Flexibility and The "Hard Right-Hand Side" - 3

Market Outlook: Topping but a possible triangle at several different time scales
Market Indexes: Dow, S&P500, NQ Higher. RUT Lower

The S&P500 closed yesterday at 2476, then gapped higher to 2481 on the overnight to-do about Apple's earnings results. Finally, that 78.6% Fibonacci level was broken to the upside, as shown. But, the 90% level, interestingly, was not hit - which tends to rule out a flat-style wave.

The gap-up was immediately "sold-on-the-news" and an apparent five-wave sequence in good form was counted out on the intraday chart. Based on these considerations, since there was no fourth and fifth wave apparent in the opening spike, it looked like the thrust out of another triangle. The y wave up finished on that spike, and appears to count like that in the chart below, in which it's .b wave was yet another triangle.

SP500 Cash - 15-Minute Continuation

The five waves down broke both the prior (e) wave, and  the (c) wave of the former x wave triangle, filling the gap from two days ago. But this wave had insufficient power to break the low of 27 Jul. Then prices began the upward march toward  the end of the day, ending at the underside of the larger (green) channel that was broken lower today, forming a smaller (turquoise) channel.

The sideways nature of the EMA-34 at this time, and whippy, but narrow point-range action suggests that either yet a LARGER triangle is under formation, or we topped at y. It is too early to say which yet.

For those having trouble envisioning a larger triangle, I will sketch it out below, along with the alternate. The idea behind such a triangle is that it might be a pre-payroll employment report triangle, since this number might affect whether the FED raises interest rates in September, or not. This triangle uses the hourly chart, and, again, is an idea only. Triangles have to form properly in every detail.

SP500 Cash - Hourly - Possible Larger Triangle

The black count is the triangle, the blue count would be a downwardly pointing impulse - which is the usual opposite of a triangle. For this hourly triangle, it would invalidate below 2459, as shown in red.  The purpose behind such a triangle might be to even out the counts on the Dow and the S&P500, to allow them to top more near each other.

And, yes, again for the curious ones, there is even a larger potential triangle on the chart, starting on 18 Jul if you want to try to sketch that one out. (Hint: it results in two less waves at the end).

Well, that's it for today. Stay alert and flexible as the market makes it decisions. Once again, as an Elliott analyst, I don't make the waves. I can't make them happen according to some preordained plan. I can only count the gyrations as best as possible, following the rules, with an eye to the couple of logical possibilities at the time.

Have a good start to your evening.
TraderJoe