A Matter of Degree - 2

Market Outlook: New Highs Occurring after Hourly Triangle in SPX
Market Indexes: Most Major U.S. Equity Indexes higher
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

We said yesterday, that there were two very good equal-and-opposite counts to have to monitor. One was a-b-c, up, which implied a down day, and the other was a diagonal wave (1), up, and retrace, which implied an up day. We also said as a direct result that the gap direction had to be monitored. Initially, the futures were lower over night, and then they were higher. The gap direction was up, the diagonal count won out, and prices headed higher into the close.

Here is the fifteen minute chart on the cash S&P500 Index out of the four-hourly chart's triangle ((e)) wave.

S&P500 Cash Index - 15 Minute Chart

Today's wave cracked above the channel, and is greater than wave ((1)), so we must allow that this is a third wave up ((3)). In the count, we have tried to keep the degree proportions between the waves similar. So, (3) of ((3)) approximates (3) of ((1)) - as best we can do it. The implication of this chart is that eventually, a fourth wave, circle ((4)) would come down near the prior wave (4) to make a better parallel channel.  But, first, confirmation of the end of wave ((3)) is needed.

Here is an hourly chart of the Dow, for comparison. The Dow never made a triangle.

DJIA Cash - Hourly Chart - Lower C than A is a FLAT

The Dow only made a FLAT wave, not a triangle, with wave C lower than wave A - which breaks the rules for contracting triangles. So, in terms of degree labeling in the upward count, if you check the point values, we have 3 < (3) < ((3)) as they proceed up the chain, and we have 1 < (1) < ((1)); so this seems to fit as it should. There are no overlaps in the Dow's upward wave count, and here again, the confirmation of a turn would be needed.

Well, that's it for tonight. Have an excellent start to the evening!
TraderJoe