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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   
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