Still in Limits

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

The futures were higher overnight on likely Senate passage of the tax bill. The market as measured by the S&P500 closed yesterday at 2,681 and opened (+7) points higher at 2,688 and traded up to 2,691 before quickly reversing course to close the opening gap in the first half-hour.

Many markets today did make lower low days which will turn their daily swing-lines lower. This included the DJIA, the S&P500, the ES E-Mini S&P500 Index futures and the NQ futures. While this is not overly detrimental to the market yet (because of the narrow point loss), the new daily lows - with lower highs - are to be respected. The S&P500 cash got down to 2,676, before trading sideways to close at 2,679 - down just two points. In this regard, the ES daily slow stochastics have not traded below the 80 level, as of yet. That is something to watch.

While we have a downward count working in the chat room, price has not created sufficient downward overlaps yet to conclude that a Minor 4th wave is unquestionably underway. However, the 1.618 Fibonacci extension on the weekly chart is literally points away, and the count below respects 1) that Fibonacci relationship, 2) the high point on the Elliott Wave Oscillator (EWO), 3) the degree labeling of each of the waves, with the minute waves smaller than the minor waves, and the minuet waves smaller than the minute waves, with 4) an extended first wave for minute ((i)), with minute ((iii)) and minute ((v)) being smaller than minute ((i)), and 5) the large hourly triangle we had, and diagonal which may be now over.

There would be nothing wrong with marginal new highs provided the hourly diagonal is respected. But, these are not required for a completed count to Minor 3.

S&P500 Cash Weekly - Minor 3 at the 1.618 Fibonacci Extension

In the count above, you can also see that all of minute ((iii)) is now above a line from Minor 2 to minute ((ii)), thus meeting another one of Neely's guidelines.

The alternate count for the above chart would be the Expanding Ending Diagonal (or fifth extension terminal) which I both originated, and have shown before. But, I will not switch to that interpretation until or unless price warrants it!

Have a very good start to your evening, or to your holiday travels if you are heading out on the road for the holiday!
TraderJoe