Three Waves Down and Reversal

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

Stocks opened lower, and based on the ES futures, during the course of the live chat room session, there appeared to be only three-waves-down before upward overlap. The chart below is descriptive.

ES E-Mini S&P500 Index Futures - Three Waves Down

The ratio between the waves appears to be c = 0.786 x a, and on a divergence of the EWO, and then, in typical whippy potential triangle action, there was upward overlap, likely ruling out a typical impulse downward. The up move came as AAPL was about to release it's earnings. You'll note the highest portion of the b wave, shown, was exceeded in the after hours. 

In terms of extent, a daily gap lower was closed by today's action, and the retrace overall was about 78% of the last 'five waves up' from yesterday's post. (P.S. it was also possible to count that b wave as a triangle.)

So, we may have made part or all of sub-wave two, down, of minuet (c) , up, of minute ((d)), up of the potential daily triangle. The updated daily chart is below.

S&P500 Cash Index - Daily - Potential Larger Triangle

Technically, with cash prices still below the daily blue EMA-34, above, and with daily ES prices still below the 18-day SMA, the line in the sand, then the bias of prices is still lower.

Things will still be whippy, so be very careful. It should be clear by now that patience, flexibility and calm are some of the best wave-counting tools around at the moment.

The NQ futures actually had an outside reversal day up, and are above their daily EMA-34. None-the-less, do not be surprised by a 38% or greater pull-back beginning tomorrow or the next day.

Have a good evening all!
TraderJoe