Driving Miss Crazy - 7

FED Spaketh, Dollar Dropeth, Stocks Riseth: based on our intraday comments and count, we were expecting an up day today. We were expecting a potential ((C)) wave, up. We did get more than that. A new local high occurred on the daily chart. And, to be honest, we were not expecting that.

The daily slow stochastic which had lost it's embedded reading yesterday regained it today. Here's what I want to know: even though I was watching it, what allows the FED Chair to pick a Brookings Institute meeting to clarify FED policy to such a degree, and, yet, as the result of FOMC meetings absolutely none of the clarifications occur in those press conferences? In the press conferences, he confuses, he obfuscates. Here he clarifies and in express detail says what he is looking for. Really. Why today? In case you don't get my drift, it feels over & over again like the fix is in. How would it be known that the this FED speech gets as much attention as an FOMC announcement (in terms of access for the public)?

Something really stinks. Do I care what the new announcement precisely is in detail? Very little. Do I care that the FED itself is creating an unbelievable amount of market volatility all by itself? I do. I really do. Some serious money could be caught the wrong way in such a move. Somebody could get royally hurt. As the chart shows, today's move isn't even the largest up move - although to listen to the financial media, you'd think that the Equity Gods had visited Wall Street in person today.

No, as I have said repeatedly, there is nothing doing to the downside until or unless that lower parallel trend line is broken, then back-tested, and then the back-test fails. That just hasn't happened yet.

And I really hope - with all the FED members caught insider trading, against the FED rules, and with the "off calendar" monetary missives - that FED Chair Powell is sleeping well at night. I, for one, have lost all respect for this organization. And for him, in particular. I listen to what they do - because I have to. I listen to what they do because, as a retail trader, they will essentially vaporize my account if they don't. I don't listen because of their wisdom, their finesse, or their skill. They are engaged in market manipulation, and worse, and I simply do not condone that.

Have a good start to your evening,

TraderJoe

Driving Miss Crazy - 6

The price structure could very well be "short-a, long-c; long-a, short-c" for (w)-(x)-(y) overall in the SPY hourly chart. The close-only chart is shown below to concentrate on form and timing. Let's see if any confirmation occurs. 

SPY Cash - Hourly Close - Loss of Momentum

I still want to see price trade below the lower channel boundary, back-test it, and fail with a lower low. The items in favor of confirmation are that the highest high is not on or above the upper channel boundary which is a sign of momentum loss, the lower Elliott Wave Oscillator, and the possible truncation high.

Have an excellent rest of the day.

TraderJoe

Driving Miss Crazy - 5

This SPY 30-min chart looks at this last wave sequence upward to see if will count as a clean "five". There does appear to be alternation in cash. And cash does not overlap, yet.

The sequence appears to start with an expanding diagonal in cash, so wave ((5)), up, should be an impulse.

Have a good start to the day and to the week.

TraderJoe

Driving Miss Crazy - 4

I'm personally not in love with any count. As I suggested in several posts & comments, a minute ((b)) wave count could be messy and full of trips & traps - especially in the light holiday volume. Here is one version on the ES 8-hr chart, which at least provides an upside target from typical technical analysis.

You could also see it as (w)-(x)-(y)-(x)-(z) and I would not say it was incorrect. However, as before, there is no downside count likely to be started until or unless the lower parallel trend line is broken, then back-tested and having the back-test fail.

Have a good rest of the holiday weekend.

TJ

Driving Miss Crazy - 3

U.S. equity prices as measured by the SPY cash (30min) index in the chart below, gapped down, broke the dashed interim trend line previously shown, then back tested that trend line and fell off a bit again. To begin to make a third wave down, the back-test would need to fail, and the down (red) fractal shown on the chart would need to be broken lower.

SPY Cash - 30 min - Expanding Pattern Currently

Today's gap (red circle) was not filled as of this time. It's hard to make more of the price movement than what it is, so far.

Have a good start to your evening and your holiday week.

TraderJoe

Driving Miss Crazy - 2

In a whippy session that we said could happen because the VIX is in the 20's (i.e. 23.8 towards the day's close) rather than in the 10's, price action created a Gap-Fill Two-For. Price as measured by the SPY cash index made a gap up, then traded down to fill today's gap, and in the process filled a gap down from yesterday. These are the two black circles shown on the chart. The gap that remains (see chart below) is from the 15th close to the 16th open (red circle).

SPY Cash - 30 min - Smaller Degree Potential Expanding Diagonal

We also suggested that analysts WAIT until the dotted up trend line shown was broken, back-tested with a subsequent back-test failure before deciding on the fate of further waves. This turned out to be sound judgement as the dotted trend line was not broken to the downside.

So, it should be clear that one downward count would be of an expanding diagonal downward off of the high. A wave v would be needed to the downside before potential wave iv invalidated to the upside. This is just the cash equivalent of the futures chart we showed yesterday. It's a little cleaner and the gaps are more prominent this way. But wait, do we really have to deal with another diagonal? Seriously? It's actually worse than that. Intraday yet another diagonal happened and we counted it in real time. Here is the final chart of that potential diagonal on the SPY 2-min chart.

Spy Cash - 2 Min - Even Smaller Degree Expanding Diagonal Upward

This is why we suggested to wait until that dotted uptrend line is broken and back-tested with a subsequent back-test failure. The trading bots are especially good at walking a trend line. Look at how little room there is between wave ((ii)) and wave ((iv)) - degree labels are just relative for illustration, here. Yes, they skin any premature trader alive if the trader acted on the suspicion that the trend line would break without seeing the actuality of it. Then they grind and grind, finally to explode to the upside in a fifth wave. 

First, notice how many overlaps there are. It's insane. Next notice the three-wave look to the sequences.  Look at the triangle that might indicate last wave ahead but does not - because it is a running triangle. Running triangles in an uptrending wave are bullish, not bearish. Fourth, notice the price extension in the fifth wave. So, even though the fifth wave is the extended wave in the sequence overall, it also put on a further extension to make the point! And Fibonacci fifth, notice price is trading back inside of the expanding pattern. If it is truly a 3-3-3-3-3 pattern then one conclusion that can be reached is that it is an ending diagonal. Time will tell.

Can we ever count an impulse? We did! Look at that wave from b to c within wave ((v)), up! It's a cleanly counted impulse. We hope to count more of them as time goes on. Right now, the diagonals are serving their purpose to keep everyone confused, and to not let you in on what the count might be. Certainly, if the market makers are going to engineer a big decline for the larger daily potential expanding diagonal downward, then they don't want you or I on board.

Back to the 30-min chart. Some technical analysts will see the price squeezed between the declining upper diagonal line and the up sloping dotted trend line and say the market is coiling. That's likely a valid assessment, and the question is which way will the coil break? Luckily, we don't have to deal with that if one just realizes there isn't a valid downward count until or unless the dotted trend line breaks to the down side is back-tested, and the back-test fails.

Have a good start to your evening and to your weekend.

TraderJoe

Driving Miss Crazy

With all apologies to the movie title, the market gapped down this morning, potentially activating the bull trap from the daily chart - with the lower daily low after the outside reversal day up - and then had no follow-though lower in the cash session. Prices then traded in an approximate 50 point range after that from 3913 to 3963. The slowness and choppiness of this hourly decline suggested the following intraday count on the hourly chart of the ES futures, below.

ES Futures - Hourly - Expanding Pattern Again

We don't know for sure, but the Elliott Wave Oscillator again suggests an expanding diagonal lower. The wave labels on this chart are just for relative reference they do not yet reflect the degree of the decline. But the EWO is on a low which suggests a wave 3, and the 62% zigzag for wave 2 is compatible with a diagonal. There appears to be an impulse  ((a)) wave, up, which started out as an expanding diagonal itself, and then converted to an impulse wave. And by the end of the day, the low held so either there is a ((b)) wave down, or just the beginning of a ((b)) wave down. Either the ((b)) wave or the ((c)) wave, up of a wave 4 could take more time so that all of wave 4 takes more time than all of wave 2. Then, a rocky fifth wave down might occur. It should also consist of a zigzag if an when it were to occur.

Like any expanding diagonal wave 4 is not allowed above the high of wave 2 or it would invalidate. If the upward wave does invalidate, alternate count is shown in red below the chart. There would just be two zigzags down, so far, labeled as w-x-y.

The time  signature of the wave is almost certain to frustrate. It's whippy and trading entries and exits have to be carefully considered. And in this environment - just like buying or selling is a strategy - just standing aside until a recognizable wave occurs can work well, too. For example, it is very difficult to tell if that ((b)) wave is done yet or not.

From the daily chart, one item of note is that downward price movement ended after price contacted the 100-day SMA again. But, there was still a lower close on the day.

Have an excellent start to the evening.

TraderJoe