Interesting Day

Market Outlook: Likely now In Minute ((iv)) of Minor 3
Market Indexes: DJIA & S&P500 cash made new all-time highs, ES futures did not
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

Since we have showed you the key reversal candle in the Dow Jones Transportation Index, it has continued to make new daily lows, as in the daily chart below. Now, it also has a very interesting overlap.

DJTA - Lower Daily Lows and Overlap

This overlap restricts the number of possibilities for wave counts that may be applied to this index.

The best the S&P500 could do today was eek out a 0.02 point gain as a new high. There is a possibility this index is in an upward "b" wave, possibly the "b:3" wave of a barrier triangle or flat. The ES E-Mini S&P futures only tied the high, while the NQ futures did make higher highs. And, the ES futures had another one of those uncharacteristically low volume days with less than 970k contracts traded, versus even summertime lows of 1.1 or 1.2 MM contracts traded. Something is up, yet again!

Today's up move was sufficient that the upward diagonal we were counting was aborted about half way through the session. (At least we were counting upward!) But the up move was very halting, and did not display much impulsiveness. What I mean by that is prices never made it up and over the upward sloping channel shown in the chart below.

S&P500 Cash Index - 15 Minutes - Upward Channel

However, it's not that today wasn't quite the "short-squeeze" if nothing else. During the live chat room, we noted fully 14 candles without a lower low being made by any candle in the sequence after the point marked as wave .ii on the chart. That is quite a run! As a result, after the close I adopted the above count.

As I mentioned in the prior blog posts, with only "three waves down" from the prior high, now shown as a-b-c to a:3, it seemed like we were only counting a corrective sequence. That was correct. The problem is that with only a fractional new high today, we may still be in a corrective sequence. We are still leaving room for new highs yet, as we still don't have a (c) = 1.618 x (a) wave, or a wave which is (iii) = 1.618 x (i).

But, we must also be on the look out for tricks & truncations. If the upward wave movement ended right here, I would call it .v that truncated slightly. But there is no reason to at this point in time. If price is making the suspected triangle shown, then upward price movement might end soon enough anyway to be a b:3 wave. The best alternate for a b:3 wave is a further up wave within a diagonal.

The reason for the above count is simple. There is no way to count that .x wave as another impulse. A middle wave would be "too short". It 'must' be counted as a-b-c to the .x wave. If price gets much beyond 1.618 (at >2,591, or so). I would simply relabel the (a) wave as a (i) wave and go from there. And it would make for another flat second wave, instead of (b) wave shown.

I will try to address the larger count in equities on the weekend.

Just today daily Crude Oil did crack the previous high (reference the weekend video) and may be on it's way to the 38.2% retracement shown on the monthly chart in the video. So, a triangle for Crude Oil's Intermediate (4)th wave may be ruled out. And the W-X-Y or double zigzag count would be the next on the list to look for.


For now have a very good start to your evening.
TraderJoe