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Saturday, October 14, 2017

Saturday, 10/14/17 update

Last week's action in the ES/SPX served to obscure more than illuminate.  It looks somewhat like an ending diagonal - upward sloping wedge kind of shape, so it could be a 5th wave as labeled in the chart.  If not then it's a "b" wave of an expanded flat.  Either way the indications are to expect a down stroke in prices in the next day or two.  If selling does materialize the other message from the current EW count is that it should be a very short lived correction.  BTFD baby. NOT TRADING ADVICE


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

Sunday, October 8, 2017

Sunday, 10/8/17 update

Time for some long term perspective.


The above long term weekly chart has been published in the update from time to time.  Although it's never been mentioned in the discussion the chart has displayed a target of ES 2569 for Primary W III for some time.  The ES is very near to that target with last week's strong ramp up.  Primary W III started at the lows of 2010.  Note that the ES is right up to the top of the channel that's defined Primary W III  since 2011.  Finally, the current count has the ES in wave 5 of 5 of Primary W III.

All this IS NOT to say that a crash is imminent.  What it does say is that a major turn is possible.  But momentum is pretty strong right now, and the ES could quite easily extend and blow through that 2569 target and the top of the long term channel.  So what's a trader to do? The trend has been up and remains so, so until there are definite signs of a change of trend the bull must be respected.  Equity markets tend to form rounded tops, so whenever that Primary W III top is established there should be time to identify it and respond appropriately.

Daily chart:


Speaking of strong momentum, the ramp up from the ST low of Sep 25 looks a lot more like a 3rd wave than a 5th wave.  Coming into last week it looked as if Minute Waves 1, 2, 3 & 4 of Minor W3 off the late August low were done and Minute W5 was in progress.  However, the rally from the Sep 25 low has been stronger and longer than the preceding rally leg.  There is therefore the possibility that Minute W3 is extending and that we are currently seeing Micro W3 of Minute W3.  Thus the labeling on the short term chart:     

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

Saturday, September 30, 2017

Saturday, 9/30/17 update

The bull keeps grinding away.  Possible top of at least intermediate degree in October.

Alternate #1

Alternate #2

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

Saturday, September 16, 2017

Saturday, 9/16/17 update

The ES closed at an even 2500.00 on Friday.  Ding!!  One more milepost on the way to ES 10000.00.  Bears are extinct, go long or be wrong!!

Obviously, the trend continues to be up.  The question as to what degree to assign to the early August correction remains open.  Was it Intermediate W4 as in alternate #1 below?  If so a major top is nearby.  Or was it a Minute W4 of an extended Minor W5 as in alternate #2?  In that case there's a lot more bull market yet to occur before that major top comes into view.  Right now alternate #2 seems more likely given the relative shallowness of that early August correction.

Alternate #1

Alternate #2 

A major top will be accompanied by some type of panic.  If alternate #1 is correct there should be a significant negative financial and/or geopolitical development that occurs in the very near future.  Some things of note in this regard are the recent moves by major world Central Banks to more restrictive postures and of course the North Korean situation.  Worth watching these.

Monday, September 4, 2017

Monday 9/4/17 update

My Grandpa was an Italian immigrant.  I remember him as a formidable figure.  I also remember that when he got animated he would pepper his heavily accented speech with the phrase "sonnamabitch!!"  I can still hear him saying it.  This last week I heard myself muttering that phrase a number of times as the ES/SPX blew my bearish socks off.

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The ramp up this last week has opened up several possibilities.  It could be that Inter W3, which started at the election day low last November, may have concluded on Aug 8 with a top at ES 2488.50 as in Alternate #1 below.  In that possibility the 3 wave zig-zag into the low on Aug 21 may be the entirety of Inter W4 or Minor Wave "a" of Inter W4.  EW rules are that waves 2 & 4 in an impulse should alternate in form, from that standpoint the zig-zag type sell off into the Aug 21st low alternates nicely with the flat formed by Inter W2 in June, 2016.  If that zig-zag was only the 1st leg of Inter W4 then we should expect to see a triangle or multiple zig-zag formation for the balance of Inter W4.

Alternate #1

One observation of note is the relative shallowness of the Aug 8 to Aug 21 sell-off in comparison to Inter W2, which gives rise to the idea that the correction was not Inter W4 but part of an extended Minor W5 of Inter W3.  This thought is outlined in Alternate #2.

 Alternate #2

So how can we evaluate which of these possibilities is in play as events unfold?  Unfortunately the only possibility that can be easily eliminated is the idea that Inter W4 is still in progress - that alternate will be effectively eliminated with a run to new all time highs.  The question as to whether Inter W3 is extending cannot be easily answered without a lot more information - i.e. market activity.

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



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

Tuesday, June 20, 2017

Tuesday, 6/20/17 update

Could be a top of IT significance in place as of yesterdays ATH in the ES/SPX.  If the below EW count is correct we're in a 4th wave correction of a bull trend that started in Feb 2016.  A possible target low is in the ES 2315 - 2320 area.  As usual keep in mind that there are alternate counts here.



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

Saturday, June 17, 2017

Saturday, 6/17/17 update

I find that trending markets are easier to analyze from an EW standpoint than cycling (sideways) markets.  They're also easier to trade.  Unfortunately, markets spend more of their time cycling than trending.  Such has been the case in the ES/SPX since the first of the month.
Right now the price action since Jun 2nd has been a sideways trading range affair which has generated an ambiguous EW pattern.  The market laid down a flat type corrective sequence from the beginning of the month into the tech selloff low of Friday, Jun 9.  Normal expectation would be for a clear 5 wave impulse rally off the Jun 9 low, but that's not what we saw last week.  Examining the chart it looks like two main possibilities are apparent at this juncture: either the Jun 2nd high was a Minute W3 top of a bull sequence that commenced on Apr 19 with Minute W4 of that sequence a triangle that ended on Friday, OR the Jun 2nd high was wave 1 of that Minute W3 with the low of Jun 9 marking the end of wave 2 - and the pattern this last week would be a series of nested waves 1 & 2 of an extended 3rd wave of Minute W3:


The above count is based on the idea that Minor W3 of the bull market that started on election day 2016 was complete at the Mar 1st highs and that Minor W5 is now in progress.  The alternate count is that Minor W3 is still in progress.  The alternate carries a lower probability IMHO, but if in fact it is what's in play then Minor W3 could well have topped on Jun 2nd and we may be in for more corrective activity.

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

Saturday, June 10, 2017

Saturday, 6/10/17 update

So when are the wheels going to fall off this market?  Maybe now.  The tech sector certainly took a hit on Friday, things are possibly unraveling.  But never count out the BTFD crowd.

There is still a question in this analyst's mind as to whether Minor W3 which started at the election day lows was complete at the Mar 1st high or continued to develop from there.  So there are still two alternates to be considered.
Alternate #1 below has Minor W3 continuing in progress since March with the top of an impulsive pattern registered on Jun 2nd.  In the week since then the ES/SPX has laid down a flat style correction.  The Jun 2nd high could finally mark the top of Minor W3 or it could be just the top of the 1st leg of Minute W5 of Minor W3.  If the collapse in the tech market on Friday is in fact the beginning of a bear trend then Minor W3 may very well have topped on Jun 2nd.

Alternate #1

Alternate #2 has Minor W3 topping on Mar 1 with Minor W4 forming a triangle into it's conclusion on Apr 19.  Minor W5 has been unfolding since then but has a distance yet to travel.

Alternate #2

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

Sunday, May 28, 2017

Sunday, 5/28/17 update

Short form holiday weekend update:

Alternate #1

Alternate #2
NOTE: dotted lines show potential EW structures and are not necessarily accurate price/time forecasts

Saturday, May 20, 2017

Saturday, 5/20/17 update

On Tuesday this week the ES/SPX appeared to roll over into the meltdown that has been anticipated in recent posts with a strong and impulsive selloff that bottomed on Thursday.  However, the BTFD crowd stepped in early Thursday morning and generated an equally strong and impulsive round of buying.  Typical.  Markets always have a way of sowing doubt.
The late week rally to this point is only three waves, and my short term momentum indicators reached "overbought" conditions late Friday.  So the pre-conditions for a resumption of the sell off are in place.  But the problem with momentum indicators is that the market can and does keep right on chugging regardless of what those indicators are suggesting.  If they are accurate then a resumption of the selling should occur early next week and that will validate the short term counts.  If not and the rally continues to new all time highs then those short term counts will have to be reworked.
However, from an Intermediate Term standpoint the action since the March 1st highs still looks very much like a market top under construction.  So barring a sustained rally to new highs significantly above those recently attained the longer term view remains bearish.

The IT Elliott counts remain as have been presented in recent weeks, with two possibilities still open:



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

Sunday, May 14, 2017

Sunday, 5/14/17 update

The ES/SPX hasn't given us a whole lot of new information in the last couple of weeks.  From an Elliott Wave perspective the pattern has been difficult to decipher, lot's of choppy and range bound action.  However there are two related observations that can be made at this juncture:
1) The seasonal tendency in recent years has been for bear market conditions over the summer ("sell in May and go away");
2) Equity indexes tend to build rounded tops, and that's what the last couple of months look like.

The two possibilities of recent note are still on the table.  The 1st alternate in the chart below has a Minor W3 top as of March 1st with the a flat type W4 correction in progress since then, and in that flat waves "a" and "b" are done and wave "c" is just starting - this would indicate a sustained bear market in the coming weeks.


The 2nd alternate has Minor W3 still in progress but very close to topping.  This would allow for one more stab up past ES 2400, possibly topping around ES 2412, before rolling over into a sustained bear trend.


Either way it appears that a summer bear market is in the offing.

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

Sunday, April 30, 2017

Sunday, 4/30/17 update

We're back to where we were several weeks ago in the ES/SPX with two possibilities apparent.  Those are that Minor W3 off the election day low ended at the Mar 1st high as in the 1st chart below or that Minor W3 is still in progress with Minute W5 of that move underway as in the 2nd chart below.  Under the 1st option the market should turn south in the area of the Mar 1st high (2401 in the ES), under the 2nd the market should blow past those highs.



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

Saturday, April 22, 2017

Saturday, 4/22/17 update

The sideways grind continues in the ES/SPX but indications are that we're close to the end.  The pattern since the Mar 1st high looks very wedgy, the ST chart below reflects that in the form of a triangle.  There are other possibilities of course, but this seems the most likely IMO.  But I've been wrong before.  Sometimes this type of pattern resolves with a final steep plunge before wrapping up, so caution is warranted.


Intermediate term chart:


Saturday, April 15, 2017

Saturday, 4/15/17 update

It's now fairly certain that Minor W3 topped on Mar 1st.  With that in mind here's a current IT chart:


The ES is in a 4th wave. 4th waves are notoriously complex and frustrating.  A couple of possibilities for the structure of the move are outlined in the below ST chart, but a lot of other things could happen as well.



Sunday, April 9, 2017

Sunday, 4/9/17 update

Last week's action in the ES muddied up the short term picture somewhat.  Of the two alternates being followed in recent weeks the idea that Minor W3 off the election day low is still in progress has been the preferred count.  The alternate is that Minor W3 was complete at the Mar 1st high.  That preferred count remains the most likely, but it's probability vs. the alternate has now dropped very close to 50/50, mainly due to the amount of time the market is spending churning sideways.  We really need to see a sustained rally to new all time highs relatively soon to keep the preferred count healthy.  As far as invalidation levels, the preferred count is eliminated if the selling accelerates and the ES drops below The Minute W1 high of 2277.00 registered on Jan 6.  Unfortunately that's a distance away so it may be of no immediate help in deciphering where we're at.  This is especially so if the ES continues to churn sideways, which it could well do.  The alternate is eliminated if we rally up from here to new all time highs as mentioned earlier.

Preferred count

Alternate count

One final note, and sorry if this is getting confusing:  a case could also be made for the possibility of Intermediate W3 being complete at the Mar 1st high.  The significance of this is that a very major market top is much closer than would be anticipated in the above alternates. 


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

Saturday, April 1, 2017

Saturday, 4/1/17 update

The preferred count for the ES/SPX has the market in a Minor W3 rally that commenced on the election day lows of last November.  As of last weekend's update Minute W1, W2 and W3 were complete with Minute W4 in progress.  Minute W4 appears to have bottomed at last Monday's low, so the presumption is that Minute W5 is underway.  ST count under that scenario looks like this:

 
 Longer term perspective:


 
As indicated on the chart a 1st target level for Minute W5 and thus Minor W3 is ES 2412.00.  It needs to be noted that Elliott Wave rules are that the 3rd wave in an impulse cannot be the shortest wave.  In the current count for Minor W3 off the election day low Minute W3 is shorter than Minute W1.  Thus Minute W5 cannot be longer than Minute W3 for the count to be valid.  The invalidation price level that is indicated is ES 2470.25 if in fact Minute W4 was complete at last Monday's low.  If that level is exceeded during the anticipated rally then the most likely inference is that Minor W3 is extending (subdividing) in some fashion.

Finally it also needs to be noted that the alternate count presented last weekend is still in play.

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

Saturday, March 25, 2017

Saturday, 3/25/17 update

The selling since the 1st of the month needs to find a bottom soon or we could be looking at a higher degree correction than the current EW count indicates.  The current preferred IT view has the ES/SPX in Minute W4 of a Minor W3 rally that commenced on election day in November:

Alternate #1 - still working out Minor W3

However, it is possible to count the move off the Nov 9 low as complete at the Mar 1 high - and that would mean that the Mar 1 high is the Minor W3 top and we are in Minor W4 of an impulse that started at the lows of last June: 

Alternate #2 - Minor W3 top is in, working out Minor W4


For perspective it should be noted that Minor W2 of the move lasted 3 months and spanned a drop in the ES of roughly 160 points.

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