Still in Limits

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

In a very weak confirmation of yesterday's inverted hammer candle, stock prices closed only slightly lower. As measured by the S&P500 Index, cash had closed yesterday at 2,685. By the opening, the futures were largely unchanged, and the cash market went on to open up slightly, but could not fill one of the running gaps we noted yesterday (this one at 2,685.64), and that gap remained opened all day. So cash went on down to trade -8 points lower at 2,678, before trading sideways to higher to close at 2,684, or largely unchanged, creating a Doji in the process.

The ES futures volume was probably the lightest of the year at 584k contracts - even lighter than most holidays. Because of the drifting price movement, the ES is beginning to look suspicious again. And, even though the diagonal we posited over the last several weeks has not formally invalidated, I was able to find a count with my original triangle idea which may prove informative. The chart is below, and it shows the ES 4-Hour time frame.

ES E-Mini S&P500 Index Futures - 4 Hour Chart - Smaller Degree Triangle

In this count, the symmetrical triangle looks to have better form to make wave 4, and the current proposed smaller degree triangle alternate wave iv, above, would have to not overlap wave wave i. Keep in mind this triangle could also be a b wave triangle within the proposed diagonal, provided that the diagonal does not invalidate in terms of price.

This alternate might be a good way to get the S&P500 Cash Index to cross that 1.618 extension mark. So, we will have to watch where the futures go over the holidays. It is still possible we topped at iii, but less likely, as it a lot of time to break lower, and the internal waves are very halting and overlapping.

Well, we'll see how it goes. Have a very good start to your holiday weekend.
TraderJoe