Well, I am happy to say, that today very likely constitutes "further notice!". Let me be as unequivocal as I can be. "Today's outside reversal candle lower in the ES has just upped the odds that Intermediate (4) is now in progress." And I have some very, very good news. In the S&P 500 and in the NQ futures, it means we may be able to count this halting, whipsawing upward progress as a contracting diagonal overall - just not the Dow Jones Industrial Average. But the DOW is most likely in it's Intermediate Wave (4), too.
So, let's look at the daily chart of the S&P 500. If the market has, in fact, reversed course here, then it is possible to count Intermediate (3) at the prior high in a Ending Contracting Diagonal in the S&P500. The half-hourly ending diagonal we showed you on January 9th in the article entitled, Intermediate (3) May Now Be Done.
|Daily Diagonal in the S&P500 Index|
It is now just barely possible in the S&P500 Index for an Intermediate Wave (4) to form from this location that is shorter than Intermediate Wave (2), and still overlaps wave (1). What makes it possible is counting the Election Night rally as an "A" wave, not as a "1" wave in itself.
As we showed earlier, this is not possible in the Dow Jones Industrial Average (although we continue to look and monitor for it).
Yet, the reason we think that Intermediate (3) is done is specifically because the Dow has broken it's prior wave Minor 4 low. See first chart below.
|DJIA Daily - Break of Prior Wave 4 Low|
In wave theory, the only way the count above can still be counted as a fourth wave, is as an expanding triangle, as below. (But we caution such structures are extremely rare, and the S&P 500 can no be so counted as an expanding triangle at this point in time.)
|A Possible But Less Likely Wave 4 in the DJIA Daily|
Besides the S&P not being able to be counted as an Expanding Triangle at this time, there is something that would be "odd" about the above potential triangle which makes it less likely, also.
Usually in expanding triangles, each new wave takes more "time" than it's predecessor wave. They not only expand in price with required higher highs and higher lows, they also expand in time. And, while that works for waves b, c and e, it does not work for wave d. Wave d takes less time than wave c. So, this is a real watch-out to the bullish case. It's almost as if the Dow and the S&P topped on the same daily bar for a reason.
Only time will tell, of course. But, if the S&P500 begins to make higher highs by even 20 points, or so, it will ultimately become impossible for that Wave Intermediate (4) to overlap wave Intermediate (1) and still have (4) remain shorter than (2).
I will continue to research the DOW to see if any diagonal makes sense for it. But keep in mind - it is not required!
Cheers and enjoy the day!