Thursday 12/3/15

Well, you can't get much more wrong than yesterday's blog commentary.  Though last Friday's high (actually occurring during the brief futures trading on Thursday) was confirmed as a multi-week high by a lower multi-day low, the fact that the Monday's supposed multi-week low was taken out in yesterday's trading makes that impossible.  There is no scenario in which a MW high can come just 3 days after a prior MW high, so despite being "confirmed", it is apparent that the prior high was not a MW high.  I believe this is the second time in the several years that I have been following this market framework that I've had to dismiss a "confirmed" high or low due to subsequent price action.  While this is disappointing, as after-the-fact changes are something that I despise about Elliott Wave theory, I must accept the fact that nothing is 100% accurate.   In fact, I once backtested a strategy that unwittingly used built-in hindsight in the code, and that strategy still had less than a 90% win rate.  Anyway, back to the charts.

The daily chart shows price yesterday making a higher high but lower low and close versus Tuesday's candle.  Price thus far today has opened below the daily pivot and has made a lower low.  With price trading below the MD MA and now testing the MW MA, it appears that yesterday was the overdue MW high.   A MW low is projected for 12/8, and we will see whether the MW MA can provide support for that low to be seen.

A secondary effect of eliminating last Thursday/Friday as a MW high is that it eliminates Monday as a MW low.  This in turn opens up the possibility that the November MW low was not also a MM low. This means that it is possible that we are still on the downside of the MM cycle, and thus possibly also on the downside of the MY cycle.  While certainly not one of the worst declines the market has seen, yesterday's action was quite impactful, turning the outlook from one of complete bullishness to one of uncertainty.  While I still believe the bullish case will be proven correct with a higher MW low this week or next followed by a move to new highs in the next upleg of the MW cycle, price will do what it wants regardless of my beliefs.

The hourly chart shows price yesterday making a 24Hr high (and MD high) in overnight trading and dropping sharply throughout the day until finding its 24Hr low at the close.   Price had a nice rally overnight into a lower 24Hr high and has again dropped sharply into the MW MA.   With a 24Hr low not projected until today's close, it remains to be seen whether the MW MA can again provide support for an early 24Hr low (and possible MD and MW low).   Until price can make a higher Session low (5-7 hours after the prior swing low) and trade above the Session MA, the bias should be to trade to the downside.