Wednesday, March 21, 2018


Market Outlook: Now Getting Higher Volatility
Market Indexes: Major U.S. Equity Indexes closed lower; RUT higher
SPX Candle: Higher High, Higher Low, Lower Close - Outside Candle
FED Posture: Quantitative Tightening (QT)

Well, after yesterday's inside day candle, today was an outside day candle down. The S&P500 cash index had closed yesterday at 2,717 and it began trading slightly lower to 2,712 for just the first few minutes before turning higher to trade to a higher recent daily high at 2,739 during the FED announcement.  The ES traded at 2,744 or slightly over it's 18-day SMA of 2,741. During the FED press conference, the market turned lower and took out yesterday's daily low, at 2,710 before swinging around again to trade higher again to 2,730, then lower again to close close at 2,712, down about -5 points on the day.

If you recall, the 62% retrace level of the prior up move was 2,705 - 2,706, and the actual daily low is below that at 2,695. So, although it was a poor close the situation needs to be watched closely. Above today's 2,730 high in the next two days may constitute a trap for the bears. 

Below the recent 2,695 low and triangle possibilities may be extending lower, or worse. We'll address those latter possibilities if and when needed.

Here is a chart of the daily S&P500 showing that price is currently defining another rising trend line from the February lows. Also, is a Fibonacci ruler showing that a deeper triangle could easily be defined, if the market wishes, because the (c) wave down of such a triangle is not yet 62 - 78%.

S&P500 Cash Daily - New Rising Trend Line

If the market goes lower, the deeper triangle is likely. If the market breaks today's high in a third wave up, then the upward contracting diagonal assumes more emphasis.

Once again, it is The Fourth Wave Conundrum at this time, and flexibility, patience and assessment of the possibilities - rather than a dogmatic position are likely needed. Objectively, I have no particular interest in which is to occur.

Just fyi - yesterday and today Crude Oil may have begun it's climb out of a triangle I have been monitoring in my own work for some time too. A daily chart of Crude Oil futures is below.

Crude Oil - Daily - Upward Breakout of Triangle

In this case, price has the right look for a triangle, and the upward move certainly has the appearance of being the powerful thrust out of a triangle. This suggests price may go over the prior high. If price does go over the high, I will have more to say, later.

For now - have a very good start to your evening.


  1. I so appreciate your steady hand on the tiller following these twists and turns and swells and troughs.
    As an English teacher though have to quibble over your 's's. Because everything else you write is so punctilious.... so, not, "Crude Oil may have begun it's climb...." but rather "Crude Oil may have begun its climb." Not "slightly over it's 18-day SMA" but rather "slightly over its 18-day SMA...." hope you don't mind the tweak.....keep up.

    1. Its going to be corrected in the future. Believe me!

    2. I have to chuckle at this. As a teacher I've noticed those mistakes too. The word "it's" is a contraction and one cannot use the apostrophe ('s) with the word "it" to denote possession--but star reader I would never have had the gumption to correct Joe! But,like you star, I appreciate the precision Joe uses to count us through each wave. Thanks Joe : )

  2. Hello Trader Joe,

    Excellent observation on the Crude Oil Futures. Looking at the explosive move upward, I would say the price action definitely confirms your analysis!