|SP500 Counting Down to a Diagonal Still|
On 10/14 & 10/17 is the contracting diagonal (a) wave we referred to in yesterday's post. Measuring the (a) wave, within it you'll find that wave .v is shorter than wave .iii; wave .iii is shorter than wave .i; wave .iv is shorter than wave .ii, and wave .iv overlaps wave .i. Again, the wave follows all of the rules and guidelines for a diagonal.
Netflix earnings provided the 'pop', and the rest of the day was spent grinding (lower, I think). We have labeled the up wave as the (b) wave because, so far, it has gone nowhere, and didn't break the wave (ii), high. As a matter of fact, today looks like the deep retrace of yesterday's (a) wave diagonal, ending in the territory of it's prior wave .ii.
Late in the afternoon, we got confirmation of a lower high from the RSI (shown as the second circle), and no subsequent cross upwards as of yet.
So, tomorrow's gap direction becomes critical. If we gap down, a lower low than minute (i) would be minute (iii) of a potential diagonal. If we gap up significantly enough to cross wave minute (ii), a diagonal would formally invalidate, and we'd have to look for an alternate. Given the waves we have now, an alternate is not clear, yet.