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Monday, July 20, 2020

Elliott Wave Update ~ 20 July 2020 [Update 8:20PM EST]

[Update 8;55 PM EST]
Futures will be interesting as the both the /ES minis and /NQ has all-hours patterns.

100 has a triangle.  They both may make overnight new highs and then we'll see I guess. Thats the upper wedge line.
[Update 8:20PM EST]
Today the Composite had its highest all-time close ever.  Using solid line mode that smooths prices, an interesting wave count pattern occurred.

Also note the extremes on the total volume ratios yet again.  The last 3 days has been consistently at the extreme. Again, one can speculate that the computers are flowing an inordinate amount of volume to get the entire Composite to lift (or stay lofted) in prices.  Whether or not this is direct manipulation or just the way the trading algorithms are reacting to flow orders, the events are becoming outsized, and now over the last 3 days, persistent.

I'm just speculating.  It could be that no one actually has a clue on why, nor do they care.  We like to think all this stuff is handled by the "Pros" behind the scenes but really I suspect we tend to conjure up images that are way off the mark and give the "market makers" and "manipulators" way too much credit.  We have seen time and again massive liquidity drying up and prices just plunge outright as if 4 or 6 of the 10 computers (or however many) are just turned off because things happened that shouldn't.

We all know the High Frequency Trading machines are likely a mortal danger to market making. They are there for one reason only and that is to scalp and front run you and I because they can.  And they will do that going in either direction. However, when those machines don't make money because the nifty little algorithms go haywire, guess what, they turn them off for "evaluation". In a panic, (or did you forget March?) who knows what will happen this time around.

The Composite total volume is sampled against the NASDAQ 100, the NYSE, and the SPX. So we have a good sample set.

The Composite internals have been steadily waning over the last 4 months as to be expected. A big outlier occurred after the Composite did the 2% open at all-time highs and finished over 1% lower (it actually finished 2% lower). The only other time this ever occurred (according to Sentiment was March 7th, 2000.  Three days later the NASDAQ peaked on March 10th, 2000.

Simple RSI double negative divergence when considering its a closing high.

So that was 6 trading days ago and the intraday peak is still intact for now.
And our trusty CPCE chart. This time we zoomed in for closer looks at what happened at the February peak (closer look at the gyrations) and what is happening now.

The market topped February 19th. After the close of the next day, February 20th, the 10 Day moving average was the lowest moving average, lower than the Daily, 3, 5 and 30 day. Although it was also the lowest moving average on the 17th two days before the top.

Today for the first time since the February top, we have the same situation. The 10 Day moving average is the lowest of the bunch. Is that a trigger? Or a 2-day warning?  Or will things just get even more extreme-er?  Or do we have more jostling to do? Or does something need to cross the 30 day which remarkably even though at a record low, the other averages are still situated even lower.
Wow, just wow, it's in the gap on the Wilshire and it has the ending diagonal triangle count.

The strain is incredible being put on the Composite.

The wedge has overthrown in the e-minis.
SPX count. LOL, I would totally laugh if they leave another massive gap down tomorrow from this exact spot.

Ok trading is over.  It looked like the Wilshire 5000 didn't want to be a wave 5, but it literally got dragged up by the Composite. The Composite was likely under tremendous internal pressure. I don't have the total volume ratio numbers but they probably hit a new peak today against everything else.

If you're a conspiracy theorist and you can imagine the Fed on the phone calling all pumpers to "keep that Composite moving up!". The computers whizzing and whirring in the machine room running hot, churning, churning ever higher still. Alarms going off, "Silence the alarm, keep pumping!"

Well you got your wave 5 Mr. Market! (Editor's note: not yet a wave 5, retrace less than 90% still) And its a wedge count at the moment.  The danger is if it is a wedge, you are looking at a 10% price collapse for starters due to sheer exhaustion.
Split screen Composite count and Wilshire. All squiggles may be in place for the wedge count. Note the Composite internals at the bottom. More down volume and decliners than up volume and advancers.
Best guess squiggles if its over.
SPX chart updated from last Thursday's special post on the SPX. Data is not in for the advancers vs. decliners for Stockcharts, will update this chart later.
Top alternate count is that the wedge proves to be false and the market will attempt a run at all-time highs.
There will be more later.

Banks were down today. NYSE did not make it back to yesterday's peak. 
If the Wilshire does not retrace at least 90%, it would still make sense to label it as a double zigzag. A failed 5 of (5) is hard to justify anything less than 90% retrace.

It currently stands at 89.58%.
Oscillating around the lower price channel line. 
One would think the market rally would yield some yield on the 10 year.

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