Lowest Cash Close

With reference to the chart posted yesterday - which may be another valid form of diagonal - today made the lowest cash close of the decline since January 2022.  Here is a repeat of the cash closing chart, updated for today's data.

SPX Cash - Daily Close - Contracting Diagonal

As you can see, today's close was lower than wave Minor 3. Today was quite the drop to the 4,200 level. Can we say this form of diagonal is completed? No, we can't because on an OHLC chart today's intraday low is not lower than the intraday low at wave 3. Today, we could count 'five-waves-down' as per the SPY 15-minute chart shown in the prior day's post. So, a retrace of some degree may be in order. Note that today's a wave is shorter than all of wave Minor 3, so degree labeling is adhered to.

It is also worth reminding you of the potential Expanding Diagonal count from the ES 8-hour futures, posted previously, as well.

In this count, trading below 4,061 is needed to validate wave Minor 5 of the diagonal. The minute ((c)) wave down of Minor 5 should be either an impulse or a diagonal, itself. Then, we need to monitor lengths overall. Sometimes, from the few examples of expanding diagonals we know of, the fifth wave of the expanding type of diagonal comes very to - but does not cross - the wave 1 to 3 trend line. In other examples, there is a bear throw-under of that trend line, and then prices quickly spring back inside the diagonal structure. If price follows one of these two later paths, it may become too long for the contracting variety of the diagonal (i.e. the first chart, above) to remain valid.

Clearly, we are open to either interpretation and are monitoring the situation carefully. Bear in mind price hit the daily lower Bollinger Band today (where the Smart Money may take some profits off the table - to paraphrase Ira), but the daily slow stochastic is not in over-sold territory. Interesting!

Have a good start to the evening.

TraderJoe