New all time High

Below is the daily tracking graph. A new ES futures low was made in the overnight, and then prices swung around 180 degrees to initially make a marginal new all-time high.

ES Futures - Daily - New ATH

The new ATH confirms at least the onset of wave (v). Could it be all of it? Yes, but then it would look quite short. The fifteen minute futures chart is below as it was counted in real time from the low.

ES Futures - 15 Minutes - From the Overnight Low

First, the overnight low did retrace 38 - 50% of wave minuet (iii), and better located the low for minuet wave (iv) of minute ((a)). And that's where the fun begins. Using the 0 - 2 trend line technique, we located wave ((3)), and called wave ((5)) in real time to the bar. But the tiny wave that follows (before the Presidential news conference at noon) really did not provide hardly any time to correct the first five waves up. Therefore we have either one of these four cases.

1. Five waves up to the high
2. Three waves up to a marginal high as a-b-c of a diagonal i wave of minuet (v) of minute ((a)).
3. One wave up and making a big FLAT for a second wave.
4. Three waves up and a non-overlapping fourth

The decline at the end of the day was the largest decline since the up wave began, so there is likely a degree change there of some type - even if just for a fourth wave. The shape of the upward wave is very funky, and the market is doing it's best to keep it's options open. If there is overlap in the overnight, it will help clarify the structure. Let's see what we can see tonight.

Have an excellent start to the evening.
TraderJoe

Tracking

At the first of the new year, I decided to post this potential topping scenario and it's close alternate - based on a potential ending diagonal wave to help burn off the new highs in the advance/decline line. The blue line is the actual. The red line is the projected. Click on the chart to enlarge it to see how it's tracking. Because it speaks for itself, I will have little commentary.

ES Futures - Daily - Projected versus Actual

I will say that so far price is under-performing a bit, which is interesting. But, at this time I do think wave minuet (iii) of minute ((a)) is completed, and we are now in minuet (iv). 

The alternate for the count is that Intermediate (B) finishes at the first high, where shown. In the alternate, the ((a)), ((b)), ((c)) would be completed since the October, 2019 low. Since the ultimate price differences are not that great, the main difference is in terms of time and the number of roller-coaster rides required.

Reader Pedro asked me to post a chart of the rise from 2009 to 2020, using The Eight Fold Path Method. Instead of a monthly chart, a three-weekly chart is used to provide the correct number of candles, in this case 167 which is the best fit for 120 - 160 candles.

S&P500 Cash Index - 3 Week - The Eight Fold Path Method

Nothing is changed in this chart. Both waves Intermediate (2) and (4) are clearly identified on the EWO by their respective approaches to the 0 line. If we assume that the higher high for the EWO is a third wave, then so be it. Wave (3) crests at the 1.618 extension in a contracting ending diagonal - both of which were called in real time. Within Intermediate (3) The divergence of Minor 5 from Minor 3 is clearly shown on the EWO. The same occurs in Intermediate (5), and is shown on the chart. The new wave (5) does not crest above the log channel as the third wave does, and this might be its primary tell-tale of any weakness.

The difference in the EWO for this chart is that the fifth wave doesn't diverge, right? Everyone has noted it. I am currently attributing it to this wave being the end of Minor 5, of Intermediate (5) of Primary ((5)) of Cycle V. Cycle V is currently the extended cycle wave in the sequence. Some fifth wave extensions that can be observed do not end on the expected divergence, like the 3rd wave extension shown in the example in the Featured Post does.

So now the market has higher highs and I can tell people are very uncomfortable with it. They don't like B waves, in general, and find them hard to handle. All I can say is, "look the at B wave for Intermediate (2). It's a very similar scenario - on a larger scale".

Note that in Minor B of Intermediate (2), the EWO also makes a higher high than wave Minor 3 - not shown for lack of room - of Intermediate (1). It's all a matter of degree and scale. Again, I think if you try to make the May, 2015 top Intermediate (1), then there is a huge new problem: an Intermediate wave would become larger than the size of Primary ((4)) at the 2009 low, and that seems like it would be bad form again. I could be wrong about that - and will be open minded. But at this point it seems highly, highly unlikely that a three-month down wave into December 2018 would correct a 10-year bull market. Wave Intermediate (2) was even much longer than that.

Have a good start to the evening.

TraderJoe

Call It Like They Measure - End of the Cycle

From what I can see, the potential diagonal scenario sketched out yesterday DOES shift the degree labeling problem to the upward waves. Those upward waves or their internals do become too long for their respective degree definitions. Please see the prior post if unfamiliar with the potential diagonal scenario.

And, if one tries to make an even larger upward diagonal, the problem gets even worse. 

Conclusion: The Primary and Cycle Waves upward have ended. The downward Intermediate (A) wave, and upward Intermediate (B) wave are correct. Any travel of Intermediate (C) that breaks the lower edge of the second blue box becomes Primary ((A)) down.

It is especially important to note in the Dow chart below where Minor 3 of Intermediate (5) ends. As a minor wave  - if labeled at the December 2017, top - it would become longer than the prior upward Intermediate Wave (3) - which is not allowed. As a large expanded flat Minor 4 provides alternation with Minor 2, and the waves retain their degree definitions. The 'net distance traveled' in wave 4 and 2, is thus made much more similar.

DJIA Cash Index - Monthly - End of the Cycle

In short, we said in yesterday's post that the waves in the diagonal proposal had to be verified in terms of degree. We simply could not in all good conscience find a way to do that. As a minor 2 wave, the Dec 24th (2018) low is not too long for the prior longest Intermediate wave, but it is too long for those prior Intermediate degree waves which are most proximal.

Therefore, the main count remains as it is. The degree has turned.

Both Primary ((5)) and the Cycle is over, as best I can tell. They ended at the October, 2018 high. Again, any movement of the Intermediate (C) wave below the trend line and the blue box is confirmation that Primary ((A)) of the next Cycle wave is underway. That is because the downward wave would become larger than the largest preceding Intermediate wave and must therefore become a Primary wave - a wave of one larger degree.

Best wishes to all.

TraderJoe

Degrees - And An Unseen Diagonal

Over the weekend, I was reading, and re-reading, and re-reading the latest newsletter from a major Elliott Wave service. And in that newsletter I found that the author, Robert Prechter, has apparently gotten the internal degree labeling correct from the 1932 stock market low. The article also goes on to make a case that the level of 28,600 - 28,700 corresponds very closely to a Fibonacci number in the Dow. It is a very cogent argument. But, then the author goes on to make a case for a fourth and a fifth wave that completely destroys the degree labeling shown beautifully before. In short, it contains a supposed downward minute wave (a) of a triangle that is much longer in price and time than a larger degree minor W wave, also downward. Those of you that have been following the degree labeling details here know just what bad form that is.

My brain was working on over-drive. Is there an alternative to the one Prechter presents, that 'might' work, and still give us the fifth wave? I promise, the work below is wholly original. It sprang up from the question, "what if the whole dang thing is a diagonal?!" You have a look. I have seen this exact pattern nowhere else.

YM Futures - Weekly - Ending Diagonal ?

Wave Minor 5 is shorter in price and time than wave Minor 3, and Wave Minor 3 is shorter in price and time than Wave Minor 1. Wave 4 is shorter in price and time than Minor 2, and overlaps wave Minor 1. Wave 2 is almost a 50% retrace on wave 1 - which is even better proportions than the 2015 diagonal. And each of the three-wave zigzags has been labeled.

And, we would now be in the overthrow of a diagonal now, and nearing the very end of the diagonal wedge.

Here's what I know. I know that this count works at Primary degree. I know it works internally. In other words - Minor 2 is larger than minute (b), and minute (b) is larger than minuet ii. What I don't yet know is whether the wave works on a percentage basis from the 2009, low. 

Right now, the pattern is intriguing. In the spirit of Elliott Wave work, I encourage you to beat it up. Help me find what is wrong with it.

Have a great rest of the weekend.

TraderJoe

P.S. Subsequent to this post, I ran this idea through MotiveWave software to look for any 'obvious' errors. The good news is no blatant errors or warnings of any type were provided. The MotiveWave chart is below.

YM Futures - Weekly - MotiveWave Version of potential Diagonal

While it should be noted that the chart contains no errors or warnings, it must still be percentage verified. However, it is worth nothing that the Dow's "orphan wave" in Jan - Feb 2016 versus the S&P500 does get accounted for. The count remains an alternate pending further study and post-pattern behavior verification. This is only one step in a validation, and one further slight high is allowed.

Weekly Doji

The weekly candle is a Doji which may also be seen as a weekly outside key reversal candle. The Doji occurred at a confluence of Fibonacci levels. But it would require a weekly confirming candle with a significantly lower close. The Fibonacci levels being noted are the 150% External Retrace of Intermediate (A) at the 3,262 level, and the Minor Y = 0.618 x Minor W, extension located at 3,253. Both levels are shown on the weekly chart below. The weekly count has not changed.

ES Futures - Weekly - Doji at Price Levels

The daily technical position is mixed and is somewhat in opposition as the Daily Slow Stochastic is still embedded, and the price bias is still positive with price closing over the 18-day SMA. The daily swing-line indicator just went to 'neutral' because of the recent lower low which follows a higher high. The daily chart 'also' shows an outside key reversal bar, as well

ES Futures - Daily - Outside Key Reversal

Daily prices are still in an up channel. And, while a Minor Y wave of Intermediate (B) 'may' indeed be seen as completed here, that assessment conflicts with the $NYAD (NY Advance-Decline line) having made a recent all-time high. So, the up move since October 'may' just be minute ((a)) of Minor Y. Yet, a retrace to the lower Bollinger Band, and/or even the 100-day SMA is likely at any time. In our view it is also possible that minute ((a)) has one more higher high to make - but there is one way to count the up wave in which it may not be required.

Have an excellent start to the weekend.

TraderJoe

Will it Or Won't It?

Here is what The Eight Fold Path Method - on the four-hour ES futures has to say about yesterday's up wave, and this morning's overnight down wave.

ES Futures - 4 Hr - Completed Wave Set

We have posted this chart many times before. It is nothing new. With now more than 125 candles on the chart (well within the recommended 120 - 160), the Elliott Wave Oscillator went below the zero line, then above the zero line on a divergence. The subsequent overnight action has gone below the prior wave ((4)) in less time than that wave took to build, and so our interpretation is that this wave set is completed.  

Per the New Year's Projection, below, these two waves were entirely anticipated. These waves would be (iii) and (iv) in the projection, below.

ES Futures - Daily Close - Projected

If the market is to finish an impulse, then a further higher high should be made. If a higher high (or a very good attempt at it) is not made, and the channel starts breaking down and being successfully back-tested, prematurely, then we may conclude that Y and, possibly, Intermediate (B) ended with Thursday's high. Then (i) = ((a)), and (ii) = ((b)), and (iii) = ((c)).

So far, the only thing odd about an impulse is that if (ii) is actually minuet (ii) and not minute ((b)) is that the up wave should have formed a wedge and not a channel. That is because the wave labeled (ii) is only a 23.6% retrace.

We will remain flexible, patient and calm until a more complete picture emerges. Stay tuned.

TraderJoe

New Year's Speculation

Here is an idea for you - as long as you accept it for only that. It is not to be taken as trading or investment advice. While this idea might seem either overly precise or overly complicated, it is based on the Elliott Wave principles listed below the projection/speculation. One way to look at this is that I do it at my own risk. Another way to look at it is that a person needs to have a potential idea for what could occur, and monitor deviations from the expected. So, without further delay ...

ES Futures - Daily Close - Projection/Speculation

Here are the principles involved in this chart. The chart starts with the current up wave from October 2019. Actual prices in blue continue through the end of December, and the projection follows in red.

1. The Federal Reserve is still very active in the markets.
2. The NY Advance-Decline line is still at an all time high.
3. The most prominent structure in 2019 was a mid-year triangle.
4. There should not be a diagonal immediately following a large triangle, by alternation.
5. Therefore, the current up wave from October should resolve as an impulse.
6. The current impulse should end minute ((a)) of Minor Y of (B) in January.
7. There should be a 38 - 62% move down from the high for minute ((b)).
8. Once the minute ((b)) is made, then, a minute ((c)) wave could be a diagonal, as ((a)) and ((c)) would alternate.
9. For the diagonal, each of waves (i), (iii) and (v) should marginally exceed the prior high.

A diagonal structure would help maintain the 1.50 or 1.62 extension of Intermediate (B) on Intermediate (A). The three higher peaks of the diagonal would be around March 1, April 1 and May 1, or the employment reports those months.

Notice in the current up wave from October, we have not seen a triangle wave or a diagonal, yet. Typically, one of these two patterns precedes a major top. The diagonal should have good proportions within it. Three waves in each numbered leg should be pretty distinct, and the retrace percents within the diagonal should be substantial. The hardest thing to project will be the depth and shape of the minute ((b)) wave - if it should occur.

Have an excellent start to the New Year. Please don't blame me if the chart doesn't work out day-by-day. It is the best projection I can do, given the Elliott Wave principles available, and incorporating stock market seasonality.

Have a very good start to the New Year.

TraderJoe