Minute (iv) - or worse - Likely Underway

Market Outlook: Topping Process Underway
Market Indexes: Major U.S. Equity Indexes closed lower; DJUtil higher
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle 
FED Posture: Quantitative Tightening (QT)

Yesterday we said to be on the watch out for a truncation because the margin was razor thin (only about -2 points) between a trend change and a sub-dividing wave c of minuet v of minute (iii). In the overnight futures markets, it quickly became apparent that margin of error was not going to hold. So, it is likely the minute (iii) wave topped last night, and as we showed before, the minute (iii) wave is a 161.8% extension on wave minute (i) to within points. Here is the daily chart again, with that key measurement.

S&P500 Cash Index - Daily - Gap Lower

It was only wave minuet v, of minute (iii) that had a slight truncation, and only by a point - completely acceptable given that the Dow did make a new all-time high, yesterday. Today's gap lower will likely continue the process of the Elliott Wave Oscillator moving lower toward the zero line for minute wave (iv).

Now, it would be common for minute wave (iv) to get down into the vicinity of minuet iv. Minute (iv) has already contacted and broken the EMA-34 indicating that as a minute (iv)th wave it would have good form and balance. But, it could have farther to travel lower. How it gets there is anyone's guess, and this is part of The Fourth Wave Conundrum, yes, which happens at every degree of trend. What we can say is that since the x wave of minute (ii) "went over the top", then the b wave or x wave of minute (iv) should not go over the top in order to show good alternation. So far, so good.

From the standpoint of an internal count from the high, so far there are only three waves down. By making a lower low tomorrow, the market could impulse. By making a higher high than today's bar, before a lower low, maybe a double zigzag lower becomes a possibility or a larger triangle. The Payroll Employment report is tomorrow, and the market's immediate and longer term reactions will be telling.

We have also cited before that the risk of making an incorrect count decision here is growing rapidly. So, last night's high has also been listed as the alternate wave minute (v), and the end of the entire bull market in a slight truncation.

One thing is for certain: the market left a gap today (see the last red circle). Inquiring minds have to ask why. Why not a key reversal at the all-time high, for example: is that coming up in our future? But that is just one of the reasons why the red count is currently the alternate count, and not the main count.

Have a very good start to your evening.
TraderJoe