Of course, we did show you this chart of the Chaikin Money Flow, and indicate clearly that volume was leaving the market.
|SP500 vs Chaikin Money Flow|
The result has been slightly lower lows, but the key 2147 level has not been taken out lower yet. We also clearly indicated on Friday (26 Aug) that any lower low beyond the 78.6% retracement level would spoil the triangle count we had in progress.
Then on Wednesday of this week, when the DOW made a lower low but the S&P500 did not, we none-the-less stated in live chat, that "we are souring on the triangle", even though it hadn't formally invalidated yet, nor had the S&P even made the same lower low that the DOW did. In fact, we have. A symmetrical triangle shape looks very strained at this point: possible but not high probability.
We also showed, this potential truncation count.
|Hourly S&P 500 Potential Truncation Count|
The primary reason for the truncation count you will recall is that the ES E-mini S&P500 futures have a higher high at the point marked 5 on this chart, where cash does not.
From a "big picture" viewpoint, there are two really good counts on the S&P 500 Index at this point. Those two counts look like this. For, the first count remember the potential long term ending diagonal for Primary 5. The above truncation count fits into that picture, as follows.
|S&P 500 Daily Diagonal Count|
So, this count applicable because price is again below the C = 0.618 x A Fibonacci level. But this count would be better validated by prices trading below the 2147 level. In this regard, since the truncation top, we can begin to count the down waves as a 'cousin' of the triangle, the contracting diagonal, as follows.
|ES E-Mini S&P500 Index - Potential Contracting Diagonal Lower|
For this count, prices may hem & haw on Friday's employment report, but two things are required: 1) a wave 4 (red) which is no longer than wave 2 (red), and, 2) a wave 5 (red) which is shorter than wave 3 (red), and occurs in a three wave sequence. So, this gives us clear invalidation points, and, hopefully, that is more helpful to you that someone who just 'guesses'.
If this contracting diagonal, lower, completes properly, then we will not know whether the diagonal is ending or whether it is leading - even though we suspect it will be a leading diagonal, lower.
The other count which is still possible is the impulse up, in which wave Intermediate (3) would have ended in the truncation. That is still possible. But because wave Intermediate (2) is a FLAT, then wave Intermediate (4) would have to become a downward zigzag or multiple zigzag that does not overlap the 2120 level in any way.
Hope this helps until things become clearer.