.tradingview.com/x/Pb1FmJIi/
TJ
Thanks.
DeleteAs was not able to draw expanding diagonal with 24988 as iii and 24512 as iv and v at 25312(1.618)( it is almost thr). Exapnding diagonal didn't seem correct with that odd iv. Is my understanding correct?
Reminder: Sep Payroll report is scheduled for the bottom of the hour. This is a 'catch up' report for the one missed in the Government shut down. TJ.
ReplyDeleteES 30-min: there is 1.618. TJ.
ReplyDeletehere's the CFD at 1.618
Deletehttps://www.tradingview.com/x/EIoFw6wO/
TJ
Amazing analysis.
DeleteES/SPY (CFD) 30-min: now trading back inside of diagonal with overlap.
ReplyDeletehttps://www.tradingview.com/x/IDfLM1Vc/
TJ
ES/SPY (CFD) 30-min: here is the intraday wave counting screen. Now back to the daily pivot point and intraday 100 MA.
ReplyDeleteBy The Principle of Equivalence, there can either be an "a" or a "ii" at the high of the morning. To clarify the count requires taking out the high of the diagonal, again, before the low. Or the low of the diagonal before the high. Right now, the odds are roughly 50:50.
https://www.tradingview.com/x/gRxHsRKu/
TJ
Now rapidly down to the S1 daily pivot. and first close below the lower band. Odds 5 - 7%.
Deletehttps://www.tradingview.com/x/9wMlwLZB/
TJ
That may be the ugliest 3 hours I've ever seen.
ReplyDeleteYou obviously weren't trading during the flash crash. But it was bad.
DeleteES 30-min downward retrace is >80%. But because of the potential "deep retrace" of a leading diagonal, nothing can firmly be said unless the low is surpassed. The futures low currently sits at 6,594; and, yes, this is quite a rapid move. But this is where the old trader's adages of "it ain't over 'till it's over" or the more crude adage of rotund lady's singing come from.
ReplyDeleteTJ
ES 30-min: second close below the lower band; odds drop to 4 - 6% of the next close below the band. Not impossible, just lower odds. TJ.
DeleteES 30-min: there is 6,590; we are through the diagonal low. And in less time. This proves that the diagonal was a true diagonal and is what Neely refers to as "the post-pattern confirmation". TJ.
DeleteES 30-min: the equivalence labels at the top right now switch temporarily to ii / b as there is a way this wave down can just be a 'c' wave. More on that later.
Deletehttps://www.tradingview.com/x/ty2p8nFJ/
TJ
ES 30-min: third close below the band drops the odds of the next close below the band to 3 - 5%. Not impossible, just lower odds. Currently trading in the bands. TJ.
DeleteES 30-min: close inside the band resets the number of consecutive closes. TJ.
DeleteES 30-min: got down to the S2 daily pivot; has 18-SMA cross 200-SMA. Slow stochastic is currently embedded, lower (in contrast to the daily). Still, nothing bullish on the intraday chart until/unless price begins closing above the 18-per.
Deletehttps://www.tradingview.com/x/4nKiRItO/
TJ
SPY 1hr- - Huge red volume spikes now.
ReplyDeleteIs this the bottom of the c wave of the large flat( as a diagonal)?
Just a factoid: the NYSE adv/dec today is right now 811 / 1963, or about only a ratio of 1 : 2.5. It would hardly seem to be a capitulation statistic. Meanwhile,
Deleteup to down volume is only about 1 : 3 at the moment. Again, usually these things are 1 : 10 or near there for capitulation. Just my two cents, and not trading or investment advice. TJ.
This comment has been removed by the author.
Delete(i) and (ii) of c or iii
ReplyDeleteA real possibility of that, no doubt. In which case c could be yuge down
DeleteMy two cents (not trading or investment advice). The ES is against the lower daily Bollinger Band. Price might go down lower today into the close, but imho, 'new' shorts initiated here would likely suffer from 'poor positioning'. There might be better oppt'y's higher up in the retrace chain. TJ.
ReplyDeleteES 5-min: there is a new lower low and a valid 5-wave diagonal can be sketched out. And it 'might be' a 5-3-5-3-5.
ReplyDeletehttps://www.tradingview.com/x/WyWMBidB/
TJ
such a diagonal would invalidate below ES 6,534.50 as the fifth wave would be too long there. TJ.
DeleteES daily - there is 6,550, and Target #3 has been reached. The ES futures daily gap from Fri 10 Oct is closed. TJ.
ReplyDeleteHere is the chart showing gap closure; target #3.
Deletehttps://www.tradingview.com/x/PZmNVlrz/
TJ
Ed or Ld
DeleteA new post is started for the next day.
ReplyDeleteTJ