Upward Overlap

Today saw more of the same "vol squeeze" referred to yesterday and brought ES daily prices up above both the 100 and 18-day SMAs. Temporarily, this flips the daily bias to up and puts a swing-line uptrend into play with the CPI report due out tomorrow morning. Further, upward price movement was sufficient to overlap the first downward wave on both the futures and the cash SPY.

ES Futures - 4 Hr Close Only - Overlap

So, The Principle of Equivalence tells us that i, ii, iii = a, b, c until it does not. Today's overlap greatly ups the odds that the (a), (b), (c) shown at the minuet level is the more correct downward count. That would mean that any further downward progress - say to the 200 day-SMA would be by diagonal only, and this count would suggest such a diagonal might be a contracting one - with the low being minute-((i)) (or circle-i or ⓘ). For the expanding diagonal count, one would have to suggest that (b) is a zigzag (ii) and not a Flat wave - which is what it looks and counts like. So, that count has diminished odds at the moment, but it just can't be completely ruled out.

As for the up wave, it is currently in a parallel and showing some increased acceleration near the upper parallel line. But I'd like to reserve the count on that wave until we see the reaction to the CPI report. There are currently a couple of ways to count it, and if it is a zigzag then often times the 'c' wave of the zigzag pierces the upper channel line. Right now, it is in a pretty strict parallel and that would be a bit unusual.

Have an excellent start to the evening,

TraderJoe