Market Indexes: Major U.S. Equity Indexes closed lower; NAS, NDX, RUT higher
SPX Candle: Lower High, Higher Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)
It was a fairly light day of trading again with only about 3.3 billion shares traded on the NYSE. This is the type of volume we were seeing during the U.S. Labor Day holiday weeks. But here it represents caution ahead of the FOMC meeting results tomorrow. The DOW and the S&P had modestly lower closes. Smaller stocks were higher. Stocks had opened modestly positive, and traded somewhat higher (+5) until just after the open. Then, they turned lower but the S&P did not make a new daily low, while the Dow did. In the end, the S&P500 closed down about -4 points.
Yesterday, we showed the possibility of a diagonal wave at the market high. Today, the parameters needed to continue that count were maintained. Here is a two-hourly chart of the S&P500 intraday.
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| S&P500 Cash Chart - 2 Hour - Potential Diagonal |
So far, the pattern has the classic wedge shape and the expected divergence in the MACD indicator. It would be nice to see a lower low within wave (4) for the c wave of (4) - perhaps even a little throw-under the lower wedge line which comes in around 2900 - 2905. There are still lots of ways this pattern could evolve yet - depending on the whippy behavior from the FED meeting. For example, the b wave within (4) may not be done yet, and could become a flat or a triangle. But, ultimately, wave (4) should be able to be counted as a zigzag.
If wave (4) gets "too deep" it would invalidate a diagonal. It may not become longer than wave (2), and it may not trade below the low of wave (2) for this pattern to hold. If the pattern does not hold, the next best guess would be a triangle of some type. But, we'll comment more on that only if needed.
Have a good start to your evening.
TraderJoe
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