For me a trend does not exist unless it is revealed in moving averages that are long enough to eliminate the effects of news and stop-running. It is almost a given that any significant high/low on any time frame will be tested, especially in the futures market, and stops triggered. There are trading systems that use this tendency to marginally overrun old highs/lows for setting up new trades. That is why I use 10-minute, 15-minute, and 30-minute closes (depending on the market traded). In the Euro the 78.6% retracement of last weeks decline is at 139.49, which was also it's high earlier in the morning. I have a stop on a 15-minute close of 139.56, which allows for stop running. In the YM futures I have a stop on a 10-minute close of 11,977. In the futures markets, especially in overnight trading, you can count on retests and I've been stopped out using conventional stops hundreds of times over the decades. I don't do that any more.
My key M/As are SP futures 30-minute 90-unit, DJI 5-minute 370-unit, and DJ futures and cash 50-day. SP futures are on a sell because they have not closed on a 30-minute above the 30-minute M/A + .5%. They need a 30-minute close above 1303.75.
Good morning, Steve.
ReplyDeleteI appreciated seeing your EW count since the year 2000 in your weekly summary. You wrote:
"The SPX and DJI for me count best as 3 down from 2000 and a 5 down from 2007. Thus they cannot exceed their 2007 highs except by the slightest margin."
I don't understand your conclusion. 3 down, followed by a long irregular wave up, followed by 5 down is a classic ABC corrective pattern (a "flat" in EW terminology).
So the move down from 2000 to 2003 could be wave A, the move up to 2007 would be wave B, and the crash from the 2007 high to the 2009 low would be wave C. Correction complete! And now we are in a new impulsive move UP to new highs and beyond!
What is wrong with that analysis and why are you saying that SPX and DJX cannot exceed (except by a small margin) their 2007 highs?
pima, good morning. The fact that the 2009 low took out the 2002 low is inconclusive as to the larger degree. The 2002 low was cycle degree and the only way to determine if the 2009 low is a primary as marked or cycle degree is for price to impulsively make a new high. The Nasdaq is plain as to cycle degree count with both 5's down.
ReplyDeletethanks. But the Naz could also be an ABC, no? first 5 down is A wave, second 5 down is C wave. EW would say that when the A wave has 5 waves, then the ABC should unfold as a zigzag and we would expect the bottom of the C wave to be significantly lower than the bottom of the A. Don't believe we have that in the Naz, though.
ReplyDeleteI do believe the large macro count is inconclusive. What makes the most sense to me is this:
If the 2000 top was the end of a large 3rd wave and the bear market since then is a wave 4, then it a likely form for that 4th wave would be a double or triple three, as in ABCXABC or ABCXABCXABC. So I believe the rally from the March 09 low to present is the first X wave. When it tops, we will begin the next large A wave down.
I count the Nasdaq as abc up from 2002-2007 and abc up from 2009 to present. A double-zigzag is about all we need here.
ReplyDeletepima, I would have to see your count to get my head around 2000 being a 3rd wave peak. The Nasdaq history does not extend backward very far.
ReplyDelete