Market Indexes: NQ Futures made new all-time highs; Dow and S&P 500 cash, not.
SPX Candle: Lower High, Higher Low, Lower Close - Inside Candle
FED Posture: Quantitative Tightening (QT)
The market as measured by the NQ futures (NDX, NASDAQ 100) continued slightly higher today while the ES E-Mini S&P500 Futures were lower. The Russell 2000 led the way to down side.
As of Friday, we had noted only three waves up in the S&P500 Cash Index (fifteen minute chart, below). And with only three-waves-up, there was only a (c) = (a) or (iii) = (i) relationship. See chart below.
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| S&P500 Cash Index - Fifteen Minutes : Three Waves Up and Clear Diagonal Down |
The market as measured by the S&P500 Index had closed Friday at 2,581. When the market gapped lower this morning, we began count an expanding diagonal which formed perfectly in every detail. Cash traded down to 2,568. Wave (5) was longer than Wave (3), Wave (3) was longer than wave (1), Wave (4) was longer than Wave (2) and Wave (4) overlaps Wave (1), upward. This diagonal was of the 5:3:5:3:5 variety which means it should, after retrace, be followed by at least one more wave downward.
Following the diagonal there has been a clear three-wave retrace upward, but the retrace may not be over. Often, the retraces of diagonals go quite deep. Not always, "often".
If the full three-wave up move from Wednesday is retraced 62% we might suspect that an upward diagonal is under way to conclude Minute wave ((iii)) from the weekend post. This might explain some of the divergence we are seeing between markets while the NDX rallies.
There is no doubt the "three-waves-up" from Wednesday could also be a "B" wave - perhaps one which is part of a triangle. We don't know for sure. What we do know is that price has fallen out of the Elliott parallel trend channel shown, and has not made a 1.618 extension at this time. Those facts alone should bring wave-counting caution.
Have a very good start to your evening.
TraderJoe
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