World Cycles Institute

The Technical (EW) Advantage

Technical Analysis vs. Fundamentals

What would the work be like without pundits predicting the market?

Answer: A lot saner for anyone trying to follow the market.

Only technical analysis will give you an accurate picture of where the market is going. Most fundamental analysis is just hearsay. That’s especially true now with virtually all asset classes are moving in lock-step. In other words all asset classes around the world are moving now as one entity.

So, it’s laughable when you hear pundits telling you the market moved in response to something Donald Trump said. And it affected every asset class in the world at the same time? Right …

Markets do not move appreciably based on events, much less what someone said in a tweet.

We have a major turn coming at the bottom of the E leg of the contracting triangle in SPX. At the point, all assets will move into the final wave.

Being a holiday week, with the Chart Show cancelled (as it falls on a holiday Wednesday), I thought I’d share some analysis that I do for my Trader’s Gold subscription group every day. This has to do with the current situation in ES and how we got to where we are.

Above is a fifteen minute chart of ES (emini SPX futures). This shows the predicted wave down on Wednesday from 2748 and leads to where we left off on Friday.

On Wednesday, I’d warned that the the market might be too weak to make the projected target of 2756 and provided some possible turn points. We turned down at 2748 and finished the day with arguably 5 waves down. I say “arguably” because the fifth wave was in two parts.

Thursday morning, with a retrace that missed the 38% retrace level by pips, the market dropped to a new low and then reversed. This completed an ABC down pattern (three waves), which calls for a complete retrace. At the end of the day on Thursday, I called for a continued move up to the 2748 area (possibly a little higher, as there’s a gap in the SP500 that might need to get filled.

On Friday, the market moved higher to complete 5 waves, but missed the target and came down in three waves. So, what we’re left with is an AB pattern looking for a C wave up to complete the required retrace. We must meet of exceed 2748 before turning down in a wave that will target the lower trendline of the contracting triangle.

I’d look for a continuation up on the weekend to our target of 2748 (or slightly higher — 2754?) to perhaps fill that gap in the SP500. Then we’ll turn down with a target of around 2600.

I provide similar analysis for all the other assets I cover. Monday looks like a turn day for quite a few of them.

My July 4 gift to the free blog. Good trading!

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Elliott Wave Basics

There are two types of Elliott wave patterns:

  • Motive (or impulsive waves) which are “trend” waves.
  • Corrective waves, which are “counter trend” waves.

Motive waves contain five distinct waves that move the market forward in a trend. Counter trend waves are in 3 waves and simply correct the trend.

All these patterns move at what we call multiple degrees of trend (in other words, the market is fractal, meaning there are smaller series of waves that move in the same patterns within the larger patterns). The keys to analyzing Elliott waves is being able to recognize the patterns and the “degree” of trend (or countertrend) that you’re working within.

Impulsive (motive) waves move in very distinct and reliable patterns of five waves. Subwaves of motive waves measure out to specific lengths (fibonacci ratios) very accurately. Motive waves are the easiest waves to trade. You find them in a trending market.

Waves 1, 3, and 5 of a motive wave pattern each contain 5 impulsive subwaves. Waves 2 and 4 are countertrend waves and move in 3 waves.

Countertrend waves move in 3 waves and always retrace to their start eventually. Counrtertrend (corrective waves) are typically in patterns — for example, a triangle, flat, or zigzag. Waves within those patterns can be difficult to predict, but the patterns themselves are very predictable.

Fibonacci ratios run all through the market. They determine the lengths of waves and provide entry and exit points. These measurements are really accurate in trending markets, but more difficult to identify in corrective markets (we’ve been in a corrective market in all the asset classes I cover since 2009).

To use Elliott wave analysis accurately, you must be able to recognize the difference between a trend wave (motive) and a countertrend wave (corrective). There’s very much more to proper Elliott wave analysis, but this gives you the basics.

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The Market This Week

Here's the latest daily chart of ES (emini futures)

Above is the daily chart of ES (click to enlarge, as with any of my charts).

Monday of this past week, it became obvious that we were not going to complete the third wave of an ending diagonal in ES. The waves to the downside were anything but clear. But what is clear is that we're in a contracting triangle in ES and the NYSE.

The Nasdaq related indices are in ending diagonals, as are the Russells. OEX and the DOW are questionable, but will likely result in 5 wave moves as their final waves up to a new high. The DOW may end up bottoming for a third time before turning up.

For the last couple of days in ES/SPX, we've experienced a countertrend move to the upside, which is almost done, but not quite. I think it will be over on Monday morning. This will be a really good short of about 150 points, so get ready! The downside target is about 2600.

ES (and related indices) is extremely weak. The drop, after this bounce tops, may be swift. It should be a drop for a number of assets, as I've described above.

Summary: We continue to trace out the E leg of a contracting triangle. Once the E leg (down) is complete, expect a final fifth wave to a new high. That fifth wave up to a new high will be the end of the 500 year bull market.

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Trader's Gold Subscribers get a comprehensive view of the market, including hourly (and even smaller timeframes, when appropriate) on a daily basis. They also receive updates through the comments area. I provide only the daily timeframe for the free blog, as a "snapshot" of where the market currently trades and the next move on a weekly basis.

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Next Date: Cancelled this week (due to July 4 market holiday)

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The Chart Show is a one hour webinar in which Peter Temple provides the Elliott Wave analysis in real time for the US market, gold, silver, oil, major USD currency pairs, and more. You won't find a more accurate or comprehensive market prediction anywhere for this price.

Get caught up on the market from an Elliott Wave perspective. You’ll also get Andy Pancholi cycle turn dates for the SP500 for the balance of the current month. There’ll be a Q&A session during and at the end of the webinar and the possibility (depending on time) of taking requests.

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{ 57 comments… add one }
  • Verne Carty June 30, 2018, 6:22 pm

    Thank you Peter! Great trading map!
    I am already short with a hard stop at 2750.
    Some things in life ARE free! 🙂

    • Verne Carty June 30, 2018, 6:26 pm

      BTW, that is on a CLOSING basis.
      Have a great weekend everyone!

  • Verne Carty June 30, 2018, 7:03 pm

    Quick question Peter. You said we are in the E leg of the triangle but if we have a C wave up ahead, wouldn’t that put us in the final leg of the D wave of the triangle instead? Thanks!

    • Peter Temple July 1, 2018, 11:13 am

      No. You can call this little wave down late Friday afternoon on a 5-10 min chart a B leg or a fourth wave. The wave up from Thursday/Friday is actually in 3 waves and needs a fifth wave to complete it, or it’s a B wave down and needs a small C wave to complete the wave up. Either way, we’re in the larger degree B wave of the E leg of the triangle, which is always an ABC wave down. You can also go look at the Chart Show video and see where the NYSE is … almost at the bottom of the E leg.

      • Verne Carty July 1, 2018, 6:27 pm

        Got it!

  • Willem July 1, 2018, 8:22 am

    Hi Peter, Thanks for the artikel. I Have a high on 11th july with my indicators. But there is also a conflict and normally if we go down the red Line is very negative. I don’t see it next week. But my indicators are not yet well coordinated (tuned). On the 26th/29th of Jan we had hughe red lines to the downsite. Now we don’t. But it stil can happen.
    I do not trade this week. If it goes a strange way we could still make the 2801on 11th of juli.
    Monday even or a little higher
    Tuesday Up
    Thursday even or a little decline
    Friday a decline and then a rise tot 11-13th (on Friday there is a Hughe rise of the Global Movement indicator.

    Be carefull its lookslike a difficult week
    http://www.prognoseus500.nl/

  • Ed July 1, 2018, 2:59 pm

    Joe,

    It looks to me like Peter T’s ES chart above might end up being a good road map to your “new moon” low around 7/13/18. What do you think?

  • Red Dog July 1, 2018, 5:07 pm

    Verne – Note that there could be positive divergence about to happen re Bitcoin. If Luri is still about could we have an updated chart. PT may you have a go if time allows.

    • Peter Temple July 1, 2018, 5:20 pm

      Red Dog,
      Without doing a chart, from an EW perspective, it’s at the bottom of a fourth wave (at the previous 4th of one lesser degree right now) and will turn up from this area to a final fifth wave high. Then it’s all over. The bubble on bubble will burst.

      • Red Dog July 1, 2018, 5:36 pm

        Thanks Pete. I assume the 5th wave high is above the all time high and up in 5 waves.

        • Peter Temple July 1, 2018, 5:38 pm

          Yeah, but it might not make it much higher than the previous high (don’t know that yet, but it’s a deep fourth) and it will likely top with everything else.

    • Verne Carty July 2, 2018, 2:08 am

      Hi Red.
      I will ask luri to put up her updated BC chart.
      She did an amazing BC/DJI analog as well that seems to be playing out.

  • Red Dog July 1, 2018, 5:45 pm

    Or top when the SP hits its low on the first major move down. People thinking its an alternative to a free falling stock market. If it tops when the general market does then that is a massive move up. Over a 200% move in 3 months. Wouldn’t mind a piece of that.
    That’s for your comments. You are doing a wonderful job.

  • luri July 2, 2018, 5:24 am

    DAWG……………………DOG…………………….. R-E-D …..D-O-G!!!!!!

    a little bird be tellin me stuff – that’s right Verne….i referred to you as a……”little bird”………………probably along the lines of the humming bird family of birds – you know the family …………the ones that could be mistaken for a “BEE”…………! ahhhhhhhHHH! :-))

    so red, you want to see BTC chart huh!! well so BE it! BTC chart it is

    now brace yourself red! ……………ARE YOU……”BE”……ready??? [notice the modern usage of the english language grammar” – its refreshing…..its like wearing polka dots in the middle of summer…….”cough”………….LIZ!!!!]…………….

    https://invst.ly/7weja

    as you can see, there is a massive positive divergence that has emerged. the C wave of 4 looks to be a quiet “u-shaped” accumulation bottoming pattern . If so, this accumulation pattern could take some more time – “BE TOLD”!!!!!!!

    • luri July 2, 2018, 5:31 am

      alternatively red,

      we have this wedge shaped pattern also in play……..WEDGE – as in “wedgies”, as in the use of a “thong bathing suit” while mowing the yard…………………..cough…………………..[verne]???!

      it could suggest the opposite in price action from that of the accumulation pattern, that is, an explosive move in prices to the upside…………………..

      https://invst.ly/7weo7

      • Red Dog July 3, 2018, 8:40 pm

        Luri – you are a legend

  • luri July 2, 2018, 5:54 am

    OK ………….peoples………………otherwise known as …”PEEPS”…..

    do you know what time it is??……………huh…………. whad ya sayin??? – why you be whispering??……………..

    i shall ask again……………………..”DO YOU KNOW WHAT TIME IT IS!!!!!!!!”

    THAT’S RIGHT…………………………ITS DATA DUMP TIME!!! oh yeah!!

    can i get ME some NOISE all up in DA HOUSE??!!!!! oh yeah!!!

    Deutsche Bank anyone? – https://invst.ly/7wex5
    DXY….is in DA HOUSE…daily time frame [y’all have seen this one plenty]
    https://invst.ly/7wf04
    DXY’s……older sister…..the monthly time frame…..https://invst.ly/7wf0x

    • luri July 2, 2018, 6:05 am

      IT’S ALL ABOUT THE CHINESE YUAN – AND “YES”…….AND YES!
      https://invst.ly/7wf2a
      and put yer hands together for some NYA aaaaaahhhhhh!!!! OMG can you feel the heat! https://invst.ly/7wf5p

      some SPX with a side of RELSIH is on the BAAAAaaaarrrrr B-QUE!!!!!!
      https://invst.ly/7wf3d weekly time frame peeps!

      WHO NEEDS DEODORANT WHEN YOU GOT SOME …..DAX……IN DA HOUSE!
      https://invst.ly/7wf4h ……..[limburger cheese comes to mind!!]

      • Verne Carty July 2, 2018, 8:19 am

        🙂

  • Verne Carty July 2, 2018, 12:17 pm

    Looks like five down in ES.

    • luri July 2, 2018, 12:54 pm

      do i hear six………………anybody…………………..do i HEAR……six down in the ES??

      six……………………………..going once……………………………
      six……………………………….going twice………………………………….aaaaaaannnnd!…..

  • Verne Carty July 3, 2018, 8:15 am

    Price action in Nasdaq portends weakness ahead for SPX…

  • Verne Carty July 3, 2018, 9:59 am

    Deploying massive 274/275 SPY bear credit spread. 250 contracts. A visit of the 200 day SMA seems in the cards.
    Have a great 4th those of you in the good ‘ole USA!
    Hey Pete, you mentioned skedaddling to an island from O’ Canada when the collapse commences.
    May I recommend the BVI? The sailing is awesome!! 🙂

    • Peter Temple July 3, 2018, 10:20 am

      Haha … it’s my favourite place to sail. And now that I have my British passport, it’s a lot higher on the list. I don’t think Canada’s going to do well at all. But there’s lots of food and fresh water!

  • Verne Carty July 3, 2018, 11:00 am

    Filled at 0.42 per contract. Lock and Load! 🙂
    SPX 2680 or lower here we come!

  • John July 3, 2018, 12:35 pm

    Today Juli 3, will it be a change in trend or just a day dip.
    Anyway the next date will be Juli 13…. and that’s a Friday.

  • Verne Carty July 4, 2018, 7:22 am

    Did you forget a possible sideways? 🙂

  • Bill rider July 4, 2018, 7:40 am

    Peter T,

    Is there a possiblity that your 4th wave only goes till 2670 and then goes higher. what are the chances.

    • Peter Temple July 4, 2018, 8:08 pm

      Bill,
      There’s always a possibility, but that one isn’t one I’d want to bet on.

      • Bill rider July 5, 2018, 7:14 pm

        Thanks Peter T.
        So you still are expecting 2750 and then 2600

        • Peter Temple July 5, 2018, 7:25 pm

          Pretty much. Exceptionally brutal, dangerous market.

  • Joe Longwill July 4, 2018, 3:47 pm

    Joe,

    It looks to me like Peter T’s ES chart above might end up being a good road map to your “new moon” low around 7/13/18. What do you think?
    ED,
    Im letting time run out . i had a july 2 date for a low based on the mars uranus cycle and i have noted the 30 days prior to the solar eclipse , hence new moon
    high to new moon solar eclipse low as the bearish set up .
    the key will come July 27-into mid aug to as late as sept 9.
    my bias is bearish based on timing .
    the wave count will play out over time and as we get closer i’ll focus more
    on the wave count vs timing .
    with the mars Uranus cycle now turning up into july 27th i have mixed feelings
    yet the set up stands as is. ( new moon high to solar eclipse low )
    Keep in mind we have mercury going retrograde july 27th as well which is another minor cycle mixed in to the other 2 im focusing on .
    all said im watch 3 to 4 different patterns and several cycles .
    Joe

  • Joe Longwill July 4, 2018, 3:50 pm

    cash dow below 24,266.97 is bearish .
    lower support sits at 23072 and then 21811

    • Verne Carty July 4, 2018, 4:28 pm

      I agree with your observation about key pivots in the cash session. I think we can glean more information from these contests than anything else going on in the market right now. They burned an incredible amount of capital trying to defend SPX 2720 and DJI 24500. Hundreds of millions! I was extremely skeptical about the Feckless Fed actually following through on QT must it does appear that QT to the tune of 30 billion per month could be actually going on as the market’s stagnation seems to correspond well with the start of the QT schedule. At any rate, failure of the bulls to hold those recently contested pivots argues strongly for an impending break of both SPX 2700, and DJI 24K. I am expecting around SPX 2680 to be a likely turning point for the final move up.
      Good to hear from you Joe. I sure wish I understood all that planetaty stuff. Glad it makes sense to you dudes!

  • Ed July 4, 2018, 4:48 pm

    Joe,

    I appreciate your thoughts! Thanks for responding!

  • John July 5, 2018, 3:35 am

    I agree with Joe, Juli 13 can be an important low.
    Tomorrow there is a change in the tides and the next one is July 13/14.
    I went short on the AEX.

    Good luck to all

  • Verne Carty July 5, 2018, 10:16 am

    It would seem the banksters are in the mood for a bit of fun this morning. They are shaking out some weak-handed shorts no doubt. Especially Johnny-come-latelys. It would be funny if it were not so pathetically predictable. What clowns!

  • Verne Carty July 5, 2018, 11:03 am

    This market is remarkably weak. I am starting to suspect that the fifth wave up will be ushered in by some sort of dovish blather from the FED( slower QT?).
    I am keeping some powder dry for a close under 2700. I think the move down to finish the triangle will be deeper than many expect, so long ad it does not go past C of course…

    • Mike Caruana July 5, 2018, 1:09 pm

      FOMC day, down? Nah. That was a one-shot deal last time because it fell on a new moon. They don’t take accountability for manipulating the market. The also un-manipulated main stream news will probably release something negative on Trump (trade wars, etc…) in a few hours or days to pass on responsibility.

  • Verne Carty July 5, 2018, 2:54 pm

    Stepping back and looking at the weekly chart, I would guess the b wave of the E zig zag of the possible ES triangle is incomplete.
    If that is right, we go higher tomorrow to finish it.

  • Willem July 6, 2018, 6:03 am

    The red line confirmes the High on the 11th. If the jobsnumber is O.K. We could go very high. I mean 280? The High is on the end of 10th and the beginning of 11th. On the 11th we go down slowly like a yo-yo.

    http://www.prognoseus500.nl/

  • Verne Carty July 6, 2018, 7:07 am

    The EW count does not call for 2800 at this time as that would negate the triangle.
    This a great example of how good TA keeps one from erroneous expectations.
    Of course some smart aleck is going suggest that Peter’s count could be wrong.
    I would not bet on it! 🙂

  • Willem July 6, 2018, 8:04 am

    Everyone
    I only give the results of my indicators.

    So keep up to the predictions of Peter! Or other experts. Use this information only as confirmation on your own prediction.

    I am still tuning the indicators. But if you follow the indicators you will find the movement. But so far so good.
    http://www.prognoseus500.nl/

    • Verne Carty July 6, 2018, 8:46 am

      Understood. How, if at all, do you tweak your methodology to ensure greater reliability?
      So far you are about 50% right on direction alone…! 🙂

      • Willem July 7, 2018, 6:24 am

        Hi Verne,
        Next time I will remove the lines and just say: Monday drop and then starts the rise to 11 July.
        For the next week that would be “Monday and a little dip in the early morning and then the rise directly to Wednesday morning. Could be Hughe. Then the fall to the weekend”.
        Perhaps I show to much information? (On purpose, so the reader can get used to the indicators and draw his own conclusions)

        Thank you for youre command. Is the changed prediction 100%?
        ( 🙂 impossible) Have a nice weekend

  • Verne Carty July 6, 2018, 9:04 am

    This move up, according to EW count, must be viewed as a corrective wave of wave E of the triangle. If we close above 2750 I would have to revisit that thesis…

  • Verne Carty July 6, 2018, 9:14 am

    Classic”C” wave!!!!!

  • Verne Carty July 6, 2018, 10:06 am

    This move past 2750 pretty convincing. Exiting short calls as that is what stops are for….switching to bull put spreads…..:)

  • Vivek Sahay July 6, 2018, 10:30 am

    Thanks to everyone for their comments. It has been very useful. My two cents here – 2757 – 2774 is 61.8% – 78.6% fib retrace of wave A (in case this is indeed wave E of the larger triangle). We are already in the range. If we do head down from there, it may well be Peter T’s triangle EW count lining up with Joe’s new moon low. It is a gutsy call to expect a new moon low given the number of new moon highs we have had this year. But then, thats what interesting moves are made of. If not, then it may well be another new moon high and we would have shifted to an ending diagonal. I will sell soon with a 2797 stop.

    • Verne Carty July 6, 2018, 11:02 am

      Thanks for the comments Vivek. My scant readings on the lunar cycles point to weakness at full moons. That upper range I think is possible if we hold 2750 through the close. Peter did cite the 2758 target area so perhaps that is what the E wave did.

  • Verne Carty July 6, 2018, 10:33 am

    Move up coming on declining volume with negative divergence. Not sure how to label it but it would have been a very brief E wave indeed if it is complete, and quite a distance short of target…

  • Verne Carty July 6, 2018, 10:38 am

    Do we have an ED on 5 min chart in DJI??!!! 😉

  • Verne Carty July 6, 2018, 11:19 am

    Has anyone else researched the strange goings on in after hours trading on July 3 rd 2017?
    Does anyone buy the explanation that all those stocks pinned to the exact same number was really due to a “glitch”?
    I found it truly mind-blowing how few traders knew about, much less discussed it. “Through the looking glass…!”

  • Vivek Sahay July 6, 2018, 1:41 pm

    Verne – I just shorted ES (2763) for half my size. 5 waves look complete (or may extend to 2774). Wave b of “E” seems to be done with ABC and C taking the form of WXY. Any price action with stronger momentum up would mean that I am wrong.

    • Verne Carty July 6, 2018, 2:13 pm

      Very interesting Vivek. I reloaded my shorts into the close. I am going with Peter’s downside target!

  • Verne Carty July 7, 2018, 11:07 am

    No problem Willem. Just trying to learn and perhaps get other readers to get more out of your contribution. Thanks!

  • Peter Temple July 7, 2018, 8:28 pm

I welcome questions or input about Elliott Wave, cycles analysis, or astrological input relating to any market. However, due to a heavy schedule, I may not have the time to answer questions.

I reserve the right to remove any comment that is deemed negative, disparages the Elliott Wave Principle, is otherwise not helpful to blog members, or is off-topic.

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