E-wave

In the last Elliott wave update from 5/17, I thought we had seen the end of a weekly wave. but this turned out premature.

But the larger point remains - if this idea of structure is right, then upside is limited because following completion of weekly wave 3 is wave 4 pullback, then wave 5 to end the move from the 2016 low. If I am right about the monthly structure, the end of this weekly series will also be the end of the 2009 move. I know, bearish. 

I can also acknowledge that 2013 was a huge breakout of multi year/decade range for SPX, and NDX followed in 2017. These moves might be stronger than E-wave idea that finishes in 2017-18. But this far my E-wave projections have mostly turned out pretty well. 

March 2016 projected 2250-2500 SPX top 2017 Q2 to 2018 Q2, when SPX was at 2050 - ding!
Late June 2016 said "If all this is correct then we are about to get the last best move of the bull market over the next year or two" - ding!
January 2017 said: "According to this view, top callers are pre-mature here. Strength begets strength as Wall Street drools over tax cuts, stimulus, and money coming out of bonds. This is what euphoria looks like." - ding!
Early 2017 March said: "So, the issue here is even if we just saw a decent trading top, what is next is a wave 4 and this is more likely to be sideways and drawn out in time." - ding! SPX sideways without much damage for nearly 3 months as next move.
Mid March said: "Take note: if model is correct, the remaining up portions of this bull market are limited to: w5/W3 on weekly SPX chart; W5 on weekly SPX chart; Finito."

So here is the weekly structure with up portions in green. Not shown are W4 and W5 to complete. 

Look at this, within the larger Wave 3, w5 subdivision = 61% of w1 nearly exact. These things happen!

If this idea is right, then the next moves are more like this:

Wave 4 would approximately match damage of W2 which at current highs projects to 2317, or about a -5% drop. 

E-wave

Continuing a series. 

While not qualitative enough for today's environment, my rough take on this model has generated very good results.

March 2016 projected 2250-2500 SPX top 2017 Q2 to 2018 Q2, when SPX was at 2050 - ding!
Late June 2016 said ""If all this is correct then we are about to get the last best move of the bull market over the next year or two" - ding!
January 2017 said: "According to this view, top callers are pre-mature here. Strength begets strength as Wall Street drools over tax cuts, stimulus, and money coming out of bonds. This is what euphoria looks like." - ding!
Early March said: "So, the issue here is even if we just saw a decent trading top, what is next is a wave 4 and this is more likely to be sideways and drawn out in time." So far correct on all USA main indexes excepting QQQ - sideways and drawn out in time correction.
Mid March said: "Take note: if model is correct, the remaining up portions of this bull market are limited to: w5/W3 on weekly SPX chart; W5 on weekly SPX chart; Finito."

Click on tag if you don't know the lingo.

Currently W5 on monthly (W5 began from 2/2016 lows, W1 from 2009 lows).

On a weekly chart, this W5 is ideally subdividing into 5. It goes like this:

W1 up
W2 down
W3 that subdivides
w1 / W3 (wave 1 subdivision of larger wave 3)
w2 / W3 pullback
w3 / W3 longest and strongest
w4 / W3 correction
w5 / W3 final fling of the strong W3
W4 down that matches W2 in some way, but can be more drawn out in time
W5 that final push up that ends the party!

Check this against the chart.

I think we just saw w5 / W3 and now we are in W4. If W4 matches W2 in points then target is 2275. As it turns out this is near Q2S1. That would be a nice buy if SPX set Q2P breaks. 

E-wave

As I have said many times, I dabble in Elliot wave. There are several drawbacks to this model:

1. Not qualitative enough for today's environment
2. Always an alternative count
3. Lack of clear entry, trade management and exit signals
4. Less emphasis on market leaders - which is where you make the real $

All that said, this model recognized the bullish potential of the lows reached in Q1 2016, and pointed to much higher highs for a final bull market high. On 3/19/2016 with SPX at 2050, I was projecting SPX 2250-2500 to land in 2017Q2 to 2018Q2 - not bad!

From another post on 6/30/2016: "If all this is correct then we are about to get the last best move of the bull market over the next year or two." Nailed it!

Now what? If the concept is unfamiliar to you, please click the tag and check out prior versions. The last update from 3/5 spells out where we are in the model. 

Market is currently in:
W5 of monthly
W3 of weekly, with wave 3 subdivision of larger wave 3 (w3/W3) top on 3/1

w4/W3 is now playing out.

If w4/W3 matches W2, then we will see 2270 area. If w4/W3 matches w2/W3, then it will be 2290. Though I am optimistic for a bounce here, let's say 2270-90 would be a better and more rewarding technical buy. 

16 1 SPX W.png

Take note: if model is correct, the remaining up portions of this bull market are limited to:

w5/W3 on weekly SPX chart
W5 on weekly SPX chart
Finito

Or translation, wherever low forms, up, bigger down, bigger up - then that's it! 

 

 

 

E-wave update

I post on this sporadically. It may not be qualitative enough for today's environment but the overall map I have been posting for about a year has done quite well.

Check out the original monthly map here from March 2016 calling for SPX 2250-2500 2017 Q2 to 2018 Q2. That was written with SPX about 2050. Compare the original projection to where we are today. 

More recently I updated the map in January 2017 here. I would say things are nicely on track.

Per 1/8: "Wave 3 subdivision of larger wave 3 'should be' the longest and strongest wave. According to this view, top callers are pre-mature here. Strength begets strength as Wall Street drools over tax cuts, stimulus, and money coming out of bonds. This is what euphoria looks like."

If you don't understand the jargon please review the two linked posts.

Basically, monthly wave in process and that ideally plays out on a 5 wave pattern visible on the weekly chart. Weekly chart is in wave 3 subdivision of larger wave 3; the longest and strongest. 

W1 = 2/2/16 bar low to 4/18 bar high
W2 = 4/18 bar high to 6/27 bar low
W3 = in process from 6/27 low, subdividing
w1/W3 = 6/27 low to 8/15 high
w2/W3 = 8/15 high to 11/7 low
w3/W3 = 11/7 low to ? ? ? - could be in or nearby

When w3/W3 (wave 3 subdivision of larger wave 3) completes, this is what remains:

w4/W3 pullback, consolidation, sideways
w5/W3 up
W4 down, that ideally has some symmetry with W2  (more on that in a future post)
W5 up = END

Let's update the charts. I continue to stress the liens indicate the pattern I am watching (loosely), not a specific time price projection. 

So, the issue here is even if we just saw a decent trading top, what is next is a wave 4 and this is more likely to be sideways and drawn out in time. The better speculative short and major long exits will be at the completion of Wave 3 and then especially Wave 5 which, according to this view of things, will end the bull market. 

I am less clear on the daily view so rather than post a few counts will just end the post here. 

 

 

E-wave update

I dabble in Elliott wave. The reasons: I like the basic framework of the way markets move: initial thrust, reaction, acceptance, doubt, euphoria. The reason I don't make it my specialty is that there is always an alternative count and when the pressure is on with money on the line I want something simple. But compare what I have drawn out very roughly months ahead to how things have unfolded and you will see it has worked out pretty well. 

Here is an E-wave post from about a month ago so I don't have to repeat things too much.

SPX Monthly view - W5 in process from 2/2015 lows. In the chart below, up portions in green and down portions in red. 

SPX Weekly view - what W5 will appear as 5 waves up, ideally speaking.

W1 = 2/2/16 bar low to 4/18 bar high
W2 = 4/18 bar high to 6/27 bar low
W3 = in process from 6/27 low, subdividing
w1/W3 = 6/27 low to 8/15 high
w2/W3 = 8/15 high to 11/7 low
w3/W3 = 11/7 low to in process

Wave 3 subdivision of larger wave 3 'should be' the longest and strongest wave. According to this view, top callers are pre-mature here. Strength begets strength as Wall Street drools over tax cuts, stimulus, and money coming out of bonds. This is what euphoria looks like.

But W5 on the monthly could peter out in an ending diagonal, something like this. 

Regardless of which version plays out, the daily view looks to be in wave 5 with a classic W4 pullback in a zig-zag. (This was the same exact pattern that played out on the monthly chart at the 2015 highs to 2/2016 lows!)

E-wave

From my first Elliott wave post in March 2016, I have been pointing to ideal SPX top 2250-2500 Q2 2017 to Q2 2018. 

I recently expanded the idea to list price and time targets across USA main indexes in a Larger View post here. 

Amazingly all 61% price targets have been met so my conclusion is - higher! 

I first posted a weekly chart dividing into a similar 5 wave pattern back in June:

And refined recently as this (as a stronger way this could play out).

Updated chart here. Lines are very approximate. It is the overall pattern that interests me. 

Anyway, current E-wave status is:

Monthly chart W5

Weekly chart w3 subdivision of W3, meaning this is the best portion of the move because this can run a while; then we see w3 end, w4, w5 all to complete W3; a larger weekly W4 that matches W2 drop, then a final W5 that will complete the monthly pattern.

Daily chart made a complete W5 up and very time extended ABC down into 11/4 low, not is in process of another 5 wave up pattern. One can debate daily chart count (there are always other counts, which is why I don't do Ewave too much) but I don't think we have see a real 4 yet. 
 

E-wave

Check the tag for prior versions. We can still debate whether the market will make ultimately more bullish or bearish long term versions. The point here is that it looks like we just had a failed 5th - meaning 5th wave didn't even make 38% of W1 let alone typical target of 61-100% - and now we 'should see' an ABC down pattern. This means the drop won't be done in one go. Down, bounce, down again for the low. Something like this, roughly speaking. 

E-wave bearish version

See previous post for preferred view. But let's consider the alternative. To keep things simple I will use SPX for bullish and INDU (DOWI) for bearish. W5 up idea is the same like this:

Although where we label the end of W4 drop makes a big difference, especially in the time target. Was it 8/2015 or 1-2/2016? The majority of USA indexes (SPX, MID, COMPQ, COMP, RUT, NYA, VTI) basically everything except INDU / DOWI and NDX, and NDX was partially pricing discrepancies on 8/24, made lower lows in 2016. But for this index we are considering the bearish count, so I'm using the lower price low in 8/2015. Projecting W1 from W5, INDU has already done 50%. This leaves the typical bullish version targets 61-100% of W1 19350-21800 above.

If we add a time projection we are past 38% of W1 and 1 bar from 50%. In fact, 50% in price and time line up at 18590 (let's say 18600) and 9/2016!

Even if higher, we could reach 61% in price and time 19350 12/2016 which is sooner than the SPX version pointing to 2017 Q2 as more bullish high. 

If we were to see a failure, we would more likely see some topping pattern; instead of powerful 5 waves up, could be some ending diagonal. The weekly chart would look more like this. 

Note W3 is dividing into 5, and we could already be in w5 of larger 3. This would mean important top soon (ideally from YR1, hey!) and decent pullback from there. After that pullback we would still have another rally to higher highs, though this would be a crucial high for the bull market - end of W5 monthly and W5 weekly.

E-wave bullish version

No change to what I've been saying the last several months: SPX 2250-2500 2017 Q2 to 2018 Q2. Check tag for prior versions and details. Here is the basic idea.

So monthly SPX W5 at which point we will see ABC down ie bear market. W5 could / should have a ways to go yet, according to the bullish version. Now going to the weekly chart, we are in a W3 like this. If bullish version playing out, then W3 should be longest and strongest wave. Something like this.

According to this version, we won't see much of a pullback and markets will continue to surprise to upside. In fact, the move up from 6/27 low could even be considered a w1 subdivision of W3, with much more to go. This conflicts somewhat with my pivot view - upside limited at key target levels - but let's see what happens at these levels. Now within the weekly moves, daily chart patterns will also appear. I think this is the best fit, ie, W4 done on 8/26 low and W5 in process. Like this, with W1, W3 and W5 up portions in green and W2 & W4 down portions in red. 

What do you know, W2 drop matched W4 drop almost exactly!

The classic target zone for W5 is 61-100% of W1, which is 2230-2275. This is admittedly much higher than I've been expecting, although the 38% failure level at 2205 is right in my target area of Q3R2 & 2HR1 2199-2209 respectively.

E-wave

Monthly SPX chart in euphoria wave 5 from 2009 lows. See tag for more detail. Back in March I used this idea to create ideal high 2250-2500 from June 2017 to April 2018. For simplicity's sake just drawing green up portions ie W1, W3 and W5. 

Within that monthly W5, we should see weekly chart unfold in 5 waves with some topping pattern at the end. Roughly, something like this. Again, I am not drawing the down W2 or W4 portions.

I used this technique to write: "If all this is correct then we are about to get the last best move of the bull market over the next year or two" on 6/30. So far it seems to be playing out. Check the tag for the post. 

Considering this is W3 on a weekly, it should sub-divide and those subdivisions will show on the daily. For the most part, we should err on letting longs run. A total complete ideal pattern played out from the 2/11 low to 6/8 high, then to 6/27 low. Then a new pattern began. Again, see prior posts for details. All this is an intro to what we should see next. 

The more bearish view is that we have already seen W1 and W3, then a sideways W4, W5 is next to complete. Then we would see ABC down for the first real pullback since the 6/27 low, which would be the next best buying chance since then. 

Or, a perma-bull might think we are just in a sub-division of a W3, and that could be just half-way through. Perhaps. If safe havens continue strong I might think the former. 

E-wave update

See the tag for the series. 

Monthly chart in W5, the last wave up of the bull market that began at the 2009 lows. 

W1 up
W2 down
W3 up that subdivided
W4 down in a zig-zag
W5 up in process

After this is over, we should a monthly chart ABC correction, ie bear market. 

If W5 = 61-100% of W1 (classic E-wave idea) then we have a price target of about 2250-2500. W5 failure target of 38% has already been exceeded, and we're even above 50% right now. I think a 161% blow-off move to 2940 is extremely unlikely.

If W5 = 61-100% of W1 *in time* then we arrive at 6/2017-4/2018 for the big top. 

So the ideal is 2250-2500 from 6/2016 to 4/2018. This may or may not happen, but would be nice if it did.

Weekly chart commencing W3, the best, most steady up move. This 'should' have more to go as W3s usually exceed W1s in both price and time. If labeling correct, W3 just shy of 61% in price and not even 38% of W1 in time. Of course, with monthly chart in W5, then any other common chart topping pattern like head and shoulders, double top, etc, could be quite important. That hasn't happened at all yet though. 

Daily chart has just started a new wave pattern after completing an ideal up pattern from the February low to the June high, then an ideal down pattern into the 6/27 low. 

"Ideal" up means we see W1 up, W2 down, W3 that sub-divides, W4 down, W5 up. There are price relationships between W2 and W4, and near enough on W1 and W5. Then an ideal ABC down pattern has price relations with A, B, and C, with the perfect being B = 61% of A and C = 161% of A. This one was pretty close to that. Once an ideal up and ideal down pattern both complete, then a new pattern begins. 

So that means the first thrust of 6/27 to 7/1 is W1, and now we are in W3. We are already at 161% in time but still shy of 100% in price. 

Bottom line I want to be bullish here as I think W3 on daily should go higher, and W3 on the weekly also "should" have much more to run. That said, we are at YR1s SPX and INDU with sentiment extremes so have to consider the possibility of at least a trading high if not major high. 

E-wave

I am not really an E-wave person compared to the many other dedicated folks out there. And I find pivots far superior tool. That said, I like to dabble from time to time.

It strikes me that we have just recently completed and ideal E-wave up pattern from the 2/11/2016 low to the 6/8/2016 high, and then an ideal down pattern to the 6/27 low, making a complete ideal pattern. The upshot is that we could be in early stages of a completely new move.

First I will outline what I mean by "ideal pattern." Then we'll go back to the larger view for context.

This is just for fun, because the problem with E-wave is that there is always an alternative count. Whereas pivots caught the turn on 2/11, shifted back more long term bullish on stocks near 3/11+, caught the top on 6/9, and recently gave a near perfect turn most especially on INDU and VIX on the 6/27 low. I could go on and on. 

First the labeling of the up portion.

W1 up
W2 down
W3 up that sub-divides; showing up portions, w1, w3, w5
W4 down
W5 up

Now in an ideal move, there will be certain percentage relationships in price and time on the various components. Often W5 will be 61% or 100% of W1. There it was an overshoot of 61% by a little bit for 3 days.

To be clear, this chart measures the move of W1 from the 2/11 low to 2/22 high then projects that move from the W4 low. 61% of that near exact was 211.35. 100% would have been 216.64. 

Timing didn't work so well on this but I'll still show it for the idea. This chart adds the timing of W1 projected from W4 low. W1 was so fast that 61%-100% in time was 6/1-6/3. The top was closer to 200% in time. Of course everything depends on labeling the key low as 2/11 and not 1/20 which would give a arguably valid structure as well. 

At the conclusion of an up portion, the ideal down move is ABC. A is the impulsive move down, B is the corrective move up, C down. C can be 100-161% of A.

A down
B up
C down to finish the entire pattern 

In this case C was just a bit over 161% of A in price. To be clear, this measures the move from the 6/8 high to 6/16 low, and projects it from the 6/23 high. 

Timing is again sloppy due to the speed of the move so I will skip it. Anyway, if this idea is right we are at the start of a new pattern. What might that be? Let's go back to the big picture for context. This idea is outlined in more detail here. 

The larger map perspective (going to SPX cash chart here) is this. 

W1 up
W2 down
W3 up that sub-divides
W4 down
W5 up, now ideally in process from the 2/2016 lows

Using the same price and time 61-100% projections of W1, I have already established an ideal target zone of about 2250-2500 SPX from 2017 Q2 to 2018 Q2 for the final bull market high. 

The problems would happen if we don't get the "ideal" final relationships but a failure or blow-off. If W5 stopped at 38-50% of W1 then we have a failure move of 2080-2165 - already reached! A blow-off would be considerably higher. But rather than be too annoying let's stick with the ideal target zone.

Now I'm going to the weekly chart to show how that W5 on the monthly will play out. Ideally it will itself be a 5 wave pattern. See below!

Probably few are reading at this point but here we have, ideally:

SPX Monthly chart W5 up in process from 2/2016 low, heading to a high of 2250-2500 2017 Q2 to 2018 Q2.
SPX Weekly chart just did W1 and W2 up of that monthly W5; to follow W3.
SPY Daily chart full pattern W1 to W5 up then ABC down constituted W1 and W2 of the weekly; brand new pattern kicking off here.

If all this is correct then we are about to get the last best move of the bull market over the next year or two. This will mean a new 5 wave up pattern on the daily, that will comprise W3 up on the weekly, that is part of W5 on the monthly. Got all that? 

If not keep it simple from my view back in March to stay on the bull side of stocks with INDU above 17048.

E-wave

I am not really an Elliott wave person but have dabbled and if you search the tag there are a couple other posts on this topic. The bigger picture view is here and has not really changed. This view calls for an ideal high 2250-2500 SPX anytime from 2017 Q2 to 2018 Q2 to complete the bull market.

I 'think' the larger monthly W4 pullback is done in classic zig-zag pattern from the 5/2015 high to 2/2016 low; though to be fair, W4 might be continuing and theoretically we could see lower lows than 2/2016 and then proceed to a W5. But if my view is correct, then W5 is already in the process of unfolding.

Already it is not a strong W5 since it hasn't powered up to new highs. But it still could be a respectable move, itself subdividing. Of course the hassle of Elliott wave is the alternative count, which is why I prefer the simplicity of pivots, but the alternative is a very bearish W5 failure at the recent highs and bear market commencing from here. I will shift to this if all five USA main indexes break their YPs, but not before.

Let's say preferred view is correct, that monthly W4 is over on 2/2016 low, and W5 has begun. To clarify the context, this means the move from February 2016 lows to recent highs is itself the first portion of a larger W5 on the monthly chart. 

So now we can proceed to the daily chart view which was recently discussed here. 

E-wave is all a matter of labeling, but rather than get too bogged down in versions of counts I will just post what I think has happened and you are free to agree or disagree. 

The main point here is that on the daily chart view, W5 failed at 38% of W1 which is typical failure level, at the 5/10 high. (Confused? I am talking about the daily chart pattern now, so this is just the first portion ie daily W1 of the monthly W5.) Failed W5s mean a harsher drop to follow. This drop will form some zig zag ABC pattern, and in total make W2 of a larger pattern. 

Anyway, this is what I think is happening. This will imply a break of MayS1s on USA indexes, and probably higher than MayR1s on TLT. In other words, near term bearish though not giving up on bull market just yet. Once this pullback low gets established, we should see a quite decent and steady rally, possible to new highs. In E-wave terms, this rally will be w3 of the monthly W5, but we need w2 of W5 first. If w1 of W5 just completed, it is the w2 drop that we are about to see. 

Elliott wave doodles

I am not really an Elliott wave person but I have dabbled. Pivots are far superior because they are completely objective and simple - either the price is above or below. There are no alternative counts etc. But still like other market tools the Elliott wave can shed light on the phase of the market. 

For example, if the big picture idea in the linked post is correct, then we are entering W5 euphoria phase for the last big up move of the bull market. This means any yearly resistance levels or YP breaks especially in the preferred timing high window 2017-18 would could be significant stock exits.

But this post is about the medium term. It strikes me we are seeing the classic pattern play out from the February low, but in this post I wish to highlight two interpretations and give my reasons for the preferred version. 

A simple W1 up, W2 pullback, W3 up, W4 zigzag and W5 up is below. 

If this is correct we'd expect some price and ideally time relationships between W1 and W5. Starting with price like this, which shows W5 = 61% of W1 at 211.37. This is about where SPX and ES AprR1s are too. 

Then we can add time. Right now current W5 already exceeded 138% of W1 and near 161% which will be 4/21 at 11:30 2 hour bar. You could say ideal E-wave move based on this idea would be a tag of W1 = 61% at 211.37 at 161% in time at 4/21 11:30. 

But after all this I am going to say this is not my preferred count. Here is why. I think probably we are still seeing a sub-divided W3. So instead of looking for the 5 count W1 up, W2 down, W3 up, W4 down, W5 up to complete, followed by ABC down; we really should be trying to spot this:

W1 up impulsive
W2 correction measurable on pivots and or Fib relationships
W3 that subdivides w1 of W3 up, w2 of W3 pullback, w3 of W3 larger steady rally, w4 of W3 pullback, w5 of W3 up
W4 that ideally matches W2 in price, although frequently more drawn out in time
W5 up to complete, with some relationship to W1

If this idea is correct, w5 of W3 will ideally have relationship with w1 of W3, and it so happens we are bang on 100% here at 210.50. SPX AprR1 and ES AprR1 are very close. 

This would imply we are in ending stages of W3 here, followed by a larger drop, and then a W5 move for a more significant top. This would match pivots too - a trading top on the monthly resistance, and after a pullback, a move up to the more important quarterly, half-year and yearly resistance levels. 

Some doodles

Feel free to completely ignore this one. 

I am not an Elliott wave person. But I have dabbled, as there are many sorts of things I have explored over the years. And it strikes me that SPX is playing out the archetypal pattern - quite well in fact!

W1 up
W2 pullback
W3 up that when strong (it was) sub-divides into 5
W4 down, often more choppy affair & drawn out in time; can replicate W2
W5 up
then major ABC correction follows, ie bear market 

First chart below the green lines are the up waves so W1, W3 and W5. The thinner green lines above W3 and the up portions of sub-divisions of W3. The red lines are the down portions, W2 and W4. 

It is quite interesting to note that W2 down was -296 points and W4 down was -324 points. In other words, W2 = W4 in price points, approximately. And as W4s are supposed to act, frustrating bulls and bears alike, a choppy affair where neither side gains much except for the most nimble players. It is also quite possible that W4 continues to pause and chop. But if this reading is correct, at some point we will see a W5 to significant new  highs. But when that ends, that is it for the 2009 bull market. 

Within W3, w1 and w5 also were quite close in terms of points, totaling 348 (w1) and 313 (w5).

Market structure fans already know that the W3 peak was 161% of the move from 2007H to 2009L - to the point. (Tradingview.com doesn't have a good snap to price so graph shows 2132 although correct number is in fact 2134.) So there is something to these ratios. 

So, stay with me here, we should see some structure relationship between W1 and W5. These can vary from a failed 5 stopping at 38% of W1, to a very exuberant blow-off of 161% of W1, but the most common would be 61% or 100%. 

So if that 1810 holds as the W4 low, then projecting W1 from there, gives is 2241 (let's just say 2250) at 61%, or 2509 (round to 2500) at 100%.

And lastly we add a time component with the same idea - W5 ideally equals 61% or 100% of W1. That takes us to June 2017 or April 2018 respectively.

We could get any combination of the price time targets, meaning it doesn't have to be 61% in price and 61% in time. It could be 100% in price and 61% in time or 61% in price and 100% in time. But basically this gives us an idea, if the classic patterns play out, of 2250-2500 Q2 2017 to Q2 2018 for a major top. 

But remember, if INDU drops back under its YP I scratch the bull alive and kicking idea!