Plausible Route to 195/200 in NVDA

In my last post on Nvidia, I said that I was looking for a fourth wave to come down and attack the lower channel line. As far as the daily chart below, shows, that has happened. 

Note that the formation may be a barrier triangle because wave ④ has come down to overlap wave ③. This could result in a pop above the upper barrier trend line. If so, the usual triangle projection of 'the widest width of the triangle added to the breakout point' allows for a projection to ~200. But barrier triangles can be tricky and do not have to reach the typical targets because of the energy already expended to try to breach the barrier.

None-the-less, the Elliott Wave Oscillator (EWO/AO) has made a reasonable fourth wave travel near the zero line and could allow for a fifth wave higher. This could also result in higher prices for the NQ/NDX and ES at some point.

On the downside, the triangle would likely invalidate below the 165/170 level, and a possible Flat wave could form instead. The EWO has divergences what looks like the extended first wave, and if the first is, indeed, the extended one, then the fifth wave would have to be shorter than the third. Let's see how it goes.

This is the second post this weekend, and if you have not seen the first one, you may wish to read it now at this LINK. Have an excellent rest of day, weekend & holiday, if you are celebrating it.

TraderJoe

Fits Together - So Far

From our post at this LINK on Saturday, we said we thought we were making a large ⓑ-3 wave up. That assessment has not changed. This is what the current wave count looks like on the ES/SPY (CFD) 4-hr chart.

ES/SPY (CFD) - 4 Hr Close Only - Elements of an Eventual Minor B Wave

This morning's dump should be watched to see if it nears the lower parallel, and/or holds there or near there. Double zigzags often form remarkably precise parallels - but we know 'this' market.

This is a further reminder that today is the last trading day of the month, with a Monday holiday, and so Tuesday may see the inflows from the typical passive sources we have so often noted (company bonus plans, 401k's, dividend roll-over schemes, etc.). And the Smart Money may try to front-run such sources, but this is not a requirement, sometimes they are patient and wait.

Eventually, the ⓑ-3 wave could reach the upper parallel, and - while likely - that is not a requirement either.

Have an excellent rest of the day.

TraderJoe

Crawling

As far as I can tell using the 1-Hr ES/SPY (CFD) or the ES alone, which has a delay here, the five-wave structure of the likely a wave from the 4-hr chart in the previous post is now emergent. The chart uses 120 candles. It's a crawler. But it works.

The fourth wave, 4, is between 38% and 50%, with no overlap, so there is no reason to think of any non-impulsive structure. Notice the third wave, 3, "turns-to-the-left" and goes above the channel as I have indicated it should do in true impulse wave structure.

Regular readers of this blog should now explore the channel shown previously on the 4-hr chart. The 'a' wave can have a bit further to go.

Have an excellent rest of the day. I will add the reminder that Nvidia reports after the close.

TraderJoe

'B' is for Belief, Bubble (and Babble, too)

The thing about B waves of expanded flats or running triangles is that they try to get you to believe they are built on something substantial, when they might not be. They might be part of a bubble too. And, as long-time reader and contributor BBRider commented on the prior post, this one is also built on some FED babble. A mumbling, stumbling Jerome Powell, Chairman of the FOMC, said on Friday the FED might be in a position to lower interest rates. OK. With that in mind, we just keep on counting, using parallels and finding clear five-wave sequences where we can find them as on the ES 4-hr chart below.

ES Futures - 4 Hr - Channel Upward

The above count is cognizant of both time and price degree considerations. It also recognizes the following counting items.

• The (c) wave down could be counted as 'five' as a diagonal, pointed out in prior comments.
• The a waves of both upward sequences in (w) & (y) are very, very similar in size and shape.
• The minuet (x) wave, down, can be seen to take less time than the minute ⓐ wave, the prior higher degree wave in the same direction.
• We also said a lower low was needed to call the down sequence from Aug 15th as a five-wave sequence. That lower low did not happen, and there was, instead, a near exact double-bottom leaving only three-waves down.

In terms of price lengths, we know the SPY and the DJI have exceeded their prior highs. So, likely all indexes must be counted in upward sequences, even if the ES has not made a new high yet. It likely will with the momentum from this wave. So, we are watching the typical ⓑ wave external retracement levels to see what information they provide.

Still, things could get very, very whippy near a new all-time high.

Have an excellent rest of the weekend,

TraderJoe

Down But Not Out

Overnight the ES futures went down to tag the 18-day moving average of closes, also known as 'the line in the sand'. Prices have since started to bounce from there as in the daily chart, below. The 18-day SMA is the place where prices often retreat to in order to figure out what to do next. This again might be the case with the FED minutes today, and Jackson Hole on Friday.

Looking at the chart we note several things: 1) there has been a more forceful overlap on L #1. This again is not fatal, but it does rule out some impulsive upward counts. 2) While this morning's lower low has the trend line currently pointing down, it has a prior higher high and now the lower low which is not typically counted as a trend. And it is currently above the 18-day SMA - so even if it was a trend - it is still neutralized by the daily bias still being upward. 3) the daily slow stochastic is currently below the 79% level. That is a warning that price and the 18-day SMA could come together. Well, they already have, they occurred almost simultaneously. 4) The only day that the embedded status can be regained is the next day, if it remains lost through the close. 5) Although not followed by many, we will note there is an upward cross of the 100-day over the 200-day SMA. This has some weak bullish significance to moving average followers.

The overlap of L #2 would provide more information from a wave-counting-perspective but that has not happened yet. So, keep an eye on things.

Have an excellent start to the day.

TraderJoe

Wobbly but Not Topped Yet

The ES daily swing line has wobbled a bit but has not set a clear new downtrend yet. Prices on Friday overlapped the prior high but not by enough to draw any firm conclusions yet. The daily chart is below. Prices retreated from the area of the upper daily Bollinger Band as expected, especially given the daily slow stochastic is over-bought only (for two days). The third day needs to be watched closely to see if gains the embedded status or not.

ES Futures - Daily - Into Minor B

Meanwhile, two other overlap levels are shown which are of interest in ruling-in or ruling-out counts. In particular, we note that if L#2 is exceeded it would probably be below the 18-day SMA and might set a trend.

In terms of an EW count, we still see the Minor A wave at the July high, and the new August highs confirm that the early August drop was only a three-wave sequence (probably ending in the diagonal we counted).

Again, we have no proof positive upward movement is over. It is possible for a Minor B wave to form in numerous ways including: an expanded flat, running triangle, or even more complex Flat-x-Zigzag, Flat-x-Triangle. Those patterns are in the book for a reason.

Have an excellent start to the weekend,

TraderJoe

Hourly Trend Line Becomes Hourly Channel

Today is Friday. Higher highs are possible, although the morning is starting out 'wobbly' - possibly like a triangle or diagonal, there is insufficient evidence for a turn yet. The lower three-touch trend line we cited earlier has held. It has become an hourly channel.

Since 123.6 has been hit and slightly exceeded, then 138.2 may be possible, but not required. Maybe the Minor B wave will be an expanded flat (at least initially) that would add length to the downside. If not, it might become a running triangle with the first :3 waves down as the more violent start of the triangle. Time will tell. The hourly MACD has turned lower again, but could be rehabilitated again, too. Dicey times.

Have an excellent start to the day.

TraderJoe