Today, all we had was a situation where the bulls couldn't make a new all-time-high (ATH), and the bears couldn't fill the opening gap. With the S&P and NQ so close to the all time highs, we must allow that until new lower low candles are printed on the daily chart, we must respect the trend and allow that new higher highs are possible. (The Dow, as you know, is now not as close to it's all time high as the S&P.)
But what I wanted to address today is in reference to the the longer term count : that of the S&P500's potential diagonal that we showed you yesterday versus the Dow Jones Industrial Average. As you may recall from my previous post entitled Elephant Head, I have a long memory, and two things have been bothering me. First is the fact that the Dow and the S&P did not bottom on the same day in Primary IV (in February, 2016), and the second was - ignoring that - the DOW would have it's Intermediate Wave (1) at a different location than the S&P500 in an impulse count. This was potentially causing me to count the DOW with an 'X' wave where I said it was a five-wave sequence in the S&P500 - which just - I'm sorry - seemed too odd.
So, I went to work last night to try to answer that riddle, and here is the Dow count that would agree with the placement of the Intermediate Waves in the S&P500 Index.
|DJIA Now In-Synch with S&P500 Index|
You should take some time to compare this to the potential count of the S&P500 Diagonal shown yesterday to now see that, a) all of the five-wave sequences are now in the same place, b) that all of the corrective sequences are now in the same place, and c) that Intermediate (1) and Intermediate (3) now synch-up on the same waves on both charts!
And the answer lie in putting that orphan wave in the Dow to good use! Problem solved!
So, the Dow may still finish as an impulse - while the S&P finishes as a diagonal - because, in the Dow, Intermediate (3) is still too long to allow Intermediate (4) to overlap Intermediate (1) with a wave that is shorter than Intermediate (2), as is required in an ending contracting diagonal for the Dow. But, perhaps it just means that Intermediate (4) in the S&P will overlap, and Intermediate (4) in the Dow will not overlap!
That would really confuse the daylights out of most wave counters - but, hey - that's what the market is here for!