A bit of housekeeping is in order before moving forward with tonight's call.
- In Sunday's edition of Heard on the Street the following charts of the emini S&P where provided and I need to clarify a point. If you look closely at the charts, you'll notice that w.(1) is located a different price locations on the charts. This is not by accident but a failure on my behalf to properly identify that one is an alternate count of which I will address in tonight's call.
- In this chart of the Canadian Dollar, I interpreted the structure as a flat correction, primarily due to the fact that w.B circle has retraced near 90% of w.A circle. However, the structure can't be identified as such as w.A is clearly five waves and therefore the correct identification would be that of a zig-zag. (5-3-5). While the retracement level is not ideal,the pattern is valid since the only requirement for a zig-zag is that the B wave can't go beyond the origin of the A wave.
At the daily chart level, impulsive behavior to the downside confirms the count and another round of selling is required to complete w.(1). A print above .998 before making a new low would bring into question that another pattern is developing.
S&P
There are multiple ways to count the advance from 1068 in the ES_F or 1074.77 in the CASH. In the absence of any sizable retracement to hang my hat the daily chart level offers the clearest count.
Here I'm working a five wave advance and looking for a small retracement tomorrow or in the ON session followed by another rally to complete the advance. Notice structural resistance comes into play just above the market.
Yet another possible count is where w.(2) unfolds as a simple zig-zag. I have placed three expansion levels on the chart for your review. Notice how price disrespected the first level of resistance... a sign of strength. Price is approaching the second target and I'll be watching how price reacts to 1202.25, where w.c=w.a. Should a decent retracement not occur, odds are the market will push to the upper target, which by the way fits with the 2007-2011 analogy i.e. a retest of the neckline.
Let's see what happens tomorrow.
Best of Trading
Thank you for your hard work, Mike.
ReplyDeleteI have one question for you.
Like some others, you labelled the rise from 1,068.15, October 4th's low to 1,097.15, the same day's midday high (not the day's high) as wave (1), which is an impulse wave count.
It is obvious, however, that we got overlap when looking closely into the sub-divisions within the rise from 1,068.15 to 1,097.15, for example, on a 10-minute or 30-minute timeframe. The same holds true for the S&P 500 cash index and the DJIA cash index.
If this observation is correct, the rise can not be sub-divided into 5-wave structure because it violates the rule under the Elliott Wave Principle that wave 4 should not overlap the territory of wave 1. In other words, the price gains from 1,068.15 to 1,097.15 are corrective in nature, and 1,068.15 may not be the ending point of the proposed blue Wave (1).
Your feedback would be highly appreciated.
Tom - thanks for the question. I applaud you for drilling down to the lower TF as most would ignore the other alternate counts.
ReplyDeleteThe time frames you select always resticts or enhances what you see. Often, higher time frames contain missing waves that show up in lower timeframes.
As I mentioned in the post from last night, there are numerous ways to count this move. I have accounted for the overlap but it's on a higher time frame, noting the a, b interpretation.
Hopeful today's trade will help bring further clarity to the count.
Mike