Backing Off

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

Yesterday we wrote, "There are now enough waves within sub-minuet wave .iii to call it complete, but it could have smaller degree waves if it intends to sub-divide. Regardless, we need to be on watch for the onset of sub-minuet wave .iv of minuet wave v."

With today's gap down opening, and further follow-through, the onset of wave .iv appears to be in the market. Stocks, as measured by the S&P500 Index, had closed yesterday at 2,914. This morning, they opened down at 2,909, and fell to 2,907, before a brief rally to 2,912, and another fade to 2,904 by about 11:30 am ET. At that time a rally attempt to surpass 2,912 failed, and stocks headed lower in earnest on a news story that another $200 billion in tariffs against China was about to roll out. (Whether that is true or not remains to be seen). Stocks fell to the 2,895 level, the level of a prior wave four, closing an up gap, and found some support there, closing at 2,901. Here is the daily chart of the cash S&P500 Index for reference.

S&P500 Cash Index - Daily - Backing Off

  
The market is most likely now in sub-minuet wave .iv, as shown. Being a fourth wave, being subject to The Fourth Wave Conundrum, and it being near a holiday weekend, make the progress of this wave very uncertain. This wave can take a lot more time if it wants. It can go over the top again (in a 'b' wave portion), or it could form a triangle. That much is unpredictable. However, wave .iv should not overlap wave .i for this count to hold.

The Elliott Wave Oscillator remains green, rising and above the zero line. It has not broken-out to new local highs yet, and so is still on a divergence. By the time wave minute (iii) is over, the EWO may have broken out. Time will tell.

For now, the S&P500 has another cash gap at the top of the market. The Dow missed filling it's cash gap from Feb 1 to Feb 2 by 20 points, yesterday, and backed off further today. Stock market volume has gotten quite light at only 2.7 billion shares on the NYSE. That can make for some flaky trade, along with the likely fourth wave.

Have a good start to your evening, and a good start to your long weekend if you have left already!
TraderJoe