Month: December 2021

I See Two Possibilities for $ES

dereckcoatney5 Comments

I have been expecting $ES to move lower, possibly in a huge move down in order to complete “E” of a big “B” wave. I expect this based on the possibility that we’re replicating the dot-com bubble fractal.

I have been expecting this additional leg lower now (rather than assume it’s already in) because a variety of risk signals I watch have been clearing their throats at me (e.g., here, here and here).

On the basis of all of that, we may expect that we’ve entered the minor (green) C wave (of E of B blah blah). That will consist of 5 minute (blue) waves, and perhaps we are in the first of that. On this look, we would expect to move lower in the 3rd minuette (orange) wave to the box below us, consolidate, then make another low to complete minute (blue) 1 before a bounce.

ES

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One Small Point of Pedantry

dereckcoatney9 Comments

On the “last leg of the B-Wave is still coming” charts that you have seen me post already, I’ve been considering the D-wave to be here, with us now. But I’m going to modify that based off of the look of the structure here as a whole, and what I’m seeing works best for other world indices.

That modification moves the D-wave behind us. The basic motion remains unchanged: both would produce a strong decline, but there is one difference that makes a big difference.

If, as pictured below, the intermediate (orange) D is behind us, then we’ve completed two legs of the three legs needed for E. That means from here, we need just the minor (green) C and that will be a single five-wave decline.

On the prior look, if we’re topping out in D now, the move from here to E will be in 3 waves. One reason I prefer the “D is already in” count is the trend line touches. If we’re finishing D now (or soon), we will need to go higher than I think we will be able to.

So, it’s a minor point, but if I’m right, it will be helpful to have this in mind if we get the decline I am looking for.

ES

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Two Other World Indices That Look Like They Need a Further Decline: $FTSE and $DAX

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Because of the mounting risk signals I have been seeing, I have gravitated toward the view that $ES may need to make one more splash to put in this big “E-Wave” of its even bigger “B-Wave” (you may review the look of that decline here). Other world indices look compatible with this, and I will display two of them, the $FTSE and the $DAX.

Here is the $FTSE as I see it:

FTSE

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No Retracement on $ES Yet

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Unfortunate to not see even a minimum retracement in price for the minute (blue) 4. We’re just a few points below the 12/28 high, so time is running out for the bears. If we breach that high, minute (blue) 4 is in, and perhaps we can make the whole structure a single triangle.

An alternative I can use (that still says a high is right in our midst) since I cannot count minute (blue) 5 in at the 12/28 high (because I cannot count the move since as an impulse wave to the downside) is to view the 4 as in yesterday, with a failed 5th wave in yesterday’s spike near the close (failed in the sense that it failed to make a new high).

I feel like the consensus is much too bullish here—it seems to me that everyone now expects this to be a 4th wave with a 5th wave significantly higher still to come, so turning down abruptly here would take many by surprise—at least so it seems to me.

And my mounting risk signals are not yet improving.

ES

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Just a Few Additional Remarks on $ES

dereckcoatney2 Comments

Presently, I still would like to see a deeper retracement for minute (blue) 4 on $ES.

Backed up a bit, it looks as I’ve depicted in the chart below. One fault with this count is that minute (blue) 4 has now become enormous in terms of time in relation to its corresponding minute (blue) 2 which we can barely even see on the hourly chart. If we do retrace to the orange box, this present wave will be more than four times the length of 2 in time. That is rather extreme.

Now, I’ve chosen a four here because it’s not a great idea to get too aggressively bearish before the market has even tried to drop more than twenty points. But (next chart)…

ES

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A Quick $VIX Observation

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I’d like to make a brief observation on the $VIX.

While the S&P (and now even the Dow) is trading at all-time forever highs, the $VIX is far from it’s October and November lows. This “cupping,” as I like to call it (red semicircles) often precedes spikes of some significance. Add to that the nice bullish wedge here and there are ingredients for a nice, big spike in vol. It’s respected the lower green trend line repeatedly.

Add this to my list of risk aversion signals (e.g., here and here).

VIX

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No Changes to $ES Count, Couple of Comments

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No significant changes to the previously expressed views (e.g., here and here).

It’s not clear to me that we have completed minute (blue) 4 on $ES yet. It is preferable to see at least some retracement in price, ideally to the orange box below. It is unusual to not even tag any fib at all on a wave of this degree. If we need one more flush in order to complete the structure, we would interpret it like this:

ES

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Another Risk Signal: $OIL

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I want to add this to my list of risk signals that are creeping in to my attention.

My expectation was for $OIL to be in its 3rd minor wave (I noted that here). 3rd waves are unmistakable and when they don’t show up I stare intently. A 3rd wave of this degree should have carried us effortlessly to the big orange box above us at a minimum.

Instead, I want to point out where it stalled (green arrow). That thin orange line is the exact point where the rally from 12/20 until now equals the rally from 12/2 to 12/8. That is equal legs. To the tick. And that is exactly how we distinguish between “corrective” and “impulsive” structures. An impulse up here should have some real extension in it. A correction here would have equal legs. Also, the smaller orange box we’re in now is the 50-61.8% retracement of the prior decline. All of this means that my minor (green) 1-2 could be a corrective A-B instead.

Now, if this gets off the mat and rallies really hard, so be it. But until then, it still needs to prove that to me.

OIL

 

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$ES May Need Another High

dereckcoatney2 Comments

Recognizing that there are many risk signals present in the market—and so the market could sell off at any time—I must also acknowledge that $ES from its most recent high does not yet look impulsive, but rather only corrective (I could be wrong about this: sometimes the best downtrends begin stealthily by looking merely corrective before beginning their descents). If that is true, it may need to extend to an additional high before turning lower. One good place for it to do so is a trend line above which has served as a slope of rejection on two prior occasions.

Also, I have relabelled the internal waves of the rally to align the peak RSI (green arrow) with the 3rd of the 3rd wave.

ES

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I Am Going to Adopt a More Bearish Tone: Here’s Why

dereckcoatney2 Comments

Recap:

  1. I had adopted a bullish stance, which was prudent, as we eventually rallied quite powerfully. The count I have been using counts a significant low in place, and this rally as needing a retracement.
  2. I have acknowledged the presence of a more bearish alternative (here) out of an abundance of caution.
  3. However, taking a wide view of the risk signals I look at leads me to want to increase my risk aversion here. I will detail some of those below.

I’ve already complained about this a few times, but Bitcoin is not rallying powerfully as I had expected. To the contrary, it’s been rather weak. I’m not going to ignore that. Here is how I am going to count it until it proves itself with an enduring rally. It’s a long and complex correction, ridiculous actually (mirroring this long and complicated period we’ve been in with equities). But, it could very well need another leg lower.

BTC

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