Gap Filler

Today's down wave in the ES March contract filled a number of gaps in the SPY cash index and the ES roll-over contract. The roll-over contract is shown in the chart below, unadjusted. The lengths of the waves remained valid for the count below, even with the roll-over considered. If there was a 'true' ending diagonal at the all-time-high (which does have fairly significant odds), then the entire diagonal from the wave iv location should be retraced in less time than the diagonal took to build.

Today's down wave was too long to consider it 'by the rules' to still be inside of the contracting diagonal. So, it may be a first wave down, ① or i. For the moment the degrees are being left relative and there will be more to say about the degree labels on the weekend.

Retraces of this wave can occur at any time. The next targets lower include wave ② and wave iv. We need to see if the market has the downward strength to delineate a trend change. This is a process called "post-pattern confirmation". The first step of that occurred today in that the wave ② to ④ trend line was exceeded lower in 'less time' than wave ⑤ took to build. The next step requires a solid close under the wave ii to iv trend line which we touched today.

Have an excellent rest of the evening,

TraderJoe