Two Options - The Principle of Equivalence

With the ES roll-over futures now at a new all-time high, the Principle of Equivalence tells us to be on the lookout for these possibilities. The first is "Minor A is done" and an Expanding Triangle Minor B is in progress.

ES Futures - Daily - Minor A is Done

What this count has going for it is that it meets the rules, and from a timing standpoint each leg is 'longer in time' than the prior leg in the same direction. For this count to really emerge, then cash should (must) also make a higher high. But, then the minute ⓓ wave should approximate a 150% extension.  Notice there is also a way for the expanding triangle to be in a fourth wave position, minute ((iv)), as shown secondarily, but that is a rarer situation.

The second count is "Minor A is Not Over", and either an impulse for minute ((v)) is underway or a diagonal wave is underway.

ES Futures - Daily - Minor A Still to Complete

In the above chart, the diagonal is sketched out. But then its wave (i) and (iii) would most likely make new highs.

At these lofty heights, the Principle of Equivalence is really saying, "Be absolutely prepared for large down drafts, but look for a pattern than can be counted." Be calm, patient, and flexible and we head towards the end of the year. I'm absolutely ok with either pattern. One implication of the second pattern is that a deeper wave would form for Minor B. One implication of the first pattern is that Neely says that the thrust up out of an expanded triangle sometimes fails.

Have an excellent rest of the day & Holiday upcoming if you are celebrating. I know I am!

TraderJoe