Upwards movement was expected. The market opened on a gap higher and thereafter moved lower, remaining above the short term invalidation point on the hourly chart.
Summary: The short term target is at 2,730. The mid / long term target is at 2,940. This analysis expects an upwards breakout from a consolidation within a week.
Long positions may have stops pulled up to just below 2,625.41.
Always practice good risk management. Always trade with stops and invest only 1-5% of equity on any one trade.
New updates to this analysis are in bold.
The biggest picture, Grand Super Cycle analysis, is here.
Last historic analysis with monthly charts is here. Video is here.
An alternate idea at the monthly chart level is given here at the end of this analysis.
An historic example of a cycle degree fifth wave is given at the end of the analysis 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.
Intermediate wave (4) has breached an Elliott channel drawn using Elliott’s first technique. The channel is redrawn using Elliott’s second technique: the first trend line from the ends of intermediate waves (2) to (4), then a parallel copy on the end of intermediate wave (3). Intermediate wave (5) may end either midway within the channel, or about the upper edge.
At least three wave counts remain valid at the daily chart level. It is possible still that a low may not be in place; intermediate wave (4) could still continue further. Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81. However, it would be extremely likely to remain within the wider teal channel (copied over from the monthly chart) if it were to be reasonably deep. This channel contains the entire bull market since the low in March 2009, with only two small overshoots at the end of cycle wave IV. If this channel is breached, then the idea of cycle wave V continuing higher would be discarded well before the invalidation point is breached.
Intermediate wave (4) may now be a complete regular contracting triangle lasting a Fibonacci thirteen weeks. There is perfect alternation and excellent proportion between intermediate waves (2) and (4).
At this stage, there are still three possible structures for intermediate wave (4): a triangle, a combination, and a flat correction. All three will be published. The triangle is preferred because that would see price find support about the 200 day moving average. While this average provides support, it is reasonable to expect it to continue (until it is clearly breached).
The triangle may be complete now, but the other two possibilities of a flat and combination may be incomplete.
DAILY CHART
Click chart to enlarge.
It is possible that intermediate wave (4) is a complete regular contracting triangle, the most common type of triangle. Minor wave E may have found support just above the 200 day moving average and ending reasonably short of the A-C trend line. This is the most common look for E waves of triangles.
Intermediate wave (3) exhibits no Fibonacci ratio to intermediate wave (1). It is more likely then that intermediate wave (5) may exhibit a Fibonacci ratio to either of intermediate waves (1) or (3). The most common Fibonacci ratio would be equality in length with intermediate wave (1), but in this instance that would expect a truncation. The next common Fibonacci ratio is used to calculate a target for intermediate wave (5) to end.
It must still be accepted that the risk with this wave count is that a low may not yet be in place; intermediate wave (4) could continue lower. For this triangle wave count, minor wave E may not move beyond the end of minor wave C below 2,553.80.
When price has clearly broken out above the upper triangle B-D trend line, then the invalidation point may be moved up to the end of intermediate wave (4).
HOURLY CHART
Click chart to enlarge.
Intermediate wave (5) must subdivide as a five wave structure. At the hourly chart level, the structure should begin to unfold with a five up. Minor wave 1 may be incomplete and subdividing as an impulse.
Within the impulse of minor wave 1, minute waves i and ii may be complete. Minute wave iii may now exhibit an increase in upwards momentum in order to have the power to break above resistance at the triangle B-D trend line (seen on the daily chart).
Within minute wave iii, minuette wave (ii) may not move beyond the start of minuette wave (i) below 2,625.41.
Minute wave iii is likely to be extended. When waves extend in price, they also do so in time; their subdivisions are also more time consuming than those within non extended waves. Also, when waves extend, their subdivisions often show up at higher time frames. Minuette wave (ii) within minute wave iii is longer lasting than minuette wave (ii) within minute wave i. Minute wave iii may show its subdivisions at the daily chart level, and so far minuette wave (ii) shows up as one red daily candlestick.
When the impulse of minor wave 1 is complete, then minor wave 2 may not move beyond its start below 2,612.67. Minor wave 1 should be long enough to break above the upper B-D trend line of the triangle. Minor wave 2 may then pullback to test support there, at prior resistance.
ALTERNATE WAVE COUNTS
DAILY CHART – COMBINATION
Click chart to enlarge.
I have charted a triangle a great many times over the years, sometimes even to completion, only to see the structure subsequently invalidated by price. When that has happened, the correction has turned out to be something else, usually a combination. Therefore, it is important to always consider an alternate when a triangle may be unfolding or complete.
Double combinations are very common structures. The first structure in a possible double combination for intermediate wave (4) would be a complete zigzag labelled minor wave W. The double should be joined by a three in the opposite direction labelled minor wave X, which may be a complete zigzag. X waves within combinations are typically very deep; if minor wave X is over at the last high, then it would be a 0.79 length of minor wave W, which is fairly deep giving it a normal look. There is no minimum nor maximum requirement for X waves within combinations.
The second structure in the double would most likely be a flat correction labelled minor wave Y. It may also be a triangle, but at this stage the expected direction for that idea does not differ now from the main wave count.
A flat correction would subdivide 3-3-5. Minute wave a must be a three wave structure, most likely a zigzag. It may also be a double zigzag.
Minute wave b must now reach a minimum 0.90 length of minute wave a. Minute wave b may be unfolding as a double zigzag. Within a double zigzag, the second zigzag exists to deepen the correction when the first zigzag did not move price deep enough. Double zigzags normally have a strong slope like single zigzags. To achieve a strong slope the X wave within a double zigzag is normally brief and shallow, most importantly shallow (it rarely moves beyond the start of the first zigzag). A new low now below 2,586.27 should see the idea of a double zigzag for minute wave b discarded.
The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double usually ends close to the same level as the first. Minor wave Y would be expected to end about the same level as minor wave W at 2,532.69. This would require a strong overshoot or breach of the 200 day moving average, which looks unlikely but does have precedent in this bull market.
Minute wave b may make a new high above the start of minute wave a if minor wave Y is an expanded flat. There is no maximum length for minute wave b, but there is a convention within Elliott wave that states when minute wave b is longer than twice the length of minute wave a the idea of a flat correction continuing should be discarded based upon a very low probability. That price point would be at 3,050. However, if price makes a new all time high and upwards movement exhibits strength, then this idea would be discarded at that point. Minute wave b should exhibit obvious internal weakness, not strength.
At this stage, the very bullish signal last week from the AD line making a new all time high puts substantial doubt on this wave count. It has very little support from classic technical analysis.
DAILY CHART – FLAT
Click chart to enlarge.
Flat corrections are very common. The most common type of flat is an expanded flat. This would see minor wave B move above the start of minor wave A at 2,872.87.
Within a flat correction, minor wave B must retrace a minimum 0.9 length of minor wave A at 2,838.85. The most common length for minor wave B within a flat correction would be 1 to 1.38 times the length of minor wave A at 2,872.87 to 3,002.15. An expanded flat would see minor wave B 1.05 times the length of minor wave A or longer, at 2,889.89 or above. A target is calculated for minor wave B to end, which would see it end within the common range.
Minor wave B may be a regular flat correction, and within it minute wave a may have been a single zigzag and minute wave b may have been a double zigzag. This has a very good fit.
However, minute wave c must be a five wave structure for this wave count and now the depth and duration of subminuette wave ii looks wrong. The probability that minute wave c upwards is unfolding as an impulse is now reduced. It is possible that it could be a diagonal, but that too has a relatively low probability as the diagonal would need to be expanding to achieve the minimum price target for minor wave B, and expanding ending diagonals are not very common.
At its end minor wave B should exhibit obvious weakness. If price makes a new all time high and exhibits strength, then this wave count should be discarded.
This wave count would require a very substantial breach of the 200 day moving average for the end of intermediate wave (4). This is possible but may be less likely than a smaller breach. The bullish signal from the AD line making a new all time high puts substantial doubt on this wave count.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A classic symmetrical triangle pattern may be forming. These are different to Elliott wave triangles. Symmetrical triangles may be either continuation or reversal patterns, while Elliott wave triangles are always continuation patterns and have stricter rules.
The vertical green lines are 73% to 75% of the length of the triangle from cradle to base, where a breakout most commonly occurs.
From Dhalquist and Kirkpatrick on trading triangles:
“The ideal situation for trading triangles is a definite breakout, a high trading range within the triangle, an upward-sloping volume trend during the formation of the triangle, and especially a gap on the breakout.”
For this example, the breakout has not yet happened. There is a high trading range within the triangle, but volume is declining.
The triangle may yet have another 6 – 7 weeks if it breaks out at the green lines.
A bullish long lower wick and support here or very close by for On Balance Volume suggest the pullback last week may be over, despite volume increasing. Looking inside the week at daily volume gives a clearer picture of where greatest support was.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
During this large consolidation, there are two green daily candlesticks with strongest volume:
1. the 6th of February was a downwards day, but it closed green and the balance of volume that day was upwards; this has the strongest volume during the consolidation.
2. the 16th of March was an inside day, which closed green and has the balance of volume upwards; this has the next strongest volume.
For most recent days, it is the upwards day of the 26th of April that has strongest volume. This is bullish. But today volume supported downwards movement, which is bearish.
This chart is mixed. Bearish are ADX, today’s volume and MACD. Bullish are the short term volume profile, On Balance Volume and support continuing about the 200 day moving average.
This market has been range bound since the last all time high. Volume suggests an upwards breakout is more likely than downwards. With price coiling in an ever decreasing range, it looks like a classic symmetrical triangle is forming. These are similar but not completely the same as Elliott wave triangles. Symmetrical triangles may be either continuation or reversal patterns while Elliott wave triangles are always continuation patterns.
Breakouts from symmetrical triangles most commonly occur from 73% to 75% of the length from base to cradle. In this instance, that would be in another 20 to 22 sessions. A breakout should be a close above or below the triangle trend lines, and an upwards breakout should have support from volume for confidence.
After an upwards breakout, pullbacks occur 59% of the time. After a downwards breakout, throwbacks occur 37% of the time.
After a breakout, the base distance (the vertical distance between the initial upper and lower reversal point prices) may be added to the breakout price point to calculate a target. Here, the base distance is 320.28 points.
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.
There is still a cluster of bullish signals on inverted VIX. Overall, this may offer support to the main Elliott wave count.
Both price and inverted VIX moved lower today. Neither have made a new low below the low of yesterday. There is no divergence.
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. A new all time high from the AD line this week means that any bear market may now be an absolute minimum of 4 months away.
All of small, mid and large caps have made at least slight new lows below their prior swing lows of the 13th of April. This pullback has support from falling market breadth.
Breadth should be read as a leading indicator.
The new all time high from the AD line remains very strongly bullish and supports the main Elliott wave count.This new all time high from the AD line will be given much weight in this analysis. This is the piece of technical evidence on which I am relying most heavily in expecting a low may be in place here or very soon.
There has been a cluster of bullish signals from the AD line in the last few weeks. This also overall offers good support to the main Elliott wave count.
Both price and the AD line moved lower today. Neither have made a new low below yesterday. There is no divergence.
DOW THEORY
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: 23,360.29.
DJT: 9,806.79.
S&P500: 2,532.69.
Nasdaq: 6,630.67.
At this stage, only DJIA has made a new major swing low. DJT also needs to make a new major swing low for Dow Theory to indicate a switch from a bull market to a bear market. For an extended Dow Theory, which includes the S&P500 and Nasdaq, these two markets also need to make new major swing lows.
Charts showing each prior major swing low used for Dow Theory may be seen at the end of this analysis here.
Published @ 10:37 p.m. EST.
I got filled on my VIX 18 strike puts for a buck apiece but they are really playing games with the spread! They have a ludicrous bid/ask of 0.70/ 3.20. Can you imagine?!
No worries if you are holding puts…they will bite for a bit over intrinsic value, which should expand to at least 3.00 pesos by next Wednesday…. 🙂
Why is this not a textbook contracting bull triangle ? Am I missing something ?
It could be. The uncertainty lies in the fact that other indices are displaying more bearish patterns, and some long term trend-lines have been decisively busted.
Until the pattern completes, downside risk remains considerable…!
Another caveat, imho, is the failure of price to penetrate, AND preferably successfully back test the triangle’s top boundary which should have ocuurred today had the pattern completed per your chart….very important…futures not confirming so far…
Thank you sir ! I have also seen false break outs , then quick reversals and failure s . IMO every technical person in the world see s this pattern , and thinks there has to be a catch , or it’s too easy . We shall see . Thank you for you contribution s Vern .
Although SPX closed down from yesterday, today’s candlestick closed green!
Closed higher than it opened… and that folks looked very out of reach at 11am today!
🙂
Thanks for everyone’s input on another crazy day in the market… make sure you tune in tomorrow for another crazy day in the market!
Well, things looking a bit bearish from where I sit. This is simply not the way triangles conclude folk, and my problem is that I have no idea what else could be going on. We are tapping hard on the 200 day SMA in a few indices and we have absolutely no room for error. I have a feeling we are going to see a big move but I am now not at all convinced it is going to to be upwards. Time for caution. There will be plenty of time to join the trend once the break occurs.
Agreed Verne. Now is not quite time to make investment level bets, IMO.
If it’s down, we’ll get wonderful incremental triggers. Starting of course with a bust of today’s low. But as I just said elsewhere, this down movement starting April 19 looks complete now, with the good relationship between legs. So I’m short term bullish, actually. Ah, everything is back to it’s natural order, thank goodness!!! Cheers my man and nice work today.
🙂
A glance at the weekly (in progress…). Note the half squeeze on the bottom side; right at the 55 ema too, very strong support, along with the lowest support trend line. The new aggressive “end of triangle” line on the lower side has an angle that is much more symmetric to the upper line, and hence more believable. Now does the up channel drawn in lead price gently, gently upward and out? Or…does this market really need to do the old “three hits” thing before being done? Obviously, today’s low is critical. If I had to bet my farm on long or short out of this structure…I’d bet long every time. It’s the “normal” thing here, given the backdrop of both the market and the economy and the economic cycles. And I give significant weight to the stochasticRSI that have triggered to the long side. The weekly momentum is now UP. As it should be in an impending triangle breakout situation after a visibly completed ABCD and E. Cheers!!!
well that didn’t go according to plan at all did it! so frustrating!
which is why I left the invalidation point on the daily chart at minor C.
minor E has moved lower, and price remains contained within the triangle trend lines, there hasn’t been a breakout yet.
now for the structure of minor E… I know this doesn’t look good because within minute c there is disproportion between minuette (ii) and (iv), but the S&P just does not always have good proportions and nice looking waves.
minor C looks so much like a double zigzag, and to see it as a single involves a truncation
only one triangle sub-wave may be a more complicated multiple, and with minor C fitting so well as a multiple and being the most common wave to do so, that’s how I want to label it
which means minor E may only be a single zigzag (or flat, it could be a flat but doesn’t meet the rules for that)
if this triangle proves to be correct with a new ATH and support from volume (invalidating the other two EW counts of combination and flat) then I think I may revisit the idea of only one triangle sub-wave being a multiple
because minor E really does look very much like a double zigzag
I have begun to do some research on a few markets, preparing a detailed EW count for the last 20-30 years, to go over all corrections which can be seen down to daily chart level. Particularly focussed on triangles. I have some questions… and I want answers!
I certainly don’t know what the larger structure is or have answers to those questions. What I do see short term is the April 19-today low showing a very well formed correction (ABC or WXY) with proper fractal relationships (the C extending to 1.27% of A). Then a thrusting move up. Strongly indicating this correction, whatever the larger structure is, is complete. Which is turn gives me my initial bias tomorrow, and if and as the market comfirms it, should give me the postive EV on my bets that I need! To put it simply: I think the short term should be up from here. And it just MIGHT be a very big upward Friday. There is room to rumble on the hourly chart, for sure.
So what do we have now? Maybe 5-up, with an extended third wave?
i hope so …
5 minute on left, hourly on right. The hourly looks ready to turn back down to me, it’s trend is still down (red bars, ignore the purple, thats in indicator of a strong pop off the lower purple range marker). Price pushing those decending EMA’s. Long tails last 2 bars, slowing momentum. ON the 5 min I’m watching for the darvas box break, and a trend coloring change to red. That’s short time………….lots of room (again) to fall on the hourly, the band (purple, avg of bb’s and keltners) is way down there. Or maybe the darvas box holds here and the breakout is upward. But i’m ready with my triggers for another sell off if it develops.
note how the last darvas box on the 5 minute is red, due to a lower low of the box vs. the previous box…another momentum shifting to “down” indicator.
“hoooolding in the box….it’s hoooolding in the box!!” The 5 minute bars have gone to gray (neutral trend)….
give me green!
Dude, BUY BUY BUY and you’ll generate green!!! Or…call your friends at the Goldman trading desks and give ’em the order!
That singing in the rain song was very long, wasn’t it? Lol!! It’s a pretty wide box…3 tests on the bottom have held. Looks like the day MAY end strong. But a sell off could descend like a turd from an overhead seagull at any time (I was just at a Giants game, yea, a flock few over, it was BAD and hilarious only because they weren’t over us!).
If this day ends up green…it’s the mother of all “oops” days!!! A reject as expected on the first try at the gap.
Gap filled! What a day… Seems like its going to correct now after the fill…
Stay long and nimble, haha…
I did generally stay long (hold my longs). But first thing I did on open was short to generate some cash on what was a virtually certain drop (that 5 wave down was NOT DONE!). Next issue is targeting: where’s it have high potential of a turn? Nailed that one. I exited my short a little early: I always struggle a bit with trusting myself when I’m holding profits. Then I managed to NAIL the turn on the 127%, got in the moment it indicated it might hold on the 1 minute chart. And I’ve been dining nicely on the long side via upro since, making for a nicely profitable day. But the best thing? I just found out it’s THURSDAY (I thought it was Friday!), so yes, another day to trade before the weekend!! (I’m a sick puppy, huh? lol!!!!!)
Very savvy trading Kevin. I also used your target and added to my longs via SPY around 2600… I hope that piercing of the 200 day SMA is the last time we see it for a while. What a gift that was…
And as always thanks again for your input on this forum…
Lets see what happens here 🙂
Just sharing as I go Ari, thank you. Got a little lucky today, with the help of a bunch of mumbo-jumbo (as a trading buddy of mind calls EW, lol!!!). I’ll give everyone a thought to consider: in my experience and opinion, predictability of the market using fractal tool analysis (EW / fibo’s) increases by an order of magnitude at each successively lower timeframe. Please read that again. It’s important. It’s what drives me to low timeframes. That and risk reduction; the less time you are in the market, the less risk you have, other factors being equal. Okay maybe an order of magnitude is too much, a bit hyperbolic. Maybe…3-5x more predictable? Counting waves at the 5min to 1 hr timeframe and using predictable fractal turns points in combination with the waves counts is far more predictable than the weekly/daily work Lara does for us (which is one of many reasons we employ her for the job!). For me, the higher tf material is critical for longer term plays where high precision is not required, on general “structure” and ranges. Ten my daily “make a buck” is at the more “well behaved” and predictable 5-60. This stuff works.
Great job guys! I love watching real traders at work!! 🙂
Great trades today! Boo-Yah!
Massive return on long puts from spread by widening spread.
Spreads are the gift that keep on giving!
Well, I’m done for the day. Bye!
One quick thing…look for an upside gap to confirm we’re done….
That’s what I was looking for yesterday after Monday’s big rally off the low. Today is setting up the same scenario. But we still have not printed green on SPX.
gapped!!!
Keep an eye on ES. We will likely get our initial green print there….
That’s the way, Uh Huh, Uh Huh, I like it….! 🙂
Look alive people!
CAPITULATION!
Ugh, I was a victim of whipsaw today I have to admit.
I think I’m moving to trading strictly straddles, Verne, you seem to have more success with that structure. At least straddles lock you into a gtee risk (credit or debit) and remove directional bias. Then you can use the wave counts and directional views to leg out of the spread or remove one leg once there is a degree of confirmation.
Any books you recommend that are specific to Straddle trading?
Ultimately, the key is in choosing the right strikes and spreads to start.
Sounds easy enough…
To be honest Jonathan, I have not found a single author who has been willing to write about the way I trade spreads. It is a well-kept industry secret. It is a technique I developed pretty much by trial and error. The best author on trading simple spreads is Ken Trester.
My idea of closing/ cashing in on the profitable leg of a spread and widening it to take advantage of counter trend whipsaws I have never seen described in any book or course. I think I came upon that approach when I realized that brokers and market makers have a habit of ambushing traders and will try to shake them out of trades with whipsaw moves. The key thing about this kind of attack is they often have to use leverage or commit a large amount of capital to move price enough to trigger stops and they cannot maintain that if you dig in.
Another critical technique when price unexpectedly moves against you is to roll the spread out instead of taking an artificially imposed loss.
So many traders puzzle over how they get stopped out of trades precisely at their stops placed in the market, only to see price magically reverse, and never figure out how they have been royally played. Spreads really level the playing field!
Maybe you should write a book Verne, like Lara. I’ll definitely be a customer 🙂
Nice pop on VIX puts….always sign of a timely execution… 🙂
Another nice shadow developing on today’s candle.
I however, MUST insist on some green before I am fully convinced. Mr. Market has been quite wily of late…! 🙂
Buying a boatload of VIX 18 strike puts expiring next Wednesday with a stop just above last gap at 18.25. I should know If I am wrong by the close. Hedging with 13/15 bull put spreads.
It’s possible we’ve seen a 5 down, a 3 up…and now it’s time for the next 5 down….
Yep. ES showing 3 up so far…a new low ahead likely….hopefull VIX divergence holds…
muuuuuch betttah now!!!! I even managed to play the little pullback profitably…nimbleness today is my friend!
how does the squeeze chart look?
Daily squeeze, tap complete. Turn…close to complete! Hammer bar still red but look quite bullish there. An awesome setup, really, if you like to range trade at this timeframe!! Or if you are overall bullish, I’d say this is a pretty decent time to get long.
We can expect this daily squeeze (bb’s are orange, and now inside the blue keltners, all at 21 period) to continue for many more daily bars, unless something “unusual” happens. Supporting my “more churn” thesis. Eventually it’s going to blow…
You don’t say…!!! 😉
c vs iii
in time we shall see
capitulate VIX!
i say unto thee
haha!
he’s a poet
but he doesn’t know it
though his big toe shows it…
he’s a Longfellow!!
Movement out of triangle E waves are sneaky beyond imagining. Blink, and they WILL leave you in the dust…believe me! 🙂
That’s all folks! VIX divergence on new low….
English please….
Index…printed…lower…low…VIX…printed…lower…high….
Capisce??! 🙂
Verne, Kevin…in terms of Lara count,
we likely just finishing E of the triangle?
Could be end of E, could be sub wave b of D with E yet to come. If we do not print green today an take out the top boundary the completion of E would in my opinion be very much in doubt.
price has certainly extended the E. As for whether it’s finished here or not…wouldn’t we all like to know for sure!! “I dunno…” See my note above about the possibility this is a big ABC down, and only A and B are complete now. In defense thereof, I took my (underwater still but much healthier after I tripled down at the low today) long position off the table. I’ll rebuy even larger if/when price starts accelerating back up. Gotta be defensive here first and foremost, I do.
Thx guys!
Keep a sharp eye the possible exhaustion gap in VIX….
Spreads looking good, scaling into more long calls. Calls currently under water but have zero cost basis as held after bear call spreads.
Are we having fun yet? 🙂
I think Kevin is right about a fourth wave…one more low to come….
If we go green in the indices today, sell the house, sell the car, sell the dog, sell the kids….well, maybe not the kids….but get long and strong on the rocket ship.
Coming from an inveterate bear like me, that’s saying somethin’!! 🙂
I’ll politely disagree with that one. There’s more churn ahead as I see it, before this intermediate 4 finally gives way to a new motive wave up. That said, yes, such would indicate that the current “churn direction” is back up. But I expect the recent past to continue, until it doesn’t: UP then DOWN then UP then DOWN then…….. though the part of me that I allow to engage in “hope” hopes you are right! I’ve got some longs that are a bit bloody (but inside my risk tolerances and plan). Love to see them all go green sooner!!
🙂 🙂 🙂 hehe!
A gentleman and a scholar! Who woulda thunk it….you bearish, me bullsh…HyukHyuk! 🙂
yea, kind of funny. I won’t say I’m per se bearish here, just not bullish in any big way. It’s a trader’s market, not an investor’s market yet, as I see it.
Looks like a shooting star in the making for VIX. An early signal?
A green print today in the indices would be a MOABS!!! 🙂
I am not sure if a VIX analogue for an impulse obtains for completion of a triangle. If it does, we should see a slightly lower VIX high than we saw for the A wave down. Ideally this would be accompanied by a long wick. These wicks and tails STILL need to be confirmed by a follow-up candle though, as we saw from Tuesday’s false signal.
There is a monumental amount of fraud going on with volatility instruments. What we are seeing makes no sense whatsoever and it is really starting to bother me big time. Somebody seems to think traders are REALLY stupid!
Then again…!!!
I’m not seeing it. I trade uvxy and svxy etf and options all day. Keep in mind uvxy tracks VXX not vix. Uvxy and VXX are effectively same product with different leverage. Aside from the fact that they are inherently crappy products…why do we torture ourselves…they seem to be trading accordingly post the short vol failure. You can argue that VXX should be up more but it is really difficult to capture pure vix moves in an etf. You have exposure across strikes and term structures.
You could be correct. I used to always compare the movement of UVXY with VIX and I traded it for years. The relationship has changed…dramatically. I used to be able to execute perfect exits from UVXY as it always lagged VIX by a few hours….no more.
Taking profits on FB bear call spread. Rolling spread out two weeks, same strikes.
Easy Peasy! 🙂
Trying to get the zen of what is obviously an impulse down starting midday yesterday. It looks to me like we need one more “4”, and a final “5” push down to complete it. The “4” might test the 100% retracement around 2612 from underneath…but I could absolutely be off there, counting at the 5 minute level is challenging. Such would set up a turn around that 127% extension most likely, so I see this count as “supportive” of the likely fractal structure being created. If someone else counts this differently, please share.
The 78% retrace of the big April upmove is 2588, and is another area of possible turn if the 127% at 2593 falls. If that 78% falls, goodnight Irene, I’d guess it’s headed to 2553 to test that Apr 2 low. But I think we get a turn at one of these two fibo’s. As I suggested several days ago, “I expect more backing and filling” and that’s exactly what the market is doing (unless it plummets below the lower triangle line of course). I should have believed myself a little more!! Trade and learn…
So far…the 127% is holding! We’ll see….
Bullish symmetry of the downmove is busted after a near touch on the 127% indicating that is going to be it for today’s selloff (but no guarantees!)…I took my short profits and tripled down on my ugly small upro position right as it started to turn, nice….well, nice, IF IT HOLDS!!!
Ari I just noticed your question from the last thread about UVXY.
Something very strange is going on with that ETF and I don’t understand why the SEC has not busted Proshares for securities fraud. They claimed they reduced leverage from 2X VIX to 1.5 and that is plainly a complete fabrication as it now consistently fails to even match the performance of VIX. I no longer trade it and use VXX instead.
Thanks Verne. I figured it’s either an implication or just hocus pocus. Lol
UVXY is 1.5 times leverage of VXX.
It seems to be tracking correctly today.
Sometimes it does, most times not. I keep complaining to SEC about what they are doing but it remains unpredictable….Argggh!! 🙂
2593 or thereabouts is the 127% extension of the April 25-30 upmove. A likely area for a possible turn…
Finding some support here for now
Bummer!
Remember the warning from Lara written in her analysis every day over the last couple of months:
“I have charted a triangle a great many times over the years, sometimes even to completion, only to see the structure subsequently invalidated by price. When that has happened, the correction has turned out to be something else, usually a combination. Therefore, it is important to always consider an alternate when a triangle may be unfolding or complete.”
No Rodney…opportunity!!! For every possible market action, there has to be a PLAN to CAPITALIZE (which includes the plan to bail or otherwise take action on growing losers). That’s my thinking anyway. I grabbed short term short the moment the market opened and have taken it for a very small profit…but will be back in if and as needed. Does this 100% retrace at 2612 hold? (We often forget, but 100% is “basic support” and a very powerful fibo level). So far so good. I again note the daily bar has come down quite close to the lower BB, which is in a squeeze. That all said, ANYTHING CAN HAPPEN FROM HERE. Be ready. As for what I think is going to happen…I think this market is generally going to continue to consolidate and bounce around in this giant triangle. Lara’s TA suggest as much as what, 13 more days worth? But a sharp break down is very possible. At this point, a sharp break up in the short term seems very unlikely.
Thanks Kevin for generally being optimistic and opportunistic. It is encouraging. That being said, I am just pointing out and reminding the many new subscribers Lara’s admonition regarding triangles. I have been stopped out of my leveraged positions at a small profit. But my non-leveraged are still open. I will see how price progresses today. If we do not have a strong rally to end the day, I will most likely close those long positions as well. My guess is we are headed toward the 200 day ma around 2570. If that does not hold, 2450 may be in the cards. Have a great day.
my hourly stochasticRSI has triggered short. So I’ve shorted at the hourly timeframe. Come heck or high water, my intention is to NOT exit this short until that hourly triggers back long…or the market breaks through the morning gap (and early jump on the hourly going back long). The signal has just been too darn good for the last few months not to.
2625 broken. Where from here?
If the cash session invalidates Lara’s main wave count, then I’ll be thinking along with Verne that E is not yet complete.
ES has already invalidated an impulse up by taking out 2623.35.
The long shadow on Tuesday was a rare reversal failure but failure it was with no confirming follow up candle.
I did have a bit of concern about the lack of upward momentum out of the presumed E wave of the triangle.
Reversals typically blast through the top of the boundary the same or next session so the tepid price action yesterday was a red flag. That’s what one gets for rooting for the bankstets!
DJI 24K u falling is worrisome. A break of and close below its 200 day iwould be even more so for the bulls. I am holding onto calls., and wideming my bull put spreads to take advantage of this move down. It sounds like some of you did not have stops in place and as big a move down yesterday should have triggered, even without a wave 2 invalidation. Unless you are fully hedged, USE STOPS!!!
Have a great trading day every one!
Looks like minute ii is continuing lower and needs to be relabeled. In order for E to be invalidated, SPX needs to break 2613.11…
200 day SMA at 2614 btw 🙂
I believe that only “this” model of an EW triangle gets invalidation. On Lara’s chart she shows the “global” triangle invalidation point as 2553.80. There’s plenty of room for the E wave to extend still.
Verne, in your last response you still did not elaborate on what you think is going to happen when the coil completes. Will the movement be up or down? And what day do you expect it to complete? What sort of spreads are you trading to take advantage of this supposedly predictable price action? Can you provide a tangible example of what you are talking about?
You said previously that the price action over the last several weeks shows price hitting the 50dma and then moving to the lower Bollinger band. Only since April 23rd has the 50dma been a reliable source of resistance. Nor has the lower BB been a reliable place to make swing long trades. The break of the lower BB on 3/22 heralded whipsawing that just saw the market move further downward along the BB.
Well Bo, you clearly have not been spending much time reading the forum posts…. 🙂