Market Indexes: Major U.S. Equity Indexes closed higher; DJIA, DJUtil lower
SPX Candle: Higher High, Higher Low, Higher Close - Yin-Yang Candle
FED Posture: Quantitative Tightening (QT)
During today's live market session, we wrote than either a triangle or a Flat wave could be in the making. This would have been the possible wave 4 in yesterday's impulse count lower. Why did we say a flat could be in the making? Have a look at the chart below.
|S&P500 Cash Index - 5 Minutes - Possible Flat Fourth Wave|
Notice that there are a clear three waves up as a:3. Then, as a b:3 wave, the downward wave reached at least 90% of the previous a:3 wave; in fact it made a marginal new low before exceeding the a:3 high early today. (This is what the waves on the hourly chart needed to do to make a flat- but hasn't gone low enough yet!)
Starting with the b:3 wave low, there were a clear five-waves up including a fourth wave triangle iv before making the vth wave up to c:5. Very, very often such a triangle signals 'the last wave up is dead ahead'. Note how that wave iv triangle alternates well with the sharp wave ii, and takes more time than the wave ii. Near ideal wave relationships in time.
As if on cue, slightly before noon prices started to fade and picked up down-side momentum later in the day. So, the whole up move can be wave 4, as per yesterday's downward count. And the whole down move late in the day looks like an expanding diagonal - and maybe stretching out the first wave lower so there are no eventual degree violations.
If a 5th wave down is made in the next trading sessions, there may be a valid downward impulse - and we will consider the implications of that impulse more fully in subsequent posts.
For now, it's time to enjoy the holidays!
Best to all.