Gap Lower and Rebound

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

Yesterday's inside candle could not break through the previous day's high in the cash market. It was something of a sign of weakness. Stocks, as measured by the S&P500, gapped lower, and continued lower until late in the session when a bit of a rebound occurred. Here is the daily chart of the S&P500 Cash Index for reference.

S&P500 Cash Index- Daily - Gap lower and Rebound

There is still nothing that takes this wave out of the realm of a possible fourth wave. Until there is, one must be patient, and continue to be flexible. Stocks dropped down to the daily EMA-34, breached it a bit, then held, and rebounded. The Elliott Wave Oscillator continued red and lower, as upward momentum continues as dreadful.

But, this is what we technicians have been waiting for. We are beginning to see further signs that the $NYAD is beginning to buckle, which may allow for a divergent top from prices at some point in the future. Today's candle is only a 'weak' hammer candle, as the real body of the candle is not green or unchanged. Therefore, it may only represent being in a triangle still. The Russell 2000 also did not break down out of it's potential triangle.

On another note from our recent posts (and not to be taken or interpreted as trading or investment advice), there is a 90 - 95% chance that the U.S. Dollar Index made at least an interim top today. Concomitantly, the EUR/USD may have bottomed with a similar probability. Typical candlestick charting would require a confirming lower close candle for the Dollar (and vice-versa for the EUR/USD).

Have a very good start to your evening.
TraderJoe