ES Daily Candle: Lower High, Lower Low, Lower Close: Trend Candle
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)
Over the holiday weekend the overnight futures were lower on the implementation of tariffs, protests in Hong Kong, and dislocations due to the hurricane. As a result stocks opened with a gap lower, and then further pulsed lower when the a weak ISM Manufacturing Index came out at 49.1 (less than the critical 50 level) at 10 am ET.
|S&P500 Cash Index - Daily - Gap Lower|
The long term view was explained in the weekend video, and the chart above is consistent with it. Prices gapped lower, traded lower, and closed lower. Such a candle can be considered confirmation of the spinning top candle or inverted hammer candle referred to in Friday's blog post. The low of the day was near the dotted orange line which is represents the support provided by the highs of the green candles in the lower half of the range. It is also near the 18-day SMA. The battle at the 18-day SMA rages on.
Today was the first gap downward since mid-August. Once again, in order to increase the likelihood of a third wave lower, then price should respect the dotted magenta down trend line shown. The daily MACD is still below the zero line.
Have a good start to the week.