Kicking-and-Screaming

Like a child that won't stand for its security blanket to be temporarily taken away, the stock market bucked and screamed and hollered for another overnight session, and then retreated some. In doing so, it did three important things. 1) it temporarily took out the 'wave-counting-stop' we posted yesterday, and closed back below it again today, 2) it stayed inside of b-3 = 1.618 x a-3, and 3) it made the largest down wave since this potential Ⓒ wave began. Here is the ES hourly chart.

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ES Futures - 1 Hr - Wave ⓒ

As we pointed out in the comments for the prior post, there was a second spot of RSI divergence with the high made today. The most recent up wave since the low on the 10th was a mess to count starting off with a possible diagonal, and including a sub-wave fifth of wave ③ of x iii that went almost entirely sideways before the CPI report.

The wave did include measurements that showed wave iii at 1.618 x wave i, and wave v that stayed less than the extended third wave and came in at v = 78.6 x iii.

Towards the end of the day, the blue lower up trend line was broken and a likely diagonal downward was completed in good form. The down wave made this afternoon was larger in price that either waves ii or iv, previously. Therefore, there is some reason to believe that there could be a change of degree.

Have an excellent start to the evening and to the weekend.

TraderJoe