Market Indexes: Major U.S. Equity Indexes closed lower; DJUtil Higher
SPX Candle: Lower High, Lower Low, Lower Close - Red Marubozu
FED Posture: Quantitative Tightening (QT)
Sorry for the late post. The holidays approach, and I won't be posting anywhere near as much, or as timely, or responding to comments as frequently.
Today was an excellent example of how the contracting diagonal we showed on the ES chart likely ended the upward c wave of minuet (ii) wave on the hourly chart. Nearly to a person, with a few notable exceptions that are catching on, almost everyone wanted that wave to have more time, or to have more price upward. Those that saw the very long b wave down know that in such a case, the upward c wave can fail. Fail it did, and down it went.
When one looks at the daily chart, the candle pattern that is seen is that of a Red Marubozu candle. Often, and not always, such a candle is a continuation pattern, and not an ending pattern. For that reason, and because of degree labeling, the count that applies best is this one.
|S&P500 Cash Index - 5 Minute Chart - Red Marubozu|
The 'Prior wave' at the top that looks so tempting as 1-2 (with the whole down wave as 3) is likely the failure wave. You will note that the wave from ~12:30 to 14:00 did not break the low of the prior fourth wave in less time than the wave from 09:30 on the 16th to the high at ~13:00 took to build. Therefore, that down wave from ~12:30 to 14:00 would be very, very suspicious as the first wave of the down count, even though that's it what it might look like to one's eye. But that down wave also did not even break the trend line of the prior waves - making it even more suspicious as a first wave lower.
Notice in this count that wave ((5)) is shorter than wave ((3)) which is shorter than wave ((1)), and wave ((4)) took more time and alternates in shape with wave ((2)) - which is the usual order of business. Wave ((4)) is a Flat, and wave ((2)) is a Sharp. Further, there are no degree violations in this count, which is very, very difficult to say if the waves from 12:30 - 14:00 are counted as a 1-2. That count would seem to introduce degree violations. The gap is a sub-wave iii of the wave ((1)).
The hourly count remains the same at this time.
Have a good start to the evening,