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Saturday, August 19, 2017

Saturday, 8/19/17 update

If you're a bear (count me in that camp) your resolve was tested this last week with the strong ramp up that started the prior Friday and topped on Wednesday.  But Thursday brought confirmation of that bearish posture and the idea that the 4th wave (Intermediate W4) of a bull sequence that commenced in Feb, 2016 is underway.

Thus far we've had 3 waves since the Aug 8th top through Friday's low - a 5 wave impulse into the low of Aug 11 followed by a 3 wave correction into Wednesday morning's high and thence another 5 wave impulse into Friday's low.  This sequence is either an a-b-c zig-zag with Friday's low either the completion of the "c" leg or the bottom of the 1st wave of the "c" leg OR it's waves 1, 2 & 3 (in progress) of a much larger "a" wave off the Aug 8th top.  It's difficult to say which possibility is unfolding, but there are some considerations which point to the likelihood that there's more bear activity yet to occur.  First consideration is the depth and duration of Inter W2 (which occurred in June of last year) which lasted three weeks and dropped roughly 140 points in the ES.  So far we're less than 2 weeks and roughly 70 points from the Aug 8 top.  Second is the position of some longer term momentum indicators which have not yet reached the "oversold" territory normally seen at IT bottoms.  However, it's important to note that there are enough waves in place for Inter W4 to be complete at Friday's low, so from an EW standpoint it would be acceptable to have that as the termination of Inter W4.  The market was oversold on a short term basis at Friday's low so the resulting bounce was no surprise, and it's likely that the move up from that low has more to go.  If the rally gather's steam and tops the ES 2474 high of Wednesday in an impulsive fashion then the odds that Inter W4 is complete mount quite a bit.

If the sell off resumes there are two areas of potential chart support to watch as potential bottoms for Inter W4: ES 2400 and below that ES 2317-2322.

NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts   

Sunday, August 13, 2017

Sunday, 8/13/17 update

The Intermediate Term top anticipated in last weekend's update materialized on Tuesday with a spike high into ES 2488.50/SPX 2490.87 followed by an immediate and steep 30 point drop.  Current EW count has this high as the top of the 3rd wave (Intermediate W3 to be precise) of a bull impulse that started in Feb, 2016.  Inter W4 is thus underway.  Inter W2 was a simple flat, so by the EW rule of alternation this sell-off should take the form of a zig-zag, triangle or some sort of complex corrective sequence.  Preliminary target for the move is in the area of the prior Minor W4 lows around ES 2317 - 2322.

On the hourly chart of the ES, Elliott Wave purists will object to the labeling of the torturous 8 day sideways grind that ended last Tuesday as a triangle - but the cash market (SPX) shows the same pattern and is more proportionate.  Also, the culmination of the sequence with a short lived spike to new highs followed by an immediate collapse is right out of the Elliott textbook for this type of chart pattern.

So far since Tuesday's top we've had 3 waves down.  That could be it for the correction so far - i.e. the market may have concluded a zig-zag type "A" wave into Friday's low - or those waves are waves 1, 2 & 3 of a downwards impulse with the 4th wave in progress or completed.  If the move so far is an impulse then a possible target for a 5th wave low is at ES 2416.    

NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts

Saturday, August 5, 2017

Saturday, 8/5/17 update

Possible short term EW count for the ES is in the chart below.  We could be quite close to an IT top.

Sunday, July 30, 2017

Sunday, 7/30/17 update

It's the end of July and we find the ES/SPX still grinding it's way upwards - no summer bear this year.  But if the current EW count is correct then we could be witnessing the set up for a classic pattern of an August top followed by a bear swoon into October.  Speculative thought that, but it's definitely possible.

The particulars: On the short term, the ES looks to be closing in on a Micro W3 top, possibly around ES 2484.75 in the coming week.  That will be followed by a drop into a Micro W4 low - the ES 2460 level looks like potential support there - and thence into a Micro W5 rally.

The top of that proposed Micro W5 rally has IT significance as it will also mark the conclusion of Minute W5 of Minor W5 of Intermediate W3.  So Intermediate W4 will ensue when that occurs.  For comparison, Intermediate W2 dropped 136 points.  So we could see a drop of that much or a little more for Inter W4, and the timing is such that Inter W4 could carry into October.

 NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts

Saturday, July 15, 2017

Saturday, 7/15/17 update

5th wave rally in progress, in case you hadn't noticed.  At some point in the coming month we should see a top, but right now the trend is up and signs of that top are yet to appear.

Hourly bars

Daily bars

Weekly bars

 NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts

Sunday, July 9, 2017

Sunday, 7/9/17 update

A couple of things are obvious in the ES/SPX.  The 1st is that the call on this site made on Jun 20 for a top being in place the prior day was correct.  However, although there's been lots of corrective looking activity since then, there's been no really significant damage, at least not as of yet.  The EW count proposed two weeks ago was that the 3rd wave (Intermediate W3) of a bullish impulse that dates back to Feb  2016 had topped and that Inter W4 was in progress.  That should produce a drop a lot deeper than what we've seen so far - for reference Inter W2 dropped about 140 points over 3 weeks.  So it could be that Inter W3 has not yet topped and that the ES/SPX is still building that top.  Charts for the two possibilities are below:

 NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts

Sunday, June 25, 2017

Sunday, 6/25/17 update

Equity markets tend to build rounded tops rather than spike into them, so calling a top can be risky.  But it sure looks like a top of at least intermediate term significance was made at last Monday's high in the ES/SPX.  If this analysis is correct, we saw the top of the 3rd wave (Intermediate W3 to be precise) of the bull move which started at the February, 2016 lows.  The daily chart below outlines that count:

If we are in fact in Intermediate W4 we should see a down move to the ES 2320-2315 area which was the area of the low of Minor W4 of Inter W3.

Hourly chart:

The price action since last Monday's high has served to corroborate the idea that we've transitioned to a bear market.  Since that high there's been a clear 5 wave impulse down into a short term oversold condition on Wednesday, with a corrective looking series of overlapping 3 wave patterns since - as opposed to a sharp upward impulse that is normally seen at the low of a short term corrective pattern.  So odds are good of at least another down impulse in the near future, and if the above counts are correct probably a lot more.

 NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts