Proof Positive

Market Outlook: Likely Long Term Top Identified
Market Indexes: Major U.S. Equity Indexes closed higher; RUT, DJTrans Lower
SPX Candle: Lower High, Lower Low, Higher Close - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)

By undercutting wave minute ((i)) shown on the chart below, today was proof positive that the hourly diagonal we described at this LINK was, in fact, a Leading Contracting Diagonal. The market doesn't offer such proof too many times (except say when a first wave has been invalidated by price excursion above or below it's origin, or when a fourth wave has been invalidated by overlapping on the first wave). So when the market offers it, we must accept it. 

S&P500 Cash Index - Daily - Lower Low than ((i))

The proof is simple. There was a lower low following the diagonal. The diagonal was predictive, and those that were on the "slope of hope" asking why such a diagonal couldn't be an ending diagonal C wave, instead, have had the final straw placed on the camel's back.

While there is good reason to still think the market can "slosh around in here" between the daily Bollinger Bands, we must also note that today's price action took out the minute ((e)) wave of the Minor 4 triangle - which has been holding prices up so far. That ((e)) wave was presented to you almost as it happened when it occurred back in April/May of this year. This adds further confirmation that the last wave up, shown on the chart as Minor 5 of Intermediate (5) has been seen.

A number of us do suspect that today's down wave was part of a difficult to count b:3 wave of an expanded flat. And, the turn-around that began around 11::00 EST is likely at least the first wave of a c:5 wave of this flat, upward. That's kind of why the blue line starts where it does. We'll see how that goes.

I am done for the day, but I want you specifically to do some homework. Take a weekly chart of the cash S&P500. Look at the candles in OHLC form. Do you see any gaps so far in the downward direction from this high marked 5 of (5)?

Now, scroll that chart backward into 2017, and further into 2016. Do you see any gaps now? Mmmm..hmmm.

Well, that's it for me. Have a nice start to the evening and to the week.
TraderJoe

P.S. Chart added at about 1 PM on Tuesday, based on a) gap fill, b) position of EWO.

S&P500 Cash - 15-min - Possible Ending Diagonal C wave of (ii)

Downward count was in the ES futures.

Downward Count was A-B-C