On Overlap Watch

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

On Friday, we showed how - by measurement - it was possible to consider a minute wave (iii) of Minor 5 that was 1.618 x minute (i). Prices as measured by the S&P500 cash index closed on Friday at 2,930. With the futures prices lower over night on political news, the cash market opened with a gap lower of -8 points at 2,922. By about 10:30 am ET prices had traded another -9 points lower to 2,913: the low of the day. That down wave was low enough to overlap a prior all-time high and puts us on "overlap watch" for a potential triangle or diagonal.

S&P500 Cash Index - Daily - Downward Overlap

As per the chart above, the potential diagonal for a minuet vth wave of minute (iii) is sketched in as a dotted magenta line. In that case it is also possible to see minuet iv as just a running flat wave, and not a triangle. Usually, as I have commented before, diagonals do not immediately follow triangles - because they are cousin patterns.

Again, diagonals are patterns which must be proven, and as I have said before, the risk of incorrect wave counting has now gone up. We're doing the best we can. But, the Elliott Wave Oscillator remains green and rising, although it may be beginning to diverge.

Have a good start to your evening and to your week.
TraderJoe