Market Indexes: Major U.S. Equity Indexes were higher; DJ Util lower
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
Cash and futures made new highs today. This was not unexpected if an ending contracting diagonal is in progress. What I have done below is show that we may only have had wave (i) of such a diagonal, not wave (iii), yet. Here is why.
|ES E-Mini S&P500 Index Futures - 4 Hr Chart|
The primary concern is within the sequence a,b,c to (i). In the futures, but not cash, there is a higher high at .b which makes the wave a flat wave. Flats are not allowed as the second or fourth waves of diagonals. They must be zigzags. Even though cash does not have this problem, I prefer to give the wave sequence a lot of time to complete. Secondly, if you look at the Fibonacci ruler today, you can see that a c wave at this location would be 0.500 x a, dead on. It is hard to ignore the exact Fib.
Next from wave iv, it is entirely possible to count the a wave as a contracting Leading diagonal with (v) shorter than (iii), and (iii) shorter than (i), and (iv) shorter than (ii), with (iv) overlapping wave (i). And all of these sequences can be counted as three-wave zigzag sequences.
The trend lines are just tentative ones, but the help to show the contraction, so far. ES volume today was very light, at 1.07MM contracts. And, as you can see by the EWO, today's new high diverged with the EWO - at least from the waves we can see.
If the diagonal forms properly I would expect every larger diagonal wave (i), (ii), (iii), (iv), (v) to show form and balance by being located on opposite sides of the blue EMA-34.
Have a nice night!