Market Indexes: Major U.S. Equity Indexes were higher; DJTran lower
SPX Candle: Lower High, Lower Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
If you followed the market today (and didn't get whiplash), you know that the DOW opened higher on a gap, then in the second hour made a lower daily low to join the S&P500 Index with a countable five-waves down. The Dow and the S&P continued lower into the mid-day, and, then at about 13:00 ET began a turn-around to close the day higher by about +330 points. At the low the Dow had been down around -490 points.
Yesterday, we wrote, "You can easily count five waves within wave ((5)), and wave ((5)) may not be over yet."
And in an impulse count we were not done. In the live chat room we posted a chart of the S&P500 cash index and said that the target of ((5)) = 0.618 x net [ ((1)) through ((3)) ] would be met at 2,555. The market hit that level on the downside, and then exceeded it slightly to 2,533. Because of that breach, it caused us look for a count that might travel slightly lower.
Therefore, this count was posted as a very, very good possibility. I rate the odds as about 60:40 with the impulse count. It is the count of a potential contracting diagonal downward. This same possibility also applies to the S&P500 - but I thought I would look at it the way that R. N. Elliott might have.
|DJIA - Half Hourly - Potential Contracting Diagonal|
So, this count is potentially supported by the divergence on the Elliott Wave Oscillator at the lower low, and the strong up-wave at the end of the day. But further, this count is more respectful of the concept of degree, because the impulse count has a very large fourth wave compared to the second wave. Strictly by the rules, either count works. Again, this one is also considerate of the guideline of wave degree.
As with all potential diagonals, a wave ((4)) must remain shorter than wave ((2)). Using the S&P500 we are able to give you a precise level for that invalidation: above 2,667.30 and the diagonal would invalidate, and the impulse wave applies. If the invalidation level holds, and there is a fifth wave down, then, it would have to remain shorter than wave ((3)). I like it when there are precise measurements; it really helps one to know the position of the market. Again, I don't care which pattern forms. Keep your balance, remain patient and flexible.
Let's see how it goes. Have a very good start to your Friday night.