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Tuesday, April 28, 2009

S&P E-Minis Show ABC's since 823

Since the 823 low last week, the e-minis, all hours, have been tracing out what appears to be a bunch of ABC's and they are configuring themselves as an ending diagonal. This would mean a move up to "5" and perhaps a new cash index high.

Is the market playing rope-a-dope for end-of-month window dressing? If your not into waves, then that can explain it. Ending diagonals are, again, supposed to break down hard at the end of the pattern.

What if this is some kind of leading diagonal in a new wave up? A leading diagonal basically looks like an ending diagonal but must occur in some kind of a 1st wave position. That would mean that 823 would be the "low" of the recent market pullback. It would mean that the market, after tracing the leading diagonal where I have marked the "5", would pull back in some kind of wave 2 and then explode upwards in a wave 3 after the wave 2 retrace. That would likely happen sometime next week.

So there ya have it. An interesting e-mini pattern with a potential move up to "5". That would make it either a leading diagonal or an ending diagonal. I prefer the ending diagonal at this time because it fits very well with the rest of the overall wave structure.

But lets just see if the move to "5" comes or not. Then we'll talk some more. If no move to "5" then the SPX is indeed headed down. Thats expert analysis folks. If it ain't goin up, its going down! LOL. Any break under today's low (where I have the "4" marked) would invalidate this pattern and just refer to my count I showed last night as still the primary count.


  1. hey dan,according to ewi book, diagonal is wedge shaped , not equal trend lines, like you are showing.

  2. yeah I know. Its not quite right and its in a weird spot.

  3. what's EWI saying, what wave are they in?

  4. dan ,ive only been reading my book for the past week, many times over and over again, takes alot to sink in with all the counting and such , but if we are in a correction from nov 2007, isnt it labeled a abc cause all corrections take 3 waves? and we are in b wave on this bearmarket rally? i dont understand five waves down like some are saying , and that we are in p2, thanks, mark

  5. EWI updates tomorrow.

    Anon, there are 5 waves in both directions depending on the degree of trend. Its hard to get your brain wrapped around it but its essential part of the theory.

    2007, was the peak of a "B" wave. Likely a giant 3-3-5 flat that started in 2000.

    So the "C" wave down should have 5 Primary waves. Each primary wave 1, 3, and 5 should have 5 Intermediate waves down. Thats the "five" down from 2007.

    We had 5 intermediate waves that made up just Primary wave 1 down of a giant C wave. Which is of course a 3 wave correction.

    We are now on a giant Primary 2 wave back up

  6. thanks dan, i understand now , mark