Inside Day - Within the Grinder

Market Outlook: In Minor 4
Market Indexes: Slightly Lower Closes

Yesterday, the S&P500 Index closed near the highs of the day at 2052.51, at the resistance of the EMA-13 and EMA-34. Prices gapped down to open at 2443.84, trading as low as 2441.42, then trading higher to 2449, before trading lower again to close at 2444, forming an inside candle with a lower close - as shown below.

SP500 Daily - Gap Down and Inside Day

There are now three open gaps on the chart. The advance decline line, up / down volume, and new highs - new lows were slightly to the positive side. The $VIX did however close above both of the 100-day SMA and 18-day SMA's, with the 18-day above the 100-day SMA in a bullish cross.

From an Elliott Wave perspective, the potential triangle we showed yesterday remains a good possibility. Today was certainly slow enough. That count is repeated below.

SP500 Half-Hour : Potential Triangle Count Still Working

But, as with most triangles, should the invalidation level be exceeded lower, it is possible to consider a 1-2-i-ii count lower. (Keep in mind the above triangle also invalidates if, from here forward, the (a) wave, upward, is exceeded higher.

The alternate count is shown below. It is not the alternate because it is less probable. It is only the alternate in this case because there is less evidence for it. The odds are about 50:50 for either, at this point, pending some news event. The second count has the potential gaps of a third wave working in  it's favor.

SP500 Half-Hour : Impulse in Channel Alternate

The above count would assume more credibility if / when the X wave of wave (2) is exceeded lower. Right now, price was exceptionally slow today. If the speed picks up significantly in the downward direction overnight or tomorrow, the second count should be seriously considered. The second wave, (2) in this case is a rather rare bird called the flat-x-zigzag.

But for now, have a good start to your evening.
TraderJoe