Downwards movement for Tuesday’s session remains above the invalidation point on the hourly chart. A new alternate wave count is today presented for consideration.
Summary: The target for minor wave 3 to end is at 2,833. But if this is wrong, it may now be too high.
Minor wave 4 may last a few weeks, possibly a Fibonacci three or five. Along the way up, to the end of minor wave 3, there may be another correction which may last about two or so days.
Stops for long positions may be set just below 2,679.63.
The trend is up. Corrections are an opportunity to join the trend. The market is still extreme and overbought, but the structure is incomplete.
Last monthly and weekly charts are here. Last historic analysis video is here.
The biggest picture, Grand Super Cycle analysis, is here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.
Within cycle wave V, the third waves at all degrees may only subdivide as impulses.
Within cycle wave V, the corrections for primary wave 2 and intermediate wave (2) both show up clearly, both lasting several weeks. The respective corrections for intermediate wave (4) and primary wave 4 should also last several weeks, so that they show up at weekly and monthly time frames. The right proportions between second and fourth wave corrections give a wave count the right look. This wave count expects to see two large multi week corrections coming up.
Cycle wave V has passed equality in length with cycle wave I, which would be the most common Fibonacci ratio for it to have exhibited. The next most common Fibonacci ratio would be 1.618 the length of cycle wave I.
Intermediate wave (3) has passed equality in length with intermediate wave (1). It has also now passed both 1.618 and 2.618 the length of intermediate wave (1), so it may not exhibit a Fibonacci ratio to intermediate wave (1). The target calculation for intermediate wave (3) to end may have to be done at minor degree; when minor waves 3 and 4 are complete, then a target may be calculated for intermediate wave (3) to end. That cannot be done yet.
When minor wave 3 is complete, then the following multi week correction for minor wave 4 may not move into minor wave 1 price territory below 2,400.98.
DAILY CHART
Click chart to enlarge.
The daily chart looks at the middle and end of minor wave 3. There are some excellent Fibonacci ratios within this new wave count.
Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute waves i, ii, iii and iv may all be complete. The final fifth wave of minute wave v then looks incomplete.
Minute wave iii is longer than minute wave i, so minute wave v is not limited. Minute wave iii will meet the core Elliott wave rule stating it may not be the shortest actionary wave.
The targets for both minuette wave (iii) and minor wave 3 both expect to see the most common Fibonacci ratio for third waves.
There is good proportion here between the corrections of minute waves ii and iv: minute wave ii lasted nine days and minute wave iv lasted six days. Both show up at the weekly chart level, and the wave count has the right look.
Within minute wave v, minuette waves (i) and (ii) may be complete. Minuette wave (iii) may be incomplete.
Minuette wave (iii) may only subdivide as an impulse. Within minuette wave (iii), subminuette waves i and ii may be complete. Within subminuette wave iii, no second wave correction may move beyond the start of its first wave below 2,652.01.
HOURLY CHART
Click chart to enlarge.
The hourly chart looks at all of minuette wave (iii) so far.
This wave count agrees with MACD. Upwards movement is showing an increase in upwards momentum, which looks like a third wave.
Subminuette wave iii may be complete at yesterday’s high. It looks like a three wave structure on the hourly chart, but it will subdivide as a five on the five minute chart. If subminuette wave iii is over here, then it is slightly shorter than subminuette wave i. This limits subminuette wave v to no longer than equality in length with subminuette wave iii, so that subminuette wave iii is not the shortest actionary wave and the core Elliott wave rule is met. That limit is at 2,723.70. If subminuette wave iv moves lower tomorrow, then this limit must also move correspondingly lower.
Subminuette wave iv may not move into subminuette wave i price territory below 2,671.88.
ALTERNATE DAILY CHART
Click chart to enlarge.
Both daily charts are identical to the high labelled minute wave i, and the low labelled minute wave ii.
Thereafter, this alternate wave count looks at the possibility that minute wave iii may not be complete.
Minute wave iii has just passed 1.618 the length of minute wave i at 2,690. The next Fibonacci ratio of 2.618 would see it end above the target for minor wave 3, and the target may best be calculated at minuette degree.
This wave count has a better fit with MACD, but it has worse Fibonacci ratios than the main wave count.
Minute wave iii may be over at the next high or at the target calculated. When it is complete, then minute wave iv may unfold over a few days. Minute wave iv may not move into minute wave i price territory below 2,490.87.
A possible zone for minute wave iv to end within would be the fourth wave of one lesser degree price territory, which is from 2,665.19 to 2,627.73.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is still no candlestick reversal signal at highs. The trend is now very extreme and overstretched, but this can continue for longer before price is ready to turn.
Overall, at this time frame, this market remains very bullish.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
With ADX not yet extreme, there is room for this upwards trend to continue. It is overbought, but that can continue for longer.
So far the breakaway gap remains open, just. Assume the gap is a breakaway gap while it remains open. If it is closed, then assume it is an exhaustion gap and a larger correction has begun.
There is again a Bearish Engulfing candlestick pattern. But it is noted that there are three more on this chart, yet none of those led to a pullback that lasted for any longer than two days.
VOLATILITY – INVERTED VIX CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.
Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.
Single day bearish divergence noted in last analysis has now been followed by one day of downwards movement. It may be resolved here, or it may require another downwards day to resolve it.
BREADTH – AD LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. This has been so for all major bear markets within the last 90 odd years. With no longer term divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market.
Only large caps made new all time highs last week. There is some weakness with mid and small caps unable to make new all time highs; this is bearish.
Breadth should be read as a leading indicator. The fall in price today came with a normal corresponding decline in market breadth. There is no divergence between price and the AD line.
DOW THEORY
The S&P500, DJIA and Nasdaq last week all made new all time highs. DJT now also made a new all time high, confirming the ongoing bull market.
The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:
DJIA: 17,883.56.
DJT: 7,029.41.
S&P500: 2,083.79.
Nasdaq: 5,034.41.
Charts showing each prior major swing low used for Dow Theory are here.
Published @ 08:52 p.m. EST.
Leading contracting diagonal in ES…?
Wow! Multiple divergences with recent small cap highs. While this can continue for some time, the longer it does the more energetic the ultimate resolution. Have a great evening all! 🙂
Selling half DJI 247 strike calls for 0.73….
Take a look at the daily chart on the VIX.
This candlestick… looking back, has a high probability. Thoughts?
ATT after tax bill passed announced that it will invest $1 Billion in additional capital expenditures in 2018 in the USA.
+ it will pay out a $1,000 Special Bonus to each of 200,000 of its U.S. employees, “all union-represented, non-management and front-line managers.”
President Trump say’s many Corporations and Companies will be announcing similar things.
“Winning”!
Too many to list… Manny Corporations announcing additional Capital Spending in the USA late this afternoon due to Tax Bill taking effect.
Bonus and higher min wage rates to be paid.
Read and/or listen to what they are announcing, amazing!
“Winning”!
Can label DJI triangle as a barrier as move down either as C or E exceeded limit…Oh well…
I meant “cannot”… 🙂
At any rate, these sideways consolidations have been behaving quite predictably and reliably lead to more upwards movement…..
Speculative trade on DIA 247 strike calls expiring Friday for 0.60. STC order for limit of 1.10…bearish engulfing candles apparently no longer mean what they used to… 🙂
Strange the move down out of the DJI triangle. I suspect it is a head-fake as they generally break to the upside if entered in an uptrend. Quite amusing…
Good morning everybody 🙂
There is now a little alternation between subminuette waves ii and iv, if I’ve got the hourly chart right that is.
Subminuette ii may have been a zigzag with a short micro wave A and long micro wave C, subminuette iv also a zigzag but a long micro A and short micro C.
The limit is recalculated for subminuette v. The target for minor 3 is probably too high, but I can’t calculate the limit at minuette degree until minuette waves (iii) and (iv) are complete.
The price action since the low this morning is looking rather “bear flag-ish” to me. I’m suspicious the big money is anticipating bad juju coming down later this week/early next. I’m battening down some hatches myself, unless/until we see some definitely impulsive action upward. The action since the recent ATH, including the instant sell off of the head fake this morning, and now this…all rather sickly in my book. The clouds could clear tomorrow, but I’m waiting for clear sunshine before I get wet again!
Not much of a pole for a flag….
Yep. Looks like some sort of triangle for the fourth wave so we should get the spike up out of it today for first thing tomorrow…
Hi Lara, All
I have a generic question about how to figure out possible length of corrections using Fib sequence. For example, if a wave2 lasted 16bars, and was a flat….how long could wave4 last and why? how do you guys do the math…thx
AG about to accelerate higher.
30 Year Treasury Yield tanking today again! 3rd day in a row tanking!
2.87% at the moment up from a close of 2.71% on 12-14.
2.82% was the close yesterday.
But IMO to really be sending a strong signal that rates are going to a higher level going forward. The 30 Year Treasury Yield must go above 3.26% and when it does, it must also accelerate higher at that same moment. Only then is the signal valid!
Deeply oversold. Buying Jan 19 TBT 35.50 strike puts for 0.85 in anticipation of oversold bounce. STC order for limit of 1.20 opened.
Hmmm. Now that has me mildly concerned. The move in TBT/TLT (20 year bonds) in the last 3 days has extreme momentum, and has broken the symmetry of the broad ranging move since late October. I’m rather expecting it to continue. I’ve lightened my long TBT position…but I’m not abandoning it at this point. I also see TBT has a nice double bottom in (sept and nov lows). The 38% retrace of the one year high to low is still several points above, and prior moves up have made it there before turning back down. I’m holding…
Nope. That was the leveraged longs getting smacked down hard. It was a totally one-sided trade with everyone expecting the yield curve to continue to flatten and getting ambushed when it headed in the opposite direction. I saw a report that someone made a contrarian bet and made 60 million on the unwind. It should be just about done.
Well…just too much momentum upward to bail now as I see it, and the bearish symmetry is broken. I’m not asking for a lot more…35.4 now, I want 36.5, I’m not greedy. We’ll see. Best of luck with the puts.
Nothing has been broken… until 3.26%+ on the 30 year.
It could just turn around, like it has done many times to date.
Hehe! Famous last words! Thanks! If it stays above upper B band tomorrow I will skedaddle… 🙂
Ahhhh…I give to better judgement. Fact is I made a poor entry to start, which is the heart of my problem with my current position. Which is no more; took my tiny profit and the associated bullets, and will look for better set ups rather than holding that one. It does look awfully stretched on the daily relative to other similar moves sizes. Next!!!
🙂
Just to share how fast the 30 year yield can move…
Back in the day (80’s) I witnessed a 200bpt move in yield in a matter of a couple of weeks. Today if it does truly break… you could easily get a 75bpt move in yield within 2 weeks.
Not saying that’s the case now… as a turn down in yield will occur with any type of correction in equities.
RIG now looks like it has some upside potential. I see multiple signs it might be initiating a move.
I have not Re-entered RIG yet. Waiting to see if old man’s likely end of throw-overs is likely to hit in the next several days or not. If not, I will enter.
AG will break out into Jan.
RIG also has some enormously valuable and under valued assets, looking to buy as well as some other offshore drillers like NBL
According to old man… Right now at higher probability of where throw-overs end in $DJI, SPX & DJT… confirmation is below Thanksgiving weeks lows as I see from lines. (91 pt range in DJIA)
There are 2 “least likely points” he called “Crazy”. Even in commodities is crazy but commodities is where it usually can happen.
This spike up possibly an x or b, with correction continuing today?
Looks that way to me. At least, it appears the 4 isn’t over. Other than that…I have no clue.
SPX sitting on a 61.8% retrace (tested multiple times now…oops, breaking below now!). If it goes (gone!), the next fibo is at 2677.5. If THAT goes…then I look for price to go to the 100% at 2672.2 , and if that goes, then to the 127% at about 2666. I’m watching NDX closely to see if it breaks below the 6455 low it just tested; multiple fibos there, and I if it goes, I think all markets probably drop hard.
Nugt has been fun huh Kevin 🙂
I lost focus on nugt last two days; glad you scored! XIV and UPRO have been my primary weapons the last few days.
WOW! Now this is some whacky action. Immediate selloff at the open but VIX and UVXY are still getting crushed. Much less drama in RUT though. Leads me to belief this is just sell the news algos and we are still headed up.
BTW, now that Trump has his tax plan and his estimated $4 billion, and soon will hear from Mueller that the investigation into wrongdoing (already two indictments, and so many more on the way) will be going on deep into 2018, my next prediction is that Mueller is fired. Trump has his money, and will lose his presidency otherwise, and the media mugging of Mueller’s integrity has been executed. So this Friday night it will be. I’ll bet $0.02 on that daring prediction! I suspect that will rattle the markets substantially on Monday, which is why I bring this up as a real possibility (I won’t debate the underlying politics here, I just want to focus on the possibility and risk factor re: the market.)
I agree, Mueller should be fired. I’m very disappointed in Jeff Sessions, he’s been gifted a golden opportunity and hasn’t acted.
To clarify: I didn’t (and won’t) share my OPINION about it. Only my PREDICTION about it, and it looming as a market risk factor.
10-4, certainly a market risk factor
I hope he can explain why he sits on boards of companies tied to the Uranium One deal, and also how he acquired shares in these companies with apparently no personal investment of capital. The stupidity of the American public is absolutely mind boggling. I think Trump is waiting for him to die the death of a thousand cuts…he probably will without Trump lifting a finger. Mueller is not only unspeakably arrogant, his knowledge of his own compromised position has made him desperate to the point of recklessness. Quite sad really…. 🙁
Very sad. The smoke and mirrors corruption level is astounding.
Thomas Friedman today in the NYTimes gives “investor of the year” award to Putin. Why? “Putin may have spend less than $500,000 to hack our election…and wants an America run by a chaos president who cannot lead the West, then Trump is his dream come true, whether or not there was any collusion between them”.
PURE Nonsense!
I’m sure you’ll want to read the article: “How Trump Made Putin’s Christmas”, by Thomas L. Friedman. You’ll also want to catch the article “No, Trump is Not P. T. Barnum”, also today’s NYTimes. Turns out Barnum actually was a man with ethics, who for example treated his creditors scrupulously, always paying debts in full and on time, and who “would have recoiled from Trump’s cynicism about principles and truth”. He concludes that Barnum would have liked to have presented Trump…in a sideshow, as an extreme embodiment of a humbug. Yea, you’ll want to catch this article too!
He (Friedman) is an ass! I stopped reading his garbage 9 years ago! I am from NY… read his garbage for decades. His work is not worth the paper it’s printed on.
Considering the almost 150 million he lavished on the Clinton Foundation, sounds like that half mil was chump change….! 🙂
As for corruption, the Newsweek Nov 2 2017 edition’s headline article was titled: “Trump is Leading the Most Corrupt Administration in U.S. History, One of First-Class Kleptocrats”.
What PURE Garbage!
I would have thought so too, but Trump tweeted yesterday that he isn’t even thinking of firing Mueller. Not that Trump is a man of his word (lol), but he does value his Twitter. Why would he change his mind by Friday?
You’re still on the Russia, Russia, Russia SCAM / Brainwashing? You were all Brainwashed that Trump had anything to do with this! All the Truth of this SCAM will be revealed. A lot of the Dems and the Media are going to have Egg on their face. A lot of people will be fired due to the perpetuation of this SCAM… FICTION!
Trump will be completely cleared… Nothing there at all!
What is the deal with VIX??? 8.90 low opened at 8.96
Banksters warring with algos
Joseph, I’ll say it one more time: XIV/SVXY are the instruments of choice re: VIX trading. They have a +5% per month trader’s edge; that’s insane in and of itself! And “volatility always settles back down”. Etc. etc. XIV is the easy money, if you ask me. And XIV’s volatility itself makes it a fantastic trading instrument (high % moves). You have to position trade it at least a bit, as yes, often it moves overnight. But just consider a buy late yesterday vs. a sell at the open today: 133.75 to 137.75. You can’t beat that kind of action, in my opinion. And by trading XIV, you are trading with the long term and intermediate term market trend as well. Something you might want to consider as part of your trading weaponry.
Love this big gap up opening. Some of my positions weren’t pretty closing the day yesterday (had to buy in through that 4), but the red has gone away, I hope the green is here to stay. XIV, UPRO looking sweet, and finally my TBT position is bobbing to surface. Happy start to a fresh trading day!
I cashed in the first 2 minutes of the market open. I’m trying to stay very cautious about this jag down, much as I want to plunge the buy button; high momentum moves sometimes precipitate much larger high momentum moves!
greetings
ready for Christmas Doc?
That will certainly start the festive mood going into the weekend…
Happy Holidays Everyone!!
🙂
uno