The Intermediate Term bullish alternate cannot be completely ruled out as of yet, that idea would say that the diagonal 5 wave move up from the Jul 6 lows at ES 1002.75 is not an ending diagonal but rather a Wave 1, with a Wave 2 correction underway.
From the standpoint of Elliott wave rules this bullish alternate cannot be discarded unless and until the ES prints below the Jul 6 low at 1002.75. But as a practical matter it's hard to give this bullish scenario any more than a low level of probability for the same reason that the rally leading into Monday's top was suspect: low volume. It's hard to see how this could be a correction in the early stages of a bull phase if there is no participation. I think it's important to note that Wednesday's sell off was relatively low volume as well. A true bear market is characterized by an evaporation of buyers.
I know the Vindicator is my own creation, but I'm still undecided as to it's utility. However, on review it's obvious that the Buy/Sell Vindicator was signaling the topping process that occurred in the last couple of weeks. Note how the Buy line (green) diverged against prices coming into Monday's highs, clearly showing the waning of buying pressure:
Not excited about the trend of the Dynamic Stoch nor how it appears to be pushing through '20'. Don't really want to buy here, but maybe I'll just cover my shorts and sit in cash.
ReplyDeleteI'm actually looking for a place to go short, looks like a very good spot right here but I'm hesitating due to it being a Friday afternoon
ReplyDeleteGlad to hear from you, Al. Technically, your buy line is above your sell line and DynOsc really wants to push through 20. My fear is a low volume melt into the close and a mutual fund Monday--not to mention OPEX week. On the other hand, I'm fully positioned to take advantage of any "Omen" and would hate to miss out if today ends up being a trap.
ReplyDeleteThe problem with the Buy/Sell line is that it tends to lag rather than lead. On the Dyn Osc, that's part of the Trendline/Oscillator system which has two components, the Trendline and the Dyn/Osc. Yes, the Dyn/Osc is poking up above 20, but as long prices stay below the trend line (thick blue line on chart) that system is in sell mode. If there is a resumption in selling in the very near future resulting in a new low the Dyn/Osc will recalculate and probably flatten out. Finally, OPEX week is notoriously bullish, and "Ramp up Monday" seems to be the game in recent months, so it's cause for pause on the sell trigger.
ReplyDeleteHa! Good stuff. Strangely, I've been having great success interpreting your Vindicator "wrong". There's 15-20 pts between here and the top of that channel and I'd hate to give those up before realizing the trend changes. But on the other hand, I'm so spooked about catching a falling knife trying to call the bottom.
ReplyDeleteIn this case, it's probably best to do as you say and risk the 15pts to the upside for possibly a greater downside. Maybe with some luck, were staring at a two day bear flag.
Don't know that there's a "wrong" interpretation for the Vindicator. Right now maybe the best attitude is "If in doubt, stay out". My sense is drift up into the close.
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