Quantitative Tightening (QT) Begins

Market Outlook: End of Minor 5 (60%), Still in Minor 3 (40%)
Market Indexes: Mixed with SP500, DJIA and RUT higher; NDX Lower

The Federal Reserve announcement today, that the Fed will being to roll off the balance sheet beginning in October to the eventual (data dependent) tune of $600 Billion per year, put a little kink in the original potential ending diagonal - if you follow the rules.

If you did not read the prior post - posted this morning - you are encouraged to do so. First, there was one higher high this morning, as anticipated. But additional higher highs did not occur by the close. They could happen tomorrow. Instead an awful lot of three-wave sequences occurred instead - both lower and then higher.

Here is the S&P500 short term chart. It is getting messy as all get out. But that's OK with me. I'll just follow the rules until we get an understandable pattern. Because of the the depth of the correction made on the FED's announcement, it did change the overall pattern to that of either a barrier triangle or a larger diagonal - perhaps one that will play out on the hourly chart, instead of the fifteen minute chart.

S&P500 15-Minute Chart

Without higher highs, we are now counting the potential triangle (in green). With additional higher highs, we can consider a larger diagonal, and only with a lower low than green (c) can we consider a very ugly flat wave.

Again, the market is taking it's time to figure it out. That's OK. We will too! I also want to take some time to see how the DOW compares to this S&P chart. It may tell a little different story. Stay tuned.

Have a good start to your evening.
TraderJoe