Update on Potential Triangle / Diagonal - 3

If you followed  the market today, you know that prices took off upward today in the direction we predicted from yesterday's post. This occurred when Chair Yellen released her written testimony before Congress, and it was interpreted as marginally dovish. Prices traded higher for most of the day and appeared to make a "tweezers top" or contracting diagonal at the end of the day. We'll show you that potential "tweezers top" later on the cash chart, but first, here is the continuation of the ES E-Mini S&P Futures 4-Hr Chart. The potential triangle is still holding. Barely.

ES E-Mini S&P 500 Futures - 4 Hr Chart

At the end of the day, because we were talking yesterday about the potential double-zigzag upward for the (c) wave, then it only had to stay below the (a) wave, and, remarkably, it did. However, we must recognize the actual measurement of the upward (c) wave is > 90% of the downward (b) wave. So far, the waves have acted per prediction - which is gratifying, but the situation still looks tricky.

When we transfer the above ideas to SP500 Hourly cash chart, then this is what the situation looks like - at this time.

S&P500 Hourly Chart

The first A wave down would be the expanding Leading Diagonal that we had commented on - on how wave (4) had just barely avoided invalidation, while the futures did invalidate. And since that time, we have only have three-wave sequences upward - to this point in time. The "deep retrace" might be the "deep retrace" of a diagonal. It is very near the high. At the end of the day you can see the "tweezers top" that may be all of or a portion of an ending diagonal. We do not know that the up wave is complete. It could be. However, in this count, the .y wave is allowed to be above the high of the .w wave, thereby avoiding a truncation.

The "three-wave chop" is what seems to make the a count like this possible, but since the Dow exceeded the highs, we continue to look for other types of triangle or diagonals that would fit this pattern. We haven't found them yet.

From a sentiment viewpoint - to a person the 'talking heads' on TV are still advising people to buy - again - at the highest prices in history (for the Dow). Interesting!

Have a good start to the night.
TraderJoe