Still in Limits - 2

Market Outlook: Expecting Higher Volatility
Market Indexes: Most Major U.S. Equity Indexes were higher
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

After counting "five up" and a retrace yesterday, the market as measured by the S&P500 opened with a gap up, after the futures had been higher both before and after the employment report. The cash market had closed yesterday at 2,637, gapped up to open to 2,646, and traded as high as 2,649 within the first fifteen minutes. The gap appeared to be a "three-of-three" gap this time. Then, the market traded largely sideways for the remainder of the day in what appeared to be another, smaller degree running triangle wave ((iv)). At the close, the market thrust out of the triangle to close at 2,651.50.

As a result, we can count the four legs of a potential triangle, as shown on the S&P500 15-minute chart below.

S&P500 Cash Index - 15 Minute Chart

While it can not be stated that the upward (D) wave is over at the present time, the potential triangle has just over a 62%  for it's (C) leg, and the (D) leg is now just over 62%, as well. There would be no issue if the triangle ultimately morphs into a barrier triangle or diagonal, as well - depending on whether the retracement stops here, more near a 78% retracement, more near the prior high, or whether higher overall highs are made on this leg of the movement.

For either the running triangle or the barrier triangle, it would be 'required' for the (E) wave to cross back under wave ((3)), if the wave travels above it. And, for form and balance, the (E) wave should cross under the EMA-34 in a more dramatic (E) wave, lower.

So far, this triangle has showed quite bit of upside bias, with the C wave of (C) truncating slightly, where the DJIA did not. So far, this is a multi-day triangle, but it is shorter than the prior one, so far. The only thing that leads the analysis away from an ending diagonal is the timing relationship between the waves. If the (B) wave were (1) of a diagonal, then it would be shorter in time than this wave. It would usually (not always) the opposite in a contracting diagonal with (3) shorter than (1).

As an (E) wave at this location it can not go below the (C) wave. But it is possible for the triangle to 'grow' in the downward direction - and for the (C) wave to become a more complex wave down to the 78.6% Fibonacci retrace, but there is no sign of that yet. I mention it for completeness at this point.

This is one of the reasons for the name, "Treacherous Triangles". Hope this helps.

Have a very good start to your weekend.
TraderJoe