Up Against It ?

Today isn't any ordinary day. Today is a day when the ES daily price has contacted the upper daily Bollinger Band with the daily slow stochastic in just an over-bought condition, as below. (The indicator is not yet embedded to the upside).

We don't know before-hand this will be the case, but this is often a location where the Smart Money takes some profits. There's nothing overt in the price structure, yet, other than price is also up into the 62 - 78% Fibonacci zone for a retracement, as well.

So, it's up to the Smart Money at this point. Do the big accounts begin to take some profits here or not? Only time will tell. It may help to look to some hourly candlesticks for clues. We shall see. 

Have an excellent start to the day.

TraderJoe

News Vacuum ??

Next week brings only a paltry number of economic reports (Consumer Credit, Mortgage Applications, Wholesale Inventories, Initial Claims, Michigan Sentiment & Treasury Budget). These are not the typical block-buster reports that move markets - like a FED meeting, CPI, or a Payroll Report.

Then, too, although earnings continue to dribble in, many of the larger reports save Disney, Coke, Oxy & a few others, have already come out. So, a question might be if the market will simply trade higher on a lack of news.

ES Futures - Daily - Higher High

The current wave count certainly allows for some further upward movement. There are still more down days in the count than up days, and they could equalize more or even switch to become more up days, within limits.

We note that the price bias is up. And that should be respected until it is no longer. We also note the upper daily Bollinger Band has been dropping below the prior all-time-high and may provide some resistance on the way up. Then, too, there is a pretty significant resistance/support band between about 5,160 and 5,260. The daily slow stochastic is not yet over-bought.

However, if price rises further, then items to watch out for - while the U.S. is in a news dead zone - would be 1) economic news out of China or the Eurozone, 2) foreign currency movements, 3) geopolitical developments that were unanticipated, and 4) news from our banking system which isn't part of a standard economic or company report, including bank failures, etc.

Then, too, news alone does not have to make market swings. Other internal factors - like traders managing "sell May" strategies, or people going on vacation, etc. can affect the market mechanics. So, it is still wise to be cautious and patient in such an environment until the wave structure becomes clearer,

Have an excellent rest of the weekend,

TraderJoe

HO - LL - HC

The whippings will continue until prices behave. Last night the ES futures made a higher open, only to decline this morning to make a lower low. This was followed by a price reversal into what is likely a higher close near the 18-day SMA. The ES daily chart is below.

As previously written, there are too many applicable patterns to make a call yet, although our count has not changed. See yesterday's post for just some the some of the possibilities. There are more - such as upward and downward diagonals, as well.

The one objective time measurement is that the up wave is still shorter in time than the entire down wave was in days. Often, second waves require as much or more time than their first waves. But, if this structure is still a fourth wave, that might not apply. So, caution and flexibility are really needed, especially with the Payroll Report tomorrow morning.

Have an excellent start to the evening,

TraderJoe

FOMC Results

Plain & simple, based on today's trading, those who were bullish the ES futures didn't do as well as hoped today. First, prices were slightly lower overnight. Then, they rallied into the FOMC press statement and conference - where, though rates were not changed, Chair Powell promised to back off on the amount of QT by $-35 bil. And then the press conference ended with prices heading back down to the area of the open.

Of interest, where did prices rise to? Why to the 18-day SMA namely. Then they staged what looks like a pretty clear reversal. Yet, from an Elliott wave perspective there are still many patterns that can form with the current price structure. We haven't changed our count as there is no reason to, but further whippy behavior is possible.

Remember, we still have the Payroll Employment report on Friday.

Patterns like a Flat, a double zigzag, a triangle or even a third wave, lower, could form from this location & structure. So, if you're going to play some of these waves, do so with the clear knowledge that reversals of direction can come at unexpected times until the market gets into a more clearly recognizable pattern.

Have an excellent start to the evening,

TraderJoe

LH - LL - LC

I had mentioned in a previous post that the ES futures price could trade higher into Monday or Tuesday. They did. They made a higher high on Monday. And, when trading started for the Tuesday session, prices traded higher than the prior close. But they couldn't take out the previous session high, and collapsed on a turn-around Tuesday, closing lower than the three previous closes. Apparently, the higher employment cost index, the higher housing prices and the much lower Chicago PMI reading (37.9 vs prior 41.4) were too much for the market to absorb.

Today was, coincidentally, also the end of a calendar month. So, there may have been an element of the typical end-of-month "window-dressing" involved in the mix, as well.

So now, tomorrow is both the first of a new month (which often sees the typical inflows from company bonus plans, 401K's, dividend reinvestment schemes, etc.) and an FOMC announcement day with press conference following that. The FED could decide not to change the rate structure but might decide to tinker with the pace of the quantitative tightening - or not! 

So, there is some significant potential for price retracement, but there is no guarantee. Sometimes the investment committees decide to wait on the announcement results and make decisions the day following. Then, too, there are lots more economic reports yet again on Thursday & Friday.

So, a lot of things are possible tomorrow. A whippy session can not be ruled out. However, a suggestion would be to treat yesterday's high as a 'wave-counting-stop' until we know more. 

Keep in mind we still have the lower daily Bollinger Band and the 100-day SMA below the market. There is no change in wave count yet from the prior post, but since there isn't really a significant upward overlap, I also have to still reserve the right to call a new lower low - just five-waves-down in an impulse (rather than the bullish falling wedge). 

We'll see how it goes, and I can only say that one "old dog in the business" - Ira Epstein - tends not to like to trade through major reports. He has someone who agrees with him on that score - at least not until the results are known and the algo's have had their say for a while.

Have an excellent rest of the evening,

TraderJoe

Battle for the 18-day SMA

Based on the ES daily futures, prices spent the day waffling on both sides of the 18-day SMA, the "line in the sand", at about the 50% retrace level.

As of this writing the futures are not closed yet, but at the cash close they looked to finish above the mark. If so, that would flip the bias to positive for now. But the bars are currently "narrow-range-bars" and that raises some concern.

Another item of note is that the upper daily Bollinger Band is curling down under the prior all-time-high. In the middle of the price range extreme patience and flexibility are needed because the daily algo has the largest room to move and can generate whippy prices just for the pure frustration of it.

Have an excellent start to the evening,

TrasderJoe

BFW

The simplest way to count the hourly SPY chart is with a truncation (*) wave up just short of the former all-time-high, followed by a Bullish Falling Wedge (BFW) lower, followed by a channel count upward in the following manner.

The upward (c) wave does not have to be done, yet. It might spill over into Monday/Tuesday to try to reach 62% or greater. But, at present, it is in excess of a 50% retrace on the downward wave which is acceptable. 

First waves down tend to be real stinkers, but the alternation in this one is a long and deep wave (ii) flat, alternating with a short and shallow wave (iv) zigzag.

If the up count since the low is going to bear-flag, it should end in this area or else it would have to form a double-zigzag or a Flat to take more time. Overall, I am still looking for five, clear minute-degree waves down to make the Minor A wave.

In any event, have a good start to the evening and the weekend.

TraderJoe