Ground Chicken

Market Outlook: Now Getting Higher Volatility
Market Indexes: Major U.S. Equity Indexes closed lower; DJTrans, DJUtil Higher
SPX Candle: Higher High, Lower Low, Lower Close - Outside Candle lower
FED Posture: Quantitative Tightening (QT)

Yesterday, we said to expect likely the fourth wave sequence lower in the S&P500 Hourly's potential contracting ending diagonal c wave of (b). That is what happened after a brief pop to the upside to likely finish the fifth wave of (iii) with a brief extension. The cash index finished down about -7.69 points, but was lower intraday. Here is the chart below.

S&P500 Cash Hourly - Wave (iv) of c of (b)

You can see the clear .a, .b., .c structure in the wave down to (iv), and the retrace was 38% of the prior wave. Also, the wave crossed the hourly EMA-34 for good form and balance. Further, we note the EWO, the Elliott Wave Oscillator, is very close to the zero line now, after a clearly divergent higher wave. So far, wave (iii) is shorter than wave (i), wave (iv) is shorter than wave (ii) and overlaps wave (i) as it should, and now, whenever it can be confirmed to begin, wave (v) must remain shorter than wave (iii). The typical "throw-over" of the upper diagonal trend line would be expected, however.

Here's the tricky part. Although within wave (iv) we can now count a completed zigzag down, the alternate within wave (iv) has to be that we have completed only .a, .b., and i of .c. In other words, even though the pattern looks good, the 38% retrace may be a bit short for a diagonal. Wave  (iv) may decide to extend, particularly if there is some event over the weekend. There might be or there might not be. Unfortunately, my crystal ball is not that good, and I'm not a mind reader.

So again, be flexible, calm and patient. So far, things are working as expected. The market is trying to grind out a conclusion to this wave with a typical Elliott Wave pattern. And grind it does.

Have a good start to your weekend.
TraderJoe