Wednesday, May 2, 2018

Whip and Froth Continue

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

Yesterday we wrote, "None-the-less, do not be surprised by a 38% or greater pull-back beginning tomorrow or the next day." That pull-back occurred today, after a visit to slightly higher highs. But, now there is a potential problem. 

Looking at the ES E-mini S&P500 Futures below, one can see that the count is at high risk of invalidation.

ES E-mini S&P500 Futures - 30 Minutes - Flat or more of (b)?


The futures closed at 2,627. And the prior low is 2,623.25. Since a wave 2 may not go below its wave 1, then even one tick below 2,623.25 - even in the overnight - would invalidate the wave 1, up count of minuet (c) of the minute ((d)) wave of the larger daily triangle.

If it, the 1, 2 count, does invalidate, then one might surmise that the (b) wave is continuing with a further sub-division as we said was certainly possible at least until there is any further evidence upon which to base a count. If the 1,2 count survives, then the structure is a common flat wave. In the cash market, the S&P500 did stop at the 78.6% retracement level on wave 1, even if temporarily. Let's see how it goes.

Have a good start to your evening.
TraderJoe

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