Like a full solar eclipse, sometimes you are in the right place at the right time and can gleefully shout, "I saw it, I saw it" along with the full other range of phenomenon that day - like sky darkening, or Bailey's beads. You can say you were there to experience them all. In today's market, if you draw the daily closing trend line up from the April low, you might see what is famously termed the "Elliott under-throw". Here is that daily chart in the SPX500 (CFD), trend line included.
If you look to the day of September 16th, you might see what Elliott termed the "under-throw" in a contracting diagonal. This is price action that breaks the trend line to get people more bearish, and then begins to recover to potentially make a fifth wave, and which can then result in the more famous "over-throw". Clearly from my post of 4 Sep ("How Nasty") I was prepared in advance for such an event, and now the sudden reversal higher.
If prices make the new high, then the under-throw will likely have been confirmed and then you can say "I saw it, too!". Further, Elliott will have been proven correct at an extraordinary degree of trend. And even if prices don't make the new high, and instead fail, he would still be correct.
Did the under-throw drive some fear into the market? Well, the CNN-Money Fear and Greed Index was last down to 27 (Fear) from its August highs in the (Greed) category near 66, so it looks to have had some impact.
The only item a little dissatisfying about the diagonal currently is that the retraces are not 62% or better as in the 'guidelines' for wave formation, but they are just that 'guidelines', not rules. So, to follow the rules now, the wave structure only needs a fifth wave that is shorter than the third.
We'll see if that happens. If not, we'll adjust. One adjustment 'could be' that the third wave, ((iii)) or circle-iii is still underway. Have an excellent rest of the weekend.
TraderJoe
The price action, with reversal coming as it did at the very end of the session was clearly designed to stoke bearish sentiment and trap momentum chasers. Indeed some of us were alert to this possibility and remained nimble! NDX 100 after the close was really something!
ReplyDeleteHow to judge if it is still iii and not v?
ReplyDeleteSPX500 (CFD) 30-min: from the intraday wave-counting-screen. Four consecutive closes over the upper intraday bad begins to drop the odds to 2 - 4% that the next close is over the band. But, the intraday slow stochastic is still embedded with price tagging the R3 daily pivot on this measure.
ReplyDeletehttps://www.tradingview.com/x/Sg1kQ3HM/
TJ
...now five consecutive closes over the upper band, dropping the odds to 1 - 3% (not impossible - just lower odds) of a further close over the upper band. TJ.
Delete...now six consecutive closes over the upper band, dropping the odds to 0 - 2% (not impossible - just lower odds) of a further close over the upper band.
Deletehttps://www.tradingview.com/x/0tOBSB4u/
TJ
..seventh consecutive closes now drops the odds to 0 - 1% (not impossible - just very, very low odds).
Deletehttps://www.tradingview.com/x/251gHe8m/
TJ
Series gaps...
ReplyDeleteiii or v?
ReplyDeleteSPX500 1-hr: with this candle there is no doubt now a 'roughly equal' but longer wave up. And depending on where you think the first wave terminates it could be a bit longer.
ReplyDeletehttps://www.tradingview.com/x/Aw1ymuqd/
TJ
There are 2 days in history like today, when the S&P 500
ReplyDeleterallied at least 1% to within 1% of a new high, and more of its stocks fell to new lows than highs.
• Jul 23, 1929
• Dec 21, 1999
A new post is started for the next day.
ReplyDeleteTJ