Back to the 18-day SMA

On the daily chart, the ES returned this morning to the 18-day SMA, "the line in the sand". Readers of this blog should verify this as they wish. The down move looks impulsive and maybe counted as the extended first wave ("falling knife") count. The SPY 15-minute chart shows this count below. For cash, the day started with an initial gap, lower. Wave ((5)) is then shorter than ((3)) which is shorter than ((1)) in the downward direction.

After the morning low, there were three waves up in a channel, including a diagonal we counted out in real time on the SPY 3-min chart. Towards the end of the day, the channel broke lower, and so we don't know if a longer second wave ii would be made by a flat, an expanded flat or a double zigzag upward - or if it is done already. The overnight futures might be watched for some clues. I don't think the upward wave is a fourth wave as it would seem disproportional and break the wedge shape (the "falling knife" shape) that Neely indicates the extended first wave counts exhibit. And, if it is a second wave it can take more time relative to the downward wave and travel more towards a 38% retracement or higher.

Have a good start to the evening.

TraderJoe