Another Lower Low Day

Market Outlook: A Top of "Some Degree" appears in Place
Market Indexes: All Major U.S. Equity Indexes were lower
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

The market as measured by the S&P500 Index closed last night at 2,579. The futures were lower overnight, and the market gapped down ten points to open at 2,569 and continued lower to 2,557 which was fully -20 points lower, validating a count we had started yesterday in the live chat room and referred to in the blog post yesterday. When the market bottomed at that level, a sharp rally was mounted back to the 2,573 level, but not closing the opening gap.

Yesterday, I said I would share with you the downward count we developed in the cash index if it came to fruition. That count is shown in the S&P500 Index Cash Half-Hourly chart below.

S&P500 Cash Index - Half Hour Chart - Downward Count

This morning we got validation of a properly formed expanding diagonal in the downward direction. Wave (5) is just longer than wave (3), Wave (4) is longer than wave (2), but does not cross above wave (2)'s high, wave (4) overlaps wave (1) in the upward direction and they can all be counted as zigzag sequences lower.

By showing you the yellow (5) flag in an even lower location, it should be clear that it is possible that the diagonal continues lower. In order words, the C wave of (5) could sub-divide, with the current C wave location only the first wave of C. Time will tell.

As we indicated, the EMA-34 is currently headed lower. That has been telling. The retrace downward at the end of the day, today, was to the 62% level so a further up leg is possible to near the level of the B wave of (5), if the gap direction tomorrow is up.

So again, either we have a diagonal to the all-time high ending a fifth wave up, and a diagonal downward, starting a down trend, or the upward diagonal is just a (b) wave, and the downward diagonal is the (c) wave of a flat.

The VIX made a higher high today going all the way back to Aug 21, but it's daily slow stochastic is not yet in over-bought territory. And the daily ES E-Mini S&P500 Future today hit it's daily lower Bollinger Band, but it's daily slow stochastic is not over-sold yet, either.

Today we discussed a slightly different count in the ES E-Mini futures (versus cash above), because the futures make their high at a slightly different location. The two counts are currently "compatible" but they are not the same. The advance-decline line, and up / down volume continued to decline.

Right now, I am monitoring the speed of the decline (price points per number of days) to determine it's significance for longer term charts. But, so far, so good.

The daily chart that shows the best possibility for a (b) wave high - instead of a fifth wave top - is the NQ daily index. However, price has traveled low enough today, that it is time - and advisable - to include the invalidation point on the ((iv))th wave of this daily chart. Here is that chart.

NQ Daily - Last Chance for a Non-Overlapping ((iv))th Wave

I have to admit, I am quite disappointed that people are not contributing by commenting on the blog. Further, I see that readership lately is down. If readership was up, and commenting was down, I'd think you were just satisfied with what your are seeing. With both down, it makes me think I should back off considerably  as people are not spreading the word regarding what is here, and neither are they paying significant attention to it either.

Well. Have a good start to your evening. Time for me to relax, too!
TraderJoe