Before the Bell - Sep 20

I thought it might help to have a healthy dose of objectivity with the morning coffee this morning, so this chart might prove instructive. The point of this exercise was to look for elements of the wave count that it would be hard to argue with. So, here is the daily chart of the S&P500 Index.

S&P500 Cash Daily

The very first element that seems hard to argue with is that, when measured in this manner, wave minute ((iii)) would be at the 1.618 Fibonacci extension from wave minute ((i)). Besides just being a measurement, one can count how many daily closes there are on the 1.618 level providing temporary resistance at that level, which makes it more difficult to argue against it.

The second point that seems very hard to argue with is that there is overlap at the 2405.77 price flag. And that's just because, there is! From an interpretation standpoint, then, looked at in the cold light of day, that wave fits 'best' as a second wave because wave fours should not have overlap.

The third element that seems hard to argue with is that if you draw a line from 0 to ((ii)), then a wave ((iv)), as drawn, sits on that line and had a slight break of it.

And, the last element that seems hard to argue with is that the DOW made a lower low at 0, than the S&P500 did. That's because, it did! So, that seems like where the bottom is, in a slight truncation for the S&P500.

From that, one could interpret that this wave count provides FLAT and SHARP alternation for waves ((ii)) and ((iv)). That is the interpretation that seems most straight-forward to me. That leaves only a fifth wave up - no matter how it is counted. Even if it is the expanding diagonal fifth wave.

But, you don't have to agree with that interpretation. You could also possibly still have a FLAT for wave ((ii)). Then, you could have a very ugly TRIANGLE for wave ((iv)), ending in the beginning of September to provide alternation. This possibility was suggested by reader mblcta, and I want to give him credit for it. There is only one issue with that interpretation as I see it. And that is the fact that such a triangle would have awful proportions - just like a similar one in the DOW would. But then, from there, one expects a more simple impulse as the last wave from the triangle.

The major point is that, in either interpretation, a fifth wave at minute degree is most likely. Not some cascading series of third waves. And, particularly, in the second interpretation, the triangle would likely mean that "the last wave in the series in dead ahead".

This likely means one should at least be planning on the market returning to the fourth wave of the previous degree at a minimum after this up wave completes. It could go much lower than that, depending on what wave label one has placed at the March 2017, high. Either way, one comes out with a similar answer.

Have a good start to your day.
TraderJoe

Supplement: Added this chart after the bell. The a wave occurred on schedule and with a minor new high. We now have two smaller fractal diagonals most likely inside a larger diagonal. The upper trend line has now been tilted up.

S&P500 Index - 15 Minute Chart