The 'Exact' Number - 2

As readers of this blog know, the 18-day simple moving average (SMA) is something of a demarcation, a "line in the sand" between a daily closing positive bias and a daily closing negative bias. On Thursday and Friday the ES futures played around on both sides of that line, with Friday (in the extended hours) closing below it, or in the regular settlement, probably just about on it. But the ES 4-hr chart does have another exact point of division between two counts, as shown in the chart, below.

ES Futures - 4 Hr - Location of Expanding Diagonal Invalidation

That point is 7,563.50 and above it an expanding diagonal lower would be ruled out. Should it not be ruled out, and the expanding diagonal continue lower, then that would put a truncated top on July 15th, with the expanding diagonal lower as the first wave in a lower sequence. 

However, if the 7,563.50 point is taken out, higher, then The Principle of Equivalence, says "consider other options", and one such option is shown below. That being the case, we need to ask, "do we know literally anything about this wave sequence, or is it all guesswork?"

Well, were are as certain as one can be that there was an overlapping expanding diagonal downward that completed on Thursday, as shown in the chart below, numbered ➀ - ➄ from what is shown as wave b to c. And that small degree expanding diagonal lower was already exceeded higher in less time than it took to form - a true diagonal.

That would leave a very large running triangle as the middle structure, and cause the whole count to be a-b-c, down. And such a structure could still be a leg of a triangle that is eventually still pointing upward - as a larger (c) wave down. That is because, if the prior wave, the (b), up, of the triangle was the complex leg, then this leg down should be a simple zigzag - which it clearly can be formulated to be, even if it is ugly.

This is part of the essence of The Principle of Equivalence. A portion of it alludes to being very careful when only 'three-wave' sequences are involved. It helps stems the "fight or flight" instincts we are all prone to and urges some degree of caution, patience and flexibility until the wave count clears.

And, when you have a single point of departure between two counts, that patient wait becomes a bit more tolerable. Yes, the market knows you just want to make a profit. The ambiguity in the counts is one of the market's very survival mechanisms so that it can't be clearly read and it avoids having all traders on the same side of the trades.

IF we get only an a-b-c, down, is that necessarily the end of the down move? No. But it would likely mean that any further down move is happening by a larger diagonal. And, if the market hasn't been brutal enough, already, I don't personally relish even larger sized whippy waves, especially in three-wave sequences.

Well, it's simple. That's a large extent of what we have available now. There is some significant probability Monday will be an up day due to "the first-of-the-month-money", but I have seen it fail on rare occasion. So, unless you have some much better market metrics, you might want to wait just a bit to see what the next few days bring and/or tread ultra-lightly to see what the market might be saying.

Have an excellent rest of the weekend,

TraderJoe

Back-test of Line in the the Sand

In the SPX500 (CFD) Daily the up movement overnight and this morning is back-testing the 18-day SMA or "the line in the sand", as in the chart below.

Locally, the swing line could turn up, but needs a close above the 18-day SMA. The daily slow stochastic is curling up. One might watch the local fractals for clues. There are still both up counts and down counts. 

Have an excellent start to the day,

TraderJoe

Good Brakes

Yesterday, we pointed out three options for local price movement. The NQ futures made a new daily low today. The ES futures did not. I don't know if you had the money to stop the ES futures from declining through the lows today, but somebody did. Twice! The exceptional number of double-bottoms is getting very suspicious. The ES/SPY (CFD) 1-hr chart is below.

SPX500 (CFD) - 1 Hr - Double-Bottom?

With the higher local high around noon there is now the possibility, not the certainty, of sub-waves ① and ② of a third wave, iii, upward, as these waves are currently shorter in price & time than the larger degree waves i and ii, the prior higher degree waves in the same directions.

There is nothing definitive that rules out further down movement at this point, and it is still possible that the (e) wave could be a triangle itself.

Have an excellent start to the evening,

TraderJoe

Trois Choix

IF we were in France, it would mean three "choices" or three "options" for the local count. The ES 4-hr chart and the ES 1-hr chart with further explanation are below. On le menu are blue x, blue i or red (ii) of diagonal.

ES/SPY (CFD) - 4 Hr - Three Choices

Alot currently depends on whether we go through the low again. That can not be emphasized enough. The option of a i ?, up, depends on the entire up wave having been an expanding diagonal, as below. It does have the right measurements and internal structures.

ES/SPY (CFD) - 1 Hr - Whole Up Wave as Expanding Diagonal

The (e) wave of the triangle simply has not invalidated yet. So, all we're getting thus far, is volatility.

Have an excellent start to the evening,

TJ

Eerily Similar with 'The Right Look' - Not Confirmed

Here is a monthly chart of the NASDAQ 100 (NDX) Index. I have endeavored to count each market as a "five". I have tried to use "impulses" where they best seem to apply based on the rules and degree-labeling definitions. Notice how much green there is in the volume graph in 2025 & 2026.  Why didn't they like them so much in 2017 & 2018 when prices were much lower?!. They sure liked them more in 2025. As far as I can tell, one enormous difference between the NDX, SPX and DJIA is the presence of the "running wave" in the NDX in 2020. This would be an omen for "exceptional upward strength to follow". Note, too, wave (4) overlaps wave (1).

NASDAQ 100 (NDX) Index - Monthly - Five Up

And here is the boring ole' DJIA futures (YM).

Dow Industrials (YM) Futures - Monthly - Similar to NDX

The Dow, too, has the overlap. It is eerily similar to the NDX, with the exception of the absence of the running wave in 2020. Although I have tried to count impulses wherever practical, the grinding nature of the chart - especially in 2023 made it seemingly impossible without breaking 'rules' or the degree definitions. So, A-B-C or W-X-Y sequences result in the sub-waves. Keep in mind the A's and C's are still impulses or diagonals. But, there can be a "five-count", up, overall.

Again, neither of these counts are confirmed, and there IS a monthly alternate, yet - the expanding diagonal. And besides the longer term alternate, there is the local alternate of a triangle on the daily chart - as noted before - that could still point upward, but I'm not buying any hopium on that one. I'm just counting waves. Right now, all of the Minor degree waves are visible, and a partial downturn is also just showing up on the charts.

The confirmation process would only 'start' with 1) trading below the upper rising trend line, again, and 2) a break below the Minor B wave of Intermediate (5). Price is nowhere close yet. And, then, there are further confirmation steps after that.

I have intentionally tried not to rush 'any' count. I'll be as patient as the day is long. Right now these are the wave sequences that best seem to fit. That could change. But, I think it's important that readers be aware of the potential of these counts as they tend to indicate that any serious down movement could occur quite rapidly once it gets recognized and/or confirmed enough for the Smart Money to act on it.

This is the second post this weekend, and if you haven't read the first one yet, you might like to. Have an excellent rest of the weekend,

TraderJoe

The 'Exact' Number

As we were discussing on Friday, the market has not yet disproved the case for the (e) wave of a fourth wave triangle. I doubt few other analysts will tell you this, but I will provide you with the 'exact' number to disprove a different case. The ES 4-hr chart is below. 

ES Futures - 4 Hr - Exact Number

I'm showing you one upward Fibonacci ruler for a reason. But first, I want to speak about a different measurement - which readers of this blog should confirm for themselves - that's why I'm not showing it. That measurement is that the second down wave labeled, i, is just pips shorter than the first down wave labeled (i), So, by degree labeling, the second down wave could either be "c" of a-b-c down that we have showed before - because the two waves are similar in length - and this would make up the (e) wave of the triangle, Orrrrrr, the second down wave can be a sub-wave of a larger wave (iii), down, yet to follow.

What few others won't tell you - because they don't follow degree labeling to the extent they should - is that there is an exact measurement that likely voids the nested (i), (ii), i, ii down count. And very, very coincidentally, that number is ES 7,500.00 to the tee. The market stopped just short of there on Friday's up move. Why did it do that? Is it nesting for a third wave? Well, this is certainly plausible. It is not at all proven. The pattern needs downward length to activate it. It might get it. It might not. The odds in the absence of knowing what the weekend news will be are pretty close to neutral - maybe 45 : 55 upside to downside, and that slight tilt downward is largely because price is still below the 18-day SMA, with a downward swing-line indicator at the moment.

So, to make it clear, trading above 7,500.00 in the ES Sep futures likely voids the nested down count because wave ii would become longer than wave (ii) in price length and would likely run afoul of degree definitions. And, trading above 7,500 would likely put the (e) wave of the triangle back on the table at the lows.

So, with only a smaller degree a-b-c up that we labeled on Friday afternoon, how would we make a fifth wave up out the (e) wave of the triangle? It would likely have to start with a larger diagonal, and not take out the prior lows.

Alternatively, taking out the lows of Thursday/Friday in the overnight Sunday or Monday would be more indicative of the larger downward movement because that would rule out Friday's upward smaller degree a-b-c from becoming a larger diagonal.

The market is giving us some clues to work with - some crumbs to follow - as awful as the wave counting and trading currently is.

Have an excellent rest of the weekend,

TraderJoe

Until it No Longer Works

The best on-line estimate is that there are approximately 198,000 - 200,000 people employed in New York City's securities industry. And, world-wide there are approximately 1.09 million people employed in the financial empires. They are essentially paid to buy stocks, bonds, mortgage securities, etc. You get the idea. And, as you can see from this "end-of-day" one-minute chart, they were doing that at the end of the day and even past the cash close. They 'must have' more stock (or futures in this case).

ES SEP Futures - 1 min - Until They Can't

Think of it. This is what they are paid to do. They wait until the end of the day, and then they buy and they buy and they buy. Clearly, they are Smart enough to count to five, and to measure to 2.618, and they are going to do this every day - every single day. Why? Because their bosses tell them to. Their employers are Smarter than them (clearly), and they are well-connected with people with gobs of money who benefit when stocks go Up. They don't benefit so much when stocks go (shush, gulp) down.

Today was 'mostly' a down day in the equities indexes. The daily ES futures - at one point - hit its lower daily Bollinger Band, before some of this rebounding took place.

My question is this: What will these minions do IF or when stock prices do decide to head for a steep decline? Are they going to continue the rabid buying into the close because they're told too - even, again, if it should turn into a down market? Why would they do that? They are Smart, aren't they? Although I am not claiming the market is acting like a perpetual motion machine (which really only applies to a closed system), there comes such a time as people remember this is largely a confidence game, and at some point confidence gets stretched to the point of incredulity before it unravels.

It becomes apparent how the machines are being used to make this happen, and how - at some point - there is a sense of diminishing returns. Oh yea, that's right, today was a down day. But, they were buying hands-and-fists into that close. And they are going to do that until their employers realize that it just isn't working any more. Sometimes, they are a bit slow on the uptake - if you get my drift.

The point is - in a true bear market - they 'sell' into the close because they figure it is likely the next day's prices will be worse than today's prices.

For the ES, the Elliott Wave count has not changed. This can still be the (e) wave down of the triangle but - as stated previously - it certainly doesn't have to be. The lower this wave goes, the lower is the likelihood of that count holding.

Have an excellent start to the evening,

TraderJoe

Stubborn Refusal - 3

The triangle count in the ES daily futures hung on by a thread, as in the daily futures chart, below. This is the lead month contract only. The roll-over contract can count the same.

ES Futures - Daily - Triangle Continuation

Price closed back above the 18-day SMA, switching the daily bias back to 'up'. The daily slow stochastic is not yet over-sold. There is already upward overlap on the downward (e) wave, if that's what it is. The exact equal bottoms in the (e) wave - at 7,473.00 - are a real feat of financial engineering by someone.

If the down wave was not the (e) wave, it is possible for it to be another x wave of the (d) wave. But, by the rules, it would be the last potential x wave in the (d) wave series. Then the (d) wave could head for the highs again.

Stay calm flexible and patient while this resolves. Have an excellent start to the evening.

TraderJoe

Stubborn Refusal - 2

Today was an inside day in the daily ES futures, as shown in the chart below. It did little to clarify the EW count.

The swing-line indicator, currently has a higher high before the lower low, so a full trend is not in force yet. But, there are two closes below the 18-day SMA, and that keeps the current daily price bias down. With the inside day, though, it would be relatively easy to turn the swing line lower.

I need to emphasize, the count shown in the chart above only comes into play if and only if the triangle scenario busts. It hasn't yet. We fully expected price to get down to this level, the level of the prior x wave of the (d) wave in the triangle count - even if the triangle remained in control. It has gotten darn close.

But, price length downward or upward is what matters now, so we need to take it slowly, cautiously and with a whale of a lot of flexibility until we see which direction that length points.

Have an excellent start to the evening,

TraderJoe

Stubborn Refusal

Many analysts have not fully acknowledged that both the ES and the NQ futures made new all-time highs (NQ on 16 Jun) if their roll-over contracts are considered (again, those are the contracts where the prior contract month's prices and the new contract month's prices are just stitched together - with no adjustment - on the volume roll over date given by the exchange, often the CME). That fact confuses Elliott Wave analysis a bit because one can ask, "is it a new high or isn't it?". Well, it can be but it doesn't have to be. Similarly, I have stubbornly refused to analyze the NQ futures until something at least reasonably clear became apparent. Why? Because there was no point. Now, we can at least look at a chart and suggest some plausible options. The NQ daily chart (roll-over contract) is below.

NQ Futures Roll-over Contract - Daily - Ambiguous

So, there are two counts here. One way the ambiguity in the roll-over and lead-month's contracts can be resolved is if the the marginal new high is just a blue (b) wave shown above. That can make the diagonal down a blue (c) wave, and price could imaginarily or actually go over the high again. 

The other way to resolve the ambiguity is if the minor higher high is actually a black minuet (v)th wave of the minute ⓥth wave in the Minor C wave count that ends the move. Then, price would not go over the high again.

What makes the pattern ambiguous is that a diagonal, itself, is often ambiguous. We know it can be either leading or ending in certain circumstances. I contend it is one of the market's very survival mechanisms. Otherwise, traders would be too sure of what the count was. And this pattern would be the 3-3-3-3-3 variety which is allowed to be either. If it were the 5-3-5-3-5 pattern it would decrease the ambiguity - because that pattern is thought to be 'leading only'.

None-the-less, there are two factors of wave counting which are much, much less ambiguous. Those are, 1) the extent of price travel, and 2) the time taken to travel. (As an aside, sometimes trend lines are less ambiguous, too, but which trend line then becomes the key.) But back to the analysis.

There is no question that this down wave in the NQ has taken more time than any of the down waves since the Minor B low. As regular readers of this blog know, that may change the degree. The last lone option is likely the (c) wave of a Flat, because fourth waves can take more time, and even travel slightly more than their second waves.

In terms of price extent, we know that the 9th Jun low has not been exceeded yet. We are leaving room above that it could be. That might introduce some motive character into the down wave. But, it could still be just the (c) wave of a flat.

Still, at some point, the time factor, and the degree change will over-rule the price extent and likely point lower. We could be nearing that point now. But bear in mind that even a diagonal likely needs a retrace wave, and that could be quite a stiff one and near the highs again. (It certainly does not have to, but it can).

That is why I always say when counting a downward diagonal, "we have a diagonal, watch the high". I am saying that here, too. If a new high is not made, it is possible for the green 1 ? on the lower right to prevail.

Keep in mind with the different indexes that they simply have different stocks in them, so they can top at slightly different times.

Have an excellent rest of the weekend,

TraderJoe

Cobbler - 3

If the ES daily pattern is the barrier triangle, it might look like this overall. The (d) wave looks to be the complex leg of the triangle.

After the higher high in the after-hours, price traveled down to the S2 daily support pivot and bounced strongly into the close. Price did not close back below the 18-day SMA, so the daily bias is still up. And the regular calculation of the daily slow stochastic shows four closes over the 80 level, meaning it is currently embedded, until/unless it comes back under the 79 level.

It's summer whippy and difficult trading.

Have an excellent start to the evening,

TraderJoe

Cobbler - 2

The Principle of Equivalence says that within the potential barrier triangle we need to consider at least two close-in local scenarios with today's price movement lower that went essential nowhere. The first one is that the minuet (d) wave is completed as shown in the ES 4 Hr chart, below.

That would make today's expanding diagonal downward the lower degree "A" wave of the minuet (e) wave of the triangle. And, again, that (e) wave can take out the prior X wave lower.

The second scenario is that the expanding diagonal today ended the lower degree (C) wave of an expanded flat of a Ⓑ wave - since it went nowhere important - and the (d) wave requires a higher high Ⓒ wave up, to finish the Y wave, now, as in the chart below.

I have no preference which occurs. I have no dog in the fight. On the daily chart, price is still above the 18-day SMA. The rationale for the second count is that often in a barrier triangle prices quickly go over the prior high, then settle back under it on the close using the timeframe of interest (ES 8 Hr or daily here). That hasn't happened yet. It could.

Note, the MACD is curled over on the 4-Hr. There is a 'way' we could have topped. But price extension lower isn't showing it yet. Maybe it will. It just hasn't yet. I'll be keeping my eyes open.

Have an excellent start to the evening,

TraderJoe

Cobbler

Like the shoe repairman that tries to save a worn-out pair with new soles, or even more like one of your favorite Savannah, GA peach deserts, I have tried to cobble together the count from what was lying around and available for use - segments we counted earlier. Using the ES 8-hr roll-over contract - the one that is most actively traded - provides this possible view of a barrier triangle. At least it does at this time.

ES Futures (Roll-over contract) - 8 Hr - Possible Barrier Triangle

Friday's up wave is so close to nicking the high that we must allow that it might. If it does, then, it might be a second zigzag upward of the double zigzag w-x-y count to the minuet (d) wave of the triangle. And, this wave may be allowed to go over the top, again, within certain limits.

From this high, it is perhaps possible to make the (e) wave of the triangle, which probably (not certainly) would take out the prior x wave lower. Notice the (c) wave, lower, only retraced a little over 62%, so something similar should be expected for the (e) wave. From there, the minute ⓥ wave top should occur as an impulse or as a diagonal to end the Minor C wave, up.

Now, notice the pattern on the Elliott Wave Oscillator (EWO or AO). You can see the contracting lines across the peaks and valleys and fairly tight hugging of the zero line overall that typically signal a contracting triangle.

If the triangle validates, with a higher high after the (e) wave, it might signal "the last wave dead-ahead" for this index. And, often, not always, the thrust out of a barrier triangle is sub-par. It might not travel the typical technical analysis target of "widest-width-of-the-triangle-added-to-the-breakout-point". It might. But it might not.

We have been looking for a formation that might signal the end of the monthly contracting diagonal, and this might be the start of it. Time will tell. And, yes, the current position shown of the C wave is just a placeholder. It is possible that Goldman & Co will try to drive the market to their 8,000+ target, which would be a Fibonacci number of 8 x 1000. But it might not get there, either.

So, why the barrier triangle? The compression of the triangle is trying to shorten up the minuet (e) wave, and thus all of the minute fourth wave triangle to be more equal in price to the minute second wave which was a fairly small wave. Remember triangles are always measured, pricewise, to their (e) waves. And yet the triangle would show huge alternation in time with its second wave, as shown in the daily chart, below.

ES Futures (Roll-over Contract) - Daily - Barrier Triangle

Again, right now we don't have any overlapping waves (in terms of minute ⓘ) to play off of. So, it still follows the 'rules' to call this a fourth wave overall. There are alternates from here. We could have topped but the odds of that grow lower with the higher highs. And it is possible a final upward contracting diagonal is being constructed to drag this thing out into oblivion. But we'll deal with these possibilities if and when they seem to take over the count.

For now, have an excellent rest of the weekend,

TraderJoe

So They'll Never Know

Today we were counting the fifth wave up in an hourly ES impulse, and that occurred until approximately 10:30 am and a price of ES 7,605. The up wave took 49 hourly candles to build. Then, at about 10:30 am a fully 55-point downdraft bar occurred which was a clear stop-runner. Checking an amalgam of newswires, you won't see that "minor excursion (sic?)" explained anywhere. It 'might' have had something to do with POTUS not signing a housing bill, or with the SK Hynix debut, or with the Iran war. No one on Wall $treet apparently owes you an explanation. They won't tell you, and you likely will never find out for sure. The hourly chart of the ES futures showing this bar is below. One thing we know is that in the futures, it went down to overlap bar xi and so likely starts a new wave.

ES Futures - 1 Hr - Five Up & One Bar Down

Of course, being Friday, the machine nanobots bought the bar and squeezed it like there was no tomorrow to make a new higher high. So, psychologically, "mom & pop" and most casual investors will never know the situation occurred unless they may have had a stop hit. All most people will know is stocks closed higher on the day and when they check their daily bars on a chart nothing will look out of place, a high near the high of the daily candle.

Oddly, today we had a discussion on the blog about proportionality in wave counts. So, over the last couple of days, we've had 49 bars up, and only 1 bar down?!! That just seems extremely unlikely, but there it is. The market can try to make restitution if the up wave following the bar is a "b" wave, up, and there is a "c" wave down to follow. Maybe, and likely. Not guaranteed.

Regardless, not only the speed of the recovery, but the complete lack of explanation seems to make the situation just another incident in the never-ending Ponzi scheme of leverage driving this market. The problem is you have to find someone who gives a flying flip. The biggies are passively in this thing, and they literally do not care as long as prices are up. It feels like the leverage is getting more & more extreme. At some point, the leverage will be seen to revealed for what it is. 

Maybe later we'll have more to say about the wave count. Like I said, nothing in the down direction will surprise me. I just can't help wondering about the financial professionals and what they are thinking. Do they see no value whatever in letting some gas out of the system slowly so that it doesn't all come out at once? I guess not.

Well, no one ever blamed the keepers of the keys with exercising judgement that was too good.

Have an excellent start to the evening and the weekend.

TraderJoe

If today was, what was yesterday?

Today from the open we counted most or all of a five-up wave. If that's the case, what was yesterday? Below is the chart of of the ES/SPY (CFD) on the 1-Hr timeframe.

All of the waves up, yesterday, and in the overnight, were so incredibly overlapping that the likely structure up was that of a contracting leading diagonal. The waves have the right length and the right form, and the up wave from 06:00 yesterday to the cash open - which was never seen in the SPY cash - is then well accounted for. This morning's roller-coaster machinations at the open become a b/ii wave. And, so far, the up wave is in a parallel.

Also, as we discussed yesterday, we came almost up to the prior high and almost made yet another double top. As stated earlier, there is significant risk of going over the prior high and/or the prior all-time high.

But nothing has clearly invalidated yet, so it remains to be seen what transpires.

Meanwhile, back at the 4-hr Dow futures (YM), there appears to be a better formed five-waves-down & an upward slanting parallel after it which might bear some watching. The parallel is a smaller version of the one on the ES. But the ES does not count as nicely downward as a five-wave structure.

The market has a very strange feel to it - like every possible excuse for a wave is being used to avoid a decline. Said another way, it feels like the Smart Money knows if a decline is allowed to begin it might quickly get out of control. A similar way to say the same thing that some prior Elliott analysts use is that it is as if the market were waiting for a news story to provide the cover for a decline. Until that happens, it just hasn't, and we'll watch and count patiently.

Have an excellent start to the evening,

TraderJoe

Doubles

You'd think it was a summer co-ed tennis match, but it's this market that is literally seeing doubles almost everywhere. Today, as seen in the ES/SPY (CFD) intraday wave-counting-screen, below, there were double bottoms to within an ES point. And then there were exact double tops later in the day near the upper intraday Bollinger Band.

ES/SPY (CFD) - 30 min - Double Bottoms & Double Tops

The double bottoms are marked by the two down (red) fractals, and the double tops after noon are marked by the two up (green) fractals. As far as I can tell, casually, the double-top/double-bottom scenario is happening with increasing regularity and throws a bit of a wrench into Elliott Wave counting as it's hard to know how those get resolved. Either some large players are doing it as a matter of "support & resistance" trading, or the new meme of retail traders can't get enough of the "levels" trade. Notice, too, how many roughly equal bottoms and tops were made in the overnight session, as well. Curious.

In the next court over from Center Court, the next pair of doubles is the fact that the intraday price so far as this is written has traded back to its 18-period intraday SMA, and, of course, the daily is also back to its 18-day SMA. So, the "battle for the line in the sand" seems to be on.

From an Elliott Wave perspective, the upward triangle and downward diagonal still form a logical pair as we explained with the Principle of Equivalence. We still need resolution.

Have an excellent start to the evening,

TraderJoe

Suspicious Minds - 4

The ES futures today invalidated the expanding diagonal possibility. That leaves a few options. But mostly the levels traders would probably say a new risk area has been defined as on the ES 8-hr (rollover) chart, below. 

So, the primary reason for the chart is that the formation just doesn't at this time look like a triangle. The wave labeled a/i/b is probably not deep enough for a symmetrical triangle. Or, if we are making a barrier triangle, then today's up wave is not high enough. That could change, of course.

The down wave is currently labeled as a/i/b because it could be a five-wave contracting diagonal instead of the expanding diagonal. So, that could be a/i or it could be just a three-wave structure as a b wave which might be part of a larger upward diagonal.

But, let me be clear, there is real risk of going over the top again. That could still happen in a triangle or in a diagonal. But we don't have quite enough waves to better visualize those right now.

Today was very, very overlapping and whippy. The down wave was too. So, the count remains undefined until we get more information. I would keep an eye out on that Local Trend Line.

The day after a holiday is often an up day in a relief rally when nothing seriously bad happens over the weekend. And Tuesday is often, not always, a reversal day when Monday is an up day.

We'll see how it goes. Have an excellent start to the evening,

TraderJoe

Suspicious Minds - 3

In the prior post on the ES September futures (front-month only) daily contract we showed the possibility of breaking up or down out of a triangle, upward, or an expanding diagonal, downward. The internals of those charts are shown below on the ES roll-over contract. This is the lead month prices stitched onto the prior expiry on the volume roll-over day in the 4-Hr timeframe.

The panel on the left shows the 15 June high as a :5, the fifth wave of the Minor C wave. That high truly is a higher all-time-high on the rollover - just not on the lead month contract when considered alone. And that high's rather impulsive look suggests it could be the fifth wave after a fourth wave flat.

If so, we may be getting an expanding diagonal downward with the remaining sequences. 

Still, The Principle of Equivalence says we should at least give roughly equal consideration to the equal and opposite pattern of a possible fourth wave triangle that is wasting a lot of time before making that final high. We haven't seen a real triangle in the Minor C wave, yet, so, yes, this could be the one.

As an Elliott analyst one has to be agnostic about the outcome until certain benchmarks are achieved such as either a new all-time high or a lower low than the 10 June low. As a trader, the job is to try to put the odds on one's side. For example, a current contraindication of price going down is that it is still closing above the 18-day SMA, and so the daily bias remains up until it does no longer. Whereas, from an Elliott perspective, if the peak on 15 June is 'actually' a five-wave sequence, then it has no business inside of a triangle pattern, which must be all three-wave sequences.

So, for example, in the triangle count it is still possible to make a lower low than the prior wave low and still be inside the triangle unless the Ⓒ wave is exceeded lower. Even, then, it might be possible to extend the triangle by dropping the lower trend line a bit, so long as the Ⓐ wave is not exceeded lower. This would make the triangle possibility extended in time by several days.

Of course, once the Ⓐ wave is exceeded lower one is well on-the-way to knowing that the diagonal is likely completing. And after the diagonal completes a pretty still retrace stiff might be expected.

This is just the market's inevitable way of having its say and not letting the profit possibility be one-sided.

So, it is still a time to be patient, calm and especially flexible. The market - as a whole - will speak, and things will become clearer. They always have and likely will continue.

Have an excellent rest of the weekend.

TraderJoe

Suspicious Minds - 2

How do you like them apples? Or Odds? You see right now, the daily ES has a pattern whose wave sequences 'might' be able to all be counted as 'three-wave-sequences'. The daily ES chart is below.

So, the odds are roughly 50-50 that there is a break upward out of a triangle, or a break downward into a diagonal. Even if you're a decent wave counter, the roughly equal odds give one a pause regarding action to be taken - at least until things become a little clearer.

It is often said that "a triangle represents either indecision or a balance of forces". Well, so be it at the moment.

Tomorrow morning's Payroll Report and Unemployment Report would have to take out some significant lows or highs to make the wave count more apparent. Maybe they will. Maybe they won't. Time will tell. It seems curious after months and years of counting waves to be in this position, but here it is. We can still count the innards of a downward diagonal. And we're not oblivious to the shape above as a possible triangle or the fact that we are soon going into a major holiday weekend. So, there we are. 

While I'm on the subject of odd, or odds, I came across this peculiarity when measuring some waves in the SPY today. 

SPY Cash ETF - 1 Hr - Boomerang of Rebalancing Candle

It turns out if you clone the length of the candle that was involved in Russell rebalancing and just add that distance to the bottom of the next candle you get a perfect length match, upward as shown by the blue boxes which are copies. It's almost as if someone's ETF boss said, "look, you broke the damn thing, now fix what you broke." You don't think those kinds of shenanigans really go on, do you? Well, I do, and a whole lot more.

One other minor thing. Of course, that SPY candle breaks the definition of a contracting daily triangle because it made a lower low. But it does so only for the SPY. The other products (ES futures, SPX, etc.) seem fine. Oh well, odds are odd.

Nothing to the downside will surprise me. The volatility is frustrating. They ain't making it easy.

Have an excellent start to the evening,

TraderJoe

Suspicious Minds

Don't let the reference to the Elvis lyric throw you. Things are working out OK, so far, on the ES 2-hr with the potential contracting diagonal lower. There have been no invalidations at this point in time.

ES Futures - 2 Hr - 'Potential' Expanding Diagonal

None-the-less, there are five things to watch: 1) the high of wave 2 - please use OHLC bars for that, but I would get very, very suspicious above the current high of wave 4, 2) watch the up channel of the a-b-c zigzag to that wave 4. A significant breakdown below it, and back-test that failed, would likely indicate more lower, 3) that is the reason to watch the channel. If price regains the channel upward, it 'might' impulse. We are not there yet. 4) watch the EWO/AO as - while it is red - it should turn below zero again for this count to play out, and finally, 5) watch for more significant downward overlaps of the 'a' wave of that 4th wave.

Have an excellent start to your "no forward guidance" day. Warsh may not give any. Would you consider the above?!

A 'closer in' 15-min wave count is included below, as an "extra free bonus". Lol.

ES/SPY (CFD) - 15 Min - Local Count Currently

TraderJoe

Tonight's the Night (Or Not...)

With apologies to Sir Rod for the title, there is a decent chance the ES futures may form an expanding diagonal in the downward direction. The 2-hr closing-only version of the chart is below just to show the form of the wave, but most of the components are in place in about 130 candles.

To complete such a pattern, there would need to be a new daily lower low and a fifth wave that is lower than and longer than the third - tentatively shown above.

IFF the pattern can not complete downward, and moves to the upside, that would leave only a clear three-waves-down and we would have to consider as alternates some extended fourth wave patterns (like a double-flat, triangle, or even diagonal upward) in a larger daily upward move. But, right now, it is what it is. It counts like it does. So, I'd rate the odds at about 55-45% lower because one could ask the question, "why did the structure form at this time exactly the way it has?"

There is further a recognizable pattern on the Elliott Wave Oscillator (EWO) with the expanding trend lines, so let's see how it goes.

Have an excellent start to the night (day).

TraderJoe

Fighting

Like different groups preparing for a revolutionary war battle, the daily ES timeframe and the intraday are currently practicing their maneuvers - and probably in lighter volume as we head into a holiday-shortened week and one in which many, many people take the whole week off for their vacations. While, today, price is just barely below the 18-day SMA on the daily chart the intraday situation is at odds.

Overnight the market has ground up and is still currently over the intraday 18-per SMA. The intraday slow stochastic is waffling around and is not yet embedded. The uptrend pattern is very overlapping at this point, but I could see a way where it is not a war injury that won't heal. But this does remain a warning sign. It remains to be seen if the two timeframes can get in synch.

Have an excellent start to the day.

TraaderJoe

Micron: Nay-I

Today after the close were the earnings for Micron Technologies (MU). These followed a day when the ES futures first made a lower daily low then, primarily in the after-hours, reversed to close higher as in the daily chart below.

The lower daily low kept the swing-line lower, and the close under the 18-day SMA keeps the daily bias down for now.

I'm glad Micron is working on A-I. But the current state of information flow is just awful, artificial or not. I waited on several sites for the MU earnings release. I almost never do this. One of the sites specializes in earnings, and another is connected with a well-known financial news TV network. The site that claims to specialize in earnings said they would be released at 4:00 pm (ET). Simple enough - by about 4:01 pm the earnings came out but not the revenues. 

A couple of minutes later still nothing from the TV site. Not even the earnings. I kept refreshing each of the pages for several minutes, still no revenues at the earnings specialization site, and still nothing over at the TV website.

I waited 'till about 4:10 pm and then had to leave for an appointment. Nothing changed. I kept refreshing and refreshing. Nothing different.

I came home to write this about 2 hrs later and both of the sites were updated with earnings and revenues. Yippee! (Not).

You see, everything a trader or investor needs to have in an earnings release can be summarized in about five lines.

1. Earnings per share
2. Revenue
3. Guidance
4. New Products
5. Special Situations/Challenges

Why in the world such a simple statement can not be released at the agreed upon time is absolutely beyond me. It should be available "on the minute", not on repeated refreshing nor having to check several sites.

What good is A-I, if information release itself is going to be so scatter-shot? Artificial Intelligence can analyze a lot - but not if it isn't given the information in the first place. The more I interact with the trading/business world, the more ridiculous some of these lax practices seem.

So mighty Micron will make more money making more chips. For what? You want more data centers? For what? As I was watching for the after-hours earnings, one could see the ES futures move steadily higher at least in unison with the initial earnings per share (actually starting about 15:30 ET somewhat in anticipation). Is a new data center going to change that situation?

Yes, a new data center might better help you plot your personal voyage to Betelgeuse, so you can study the supernova - if and when it happens - in person. (The computers used to guide Apollo to the moon are probably not good enough.) Oh. But guess what? Even though you plot your course, get it laid-in the Nav system, and get launched in the right trajectory using your new super A-I data, your lifespan isn't long enough to survive the 672-light-year journey even IF you could travel at the speed of light; which you can't yet.

Go ahead. Make more chips. Make a LOT more chips. Pollute the air and the water doing it, only to have them become as obsolete as my old Pentium-3. At some point, data processing is at least sufficient for most tasks. I'm not sure what benefits the 14th generation I-7 is even delivering compared to its first couple of iterations. It certainly didn't make the earnings release happen any earlier.

Get my drift? Have an excellent start to the evening,

TraderJoe

Yawn?!

Today provided a lower high and a lower low on the swing-line indicator for the ES futures with a daily close under the 18-day SMA. This sets the daily bias as lower - at least for the time being.

ES Futures - Daily - Swing Line Lower

Some of the internal movements were a bit whippy, so it wasn't a total yawner - one had to stay on their toes a bit. But it is summer, and a lot of people have other things on their minds like vacations, World Cups, staying cool in hot weather, etc. So, less interest might be expected.

Still, from an Elliott Wave perspective, the current wave structure counts like it is unfinished, so it might be possible for price to target the lower daily Bollinger Band. Note that the daily slow stochastic is nowhere near over-sold yet. And price is still in a downward sloping parallel so lower lows might still be expected.

Have an excellent start to the evening,

TraderJoe

Weaks Away?

(Pun intended). Is the Dow Jones Industrial Average, and its futures contract, shown below, days or weeks away from a major top? With 109 candles on the 8-hr chart, the pattern we posted in the comments of a prior post can still be playing out. It would be that of that overlapping expanding diagonal pattern with the 3-3-3-3-3 internal sequence, which is classified as a terminal pattern.

DJIA (YM) Futures - 8 hr - Expanding Diagonal

The three-wave sequences of a-b-c's are clearly shown. There is good form & balance with every numbered wave on an opposite side of the EMA-34. Nothing looks rushed, and we are trying to give the last wave as much time as it likes to play out because typically the waves expand "in time", too.

Sometimes, the last 'b' wave in this pattern will be a triangle. That can stretch the timing out some if the market wants. But the overlap seems like a key clue to this pattern. And there is a lot of room for algorithmic back-and-forth within its daily Bollinger Bands.

Unfortunately, I'd have to say that while a higher high often, and most usually results in this pattern, it simply does not have to if it is the true end of a larger pattern. The last wave can fail - which will also make it a bit of a cat & mouse game. But the (v)th wave has already exceeded the length of the (iii)rd and so the pattern is 'qualified' by the rules.

Further, also as previously noted, the expanding pattern shows up clearly in the waves of the Elliott Wave Oscillator (EWO or AO).

The b wave can be quite intractable, as usual, and it can be 'any three' including zigzags, multiple zigzags, flats, expanded flat or a triangle as noted.

But the last c wave, up, should be countable as a 'five' even if it truncates.

I'm really happy to see that the once mighty Dow, the once king of the indexes, has lost its following at this time, and everyone is all "NASDAQ & Mag10, and don't bother me with anything else." Maybe this once great index will still have a story to tell.

Have an excellent rest of the weekend,

TraderJoe

The Battle of Juneteenth

This famous historical battle is being fought at the 18-day SMA on the ES daily chart below. The snapshot was clicked about 9:30 am - just a few moments ago. It's hard to get closer than that.

So far, the correct answer to the question of, "will the up (green) fractal or down (red) fractal be broken first?" is, well, neither. Reminder: Globex only has a partial day today.

Have an excellent start to the day,

TraderJoe

Warsh-It (2)

Gesundheit.  Whatever you thought of the new FOMC Chair's performance today, the market sneezed enough to flip the daily bias to lower with a close on the daily ES futures below the 18-day SMA, filling a daily gap in the ES futures in the process. This condition needs to be monitored as to whether the new up (green) fractal is taken out before the down (red) fractal or vice-versa.

ES Futures - Daily - Bias Down

I've seen a lot of corporate CEO types come & go. I've worked for some. Yea. They always start with "what a great team we have here", and "things are gonna change beginning now". And, when they don't know what to do so immediately, they typically create lots of committees to 'study things'. 

As the reporter said at the press conference, "if you were serious about cutting inflation, you would have raised rates today." He didn't. He listened to his other peers who likely told him, "You're gonna have a bad enough market reaction just saying you're serious about inflation without the rate hike. Raise rates too and you're going to see real problems".

Instead, he let his jawboning both take the edge off some assets and raise rates over in the bond market too.

And, ironically, he said he needed a task force to "study" the reason for inflation. Meanwhile, everyone on the committee and in the room is snortle-chuckling thinking, "uh, don't we create inflation by printing money and destroying the value of the dollar? We need a task force for this, huh?"

And, when asked whether financial conditions were easy or tight, he rightly answered, "well, they are certainly different in the housing market than elsewhere." Boom, chacka boom. And what organization was it that raised interest rates from 0.25 to 5.25% in a couple of years? Oh. Meanwhile, his speech today raised interest rates marginally on the longer ends of the curve: the end of the curve housing depends on.

So, all-in-all, it's a "kick-the-can-down-the-road" performance, just as many of Jerry's later ones were. Of course, the three blind mice (Bernanke, Yellen & Powell) weren't really blind, except to inflation. They just knew if they stopped printing money, then asset prices might fall. Meanwhile, prices at the imaginary Grocery have just about doubled (i.e. 100% inflation). And, the Grocery is only imaginary because it's not counted in "Core PCE". I don't know about you, I think they just about have the "core" backwards. I need to count on food & energy the most, right after shelter, so it shouldn't be excluded from anything.

But, when you make decision by committee, this is what you get. Committees are fine except you have to watch out for a committee's natural tendencies to 1) be too polite, 2) water things down too much, 3) stall and ask for more time, 4) ignore the more vocal - and usually the more correct members - because for some reason, they seem to have a temper. When, really, the answers are simple - just painful to implement. And no one wants the pain.

Have an excellent start to the evening,

TraderJoe

Warsh-it

When I needed my clothes cleaned because I got them muddy as a young kid, I would ask my mom to wash them. Apparently, when something is muddy in the Midwest (particularly 'round Ohio, Indiana and Illinois) you ask to have them warshed - well you say it that way. The wave counts are currently a bit muddy, maybe the meeting tomorrow can help make them cleaner again. The hourly ES futures are below.

It looks like - at the moment - there are three waves down from the high, but they currently count best as two zigzags, starting with the diagonal "a" wave we pointed out yesterday from the high.

Of interest, the second wave down is 1.618 x the first. And price got under a prior overnight low. I'll be a good boy and not suggest that it means that upside & higher all-time highs can't happen. I won't suggest that maybe the ES & SP500 will truncate. I did not say that. You did not hear that. Being over 78% it could still be the fifth wave. With an FOMC meeting tomorrow a lot could happen. And much could happen over-night. I would keep my eye on that overlap warning level, and on the 18-day SMA which price is still above.

Today was an inside day. A day of rest. Have a good start to the evening,

TraderJoe

Risky Business - 2 (Why It Can't Be Any Other Way)

Today did not take out the risk area proposed in cash or either sole ES futures contract (JUN or SEP), but it did exceed it in the roll-over contract (SEP stitched to JUN on the volume roll-over-day). The risk area could be history in the next day or two - especially with a FOMC meeting coming up. Or it might hold. But the odds favor the former.

Any number of people complained about the ugliness of the market movements today, and how ugly structures are made or typical technical levels broken just to trick the public into different counts. I want to tell you why it has to be so. Think of it like this ... I do.

Hint: You are Not Dressed in White

Look when - as a trader - not an investor, you sign up with a brokerage firm, they know everything about your finances - which is all they care about. They could care less about whether you're a Moving Average Trader, or a Breakout Trader, or a Range Trader, or an Elliott Wave trader.  Not relevant.

You sign up (if with a futures firm) and you must agree to the following conditions: A) a Clearing Firm will clear all of your trades - that means they know which trades you put on and where you put them on in the market, and where you take them off. B) They know the size of your trade. Did you just trade one micro at the market? Did you trade 10 E-mini's on a limit-entry? Regardless, they know. C) They also know your margin - and in fact, display it back to you in real time (big hint: they are tracking it!). They are required by law to track it, so you don't wind up in a margin call. D) They also know historically when you trade. Do you usually stop trading at the close - possibly because of margin? Do you usually stop trading at 11 pm so you can get some sleep. In short, they know. They know you. E) Your brokerage agreement also specifically states that your brokerage firm may take trades against your position. Really? You heard it. And if that isn't bad enough, F) Your margin may be swept by the brokerage firm, so that they can earn interest on the balance or use it otherwise. Listen to that again: let's say you go short a futures contract. You post the margin to do it. The clearing firm sweeps that margin balance to your brokerage, and the broker can use that money to trade against you.

Your money being used against you. This is just as long as they segregate your funds for the brief reporting period at the end of the day, so they can account for what is yours and what is theirs (they robbed from you). All of that became clear in the MF Global bankruptcy and following settlements.

Now can anyone tell me they signed a brokerage agreement that says, "This Brokerage will not keep a historical record of their client's activities over time."? Well, certainly not. The brokerage might need that information to defend themselves in court. And what says they won't store such data to build a profile of you - including your typical risk tolerance? Is Bob ok with a $1,000 loss usually? Does Janet usually bail at $450 in the red?

Do you get the picture here? Look at how much information they have about you. Period. Now ask yourself, "what do you honestly know about them?" Do you know what trades are on Blackrock's servers? Not a chance. That is proprietary information. Do you know what Megacap company is going to do a buyback, on what date, in what size & what time of day? Not a chance. That is proprietary information, too. Do you know how much money Goldman allots to the "closing buy-back" that usually lifts the market at the end of the day? Not a prayer. More proprietary information. (Although this is a documented fact that their customers once publicly complained they were not keeping a big enough balance at the close to keep driving the market to higher highs). Oh, and let's not forget the FED & the Treasury. Do you know when the Treasury is going to force a change in currency spreads to work a balance issue? Do you know exactly when the FED is going to reverse-repo somebody out of a problem?

They know. You don't. They can usually trade on it and mange it. They have the size and the capitalization to give them flexibility. You most assuredly don't know when. And if you did, you probably don't have the size to manage it.

Now look, nobody - but nobody - can manage this market & economic complexity without computers, and probably without A-I. We know there are so-called market-making algorithms to handle the trades. We already know Blackrock is using A-I. You think they're doing it to feed your account?

See, if you're a trader, you actually signed up for this. It's all part of the Ponzi scheme. They win, and if you place enough trades over time, you will probably lose. You might have good weeks, good months, but it is hard to beat their track-records with the information they have and that you don't. And it is legal that they win. There wouldn't be a brokerage business if they couldn't.

So, you think I'm done with this rant? Heck no. I've only hit the tip-of-the-iceberg, above: the legal stuff. Never, never, never doubt there is illegal stuff being done to you, too. Besides Congressional insider trading, and possibly higher, I'll give you one other example.

I'll never forget when Gary Gensler, then Chair of the Securities and Exchange Commission came on a TV interview and admitted, shortly after the pandemic, "look, during Covid, I had to literally call these several hedge fund managers up and tell them to stop texting each other with 'trading ideas' that would be otherwise be considered as 'market manipulation' as we were keeping a record of it at the SEC." They stopped. Did anything become of it? Never heard of any prosecutions as a result. But they had already done it!

They have to keep the music playing. The game must go on. One OTHER small problem is most of us can't see the nano-trades. In today's market, algorithmic trading accounts for roughly 70% of ALL trades, including the High Frequency Trading but other arbitrage & similar schemes, too.

All I can say is "the prices are in the waves", the trade details are not, except a bit with volume. So, if it were me, knowing the above, I would trade like there's a robot facing me, saying "Go ahead, punk. Make my day."

Have an excellent rest of the evening,

TraderJoe