Light Volume Continues

Market Outlook: No Confirmation yet of top of Minor 3
Market Indexes: Most Major U.S. Equity Indexes were higher; NQ / NDX lower
SPX Candle: Higher High, Higher Low, Higher Close; spinning top candle
FED Posture: Quantitative Tightening (QT)

Today's small gap up was high enough to allow the Elliott Wave Oscillator in the chart below to register a small third wave. As a result of the gap and the position of the EWO, it appeared the best count was a third wave.

S&P500 Cash Index - Less Likely a Diagonal Now

So, we rearranged the current wave labels to show the fourth wave triangle ending on 12 October, as the gap out of it as a first wave ((i)). That most likely made wave ((ii)) a double-combination which counts as (w), (x), (y) - where the (y) wave is a triangle. Remember, second waves, by rule, may never be a triangle in their entirety. Already a wave ((iv)) could alternate with it, as it's (b) wave did not go over the high. It is also possible for this wave ((iv)) to become more complicated, yet. But, in this count a wave ((iv)) may not overlap 2557.64 in the downward direction because, in an impulse, wave ((iv)) may not overlap wave ((i)).

Because of the current lack of downward overlaps, we are not currently calling this wave as a diagonal (see below). And that may provide further evidence yet, that this upward wave is only Minor 3, and not the entire end of the cycle. The upward move is getting quite gap-ridden, though, and may not be far from a significant set-back. If it becomes required (due to overlaps) to switch back to the diagonal count, then so be it - so see below.

We don't want to harp on it, but the market is shouting something. The ES futures volume today was still in that 720 - 730k range. To see two days in that range for a non-holiday period is astounding!

Now for those who just can not believe this is anything but a diagonal, below is my best effort to sort out how this wave may still be a diagonal, and keep all of it's waves within the confines of a diagonal. This diagonal now appears on the hourly chart of the S&P500 Index cash.

S&P500 Cash Index - Hourly - Potential Larger Diagonal

In this case yesterday would be the interior (B) wave triangle of a wave ((3)) zigzag. And it still places us in a third wave today. But, then, that fourth wave overlap is required. It turns out there is just enough room to make it, and it would still have the required shape. However, for that count wave ((4)) should not travel below 2553.63 in the cash index, otherwise it would become longer than wave ((2)). Clearly in this structure, as outlined, wave ((3)) is already shorter than wave ((1)).

This second count is a novel and surprising count. Let's see if anyone else finds it?! Again, the only reason I have not formally adopted it as the primary count is that the wave ((4)) overlap is not in evidence yet, and it's wave lengths are not yet proven. It is very, very clear the market is keeping it's options open, and so am I. Patience & flexibility. Patience & flexibility.

Well, that's it for today. Have a good start to your evening.
TraderJoe