Simple is Best Right Now

Market Outlook: Expecting Higher Volatility
Market Indexes: Most Major U.S. Equity Indexes were lower; DJIA & DJTA higher
SPX Candle: Higher High, Higher Low, Lower Close - Yin Yang Candle
FED Posture: Quantitative Tightening (QT)


The market as measured by the S&P500 Index had closed Friday at 2641. Because the Senate's passage of their version of tax cut / reform was not figured into the market, yet, the futures were much higher over night, and the cash market opened at 2,657, and traded as high as 2,665.

Using the Dow chart, below, for three reasons 1) the exceptionally shallow retrace for the down wave, 2) the first sequence of five waves up could not be an extended first wave, as  the second series of five waves up was longer than the first, and 3) the leading diagonal which is 'most likely' an A wave, we called for an A-B-C up today, with the C = 1.27 x A relationship.

DJIA Cash - Two Day Chart

Then, a small five waves down were counted. The market followed through with down side action and the S&P500 filled the gap and turned negative on the day, closing down -3 points to 2,639 while the futures continue to trade lower in the after-hours to down about -9 points. The Dow, too, lost more points. Since we have now had three waves down to Friday's low, and only three waves up to today's high, we think, unfortunately, once again, we are either in a smaller degree triangle or diagonal to end this up wave.

For this reason, and the complications within, right now, the very best we think our readers can do is pay attention to the following levels on the daily ES E-Mini S&P500 Index Futures.

ES E-Mini S&P500 Index December Futures Key Levels

The only structure we are showing you is the prior triangle we counted out for you in real time. From the ((E)) wave of the triangle we can only count three waves up to 2,660, and the Long Bar, is either all of the fourth wave, with a possible to diagonal to follow, or the Long Bar is just part of a triangle. In either event, the long bar is the longest to form since this leg of the up trend began.

Therefore, trading below the long bar would be a significant warning to to start counting waves with a trend direction of down. And trading below the ((E)) wave of the triangle would most likely constitute an actual change in the wave counting trend (CIT). The NQ futures may be making a triangle or a FLAT fourth wave.

Keep your eye on this second daily chart. We will!
Have a good start to your evening!
TraderJoe