Slow Day

Market Outlook: Highs are likely in for S&P500, ES, NQ, and RUT, not so the DJIA
Market Indexes: RUT: lower low day; SP500, ES, NQ: sideways; DOW higher.

In another slow day of summer trading, the Russell 2000 continued leading to the down side with a lower low day today. The Dow continued to make higher highs as it apparently struggles to finish a contracting diagonal. A chart of that continued diagonal is below. Note that wave (iii) is still shorter than wave (i). Trend lines will be adjusted as needed.

DJIA Cash - 4 Hr Chart - Potential Diagonal

Sometimes, they like to keep these diagonals going on seemingly forever, as money tries to rotate into the perceived safety of large cap defensive names, after leaving some of the smaller and more speculative issues.

The S&P500 made only an inside candle today. Whether yesterday was a first wave down or just an "A" wave down is still up for grabs. We're watching to see whether the market forms one of two upward structures, those being either a double-zigzag, upward, or a triangle. (By the settlement a triangle had not invalidated yet). If a triangle forms, it would definitely more credence to the A wave case. If the double  zigzag forms then, it might lend more credence to a first wave scenario, but still the odds would be about even in that case. Again, favoring the A wave case is also the fact that the retrace has been deeper than 61.8%.

The NQ futures chart, by contrast, has the makings of a flat correction, as the 90% retrace level of the three upward waves was made this morning. Here is that chart.

NQ Hourly Futures - Likely A Flat Correction as 90% Was Reached

Anyway, we note now how remarkably bullish some people are - even given the seasonal nature of declines in the August / September time frame. And, just a reminder, August is only two trading days away, with a solar eclipse in the middle of it!

Well, until then, there is a fun weekend to have ahead. So, here's hoping you get a good start on it.

Perhaps there will be some more over the weekend.
TraderJoe