Consistent With

In a daily price pattern that is at least consistent with the potential ending contracting diagonal count we posted yesterday, today the daily ES E-Mini S&P500 Futures made an outside day down as the chart below shows. One does have to ask, "why did it do this today?". Is it because the cash index can not travel any higher? Cash did not make a higher high today as the futures did.

ES E-Mini S&P500 Futures - Daily - Outside Day Down

We are the first to admit that it's not the largest down candle ever, but it did make a higher high than yesterday's bar, and then it turned around and made a lower low - not only over yesterday's low, but also of Tuesday's low, as well.

Again, we said yesterday this price behavior simply is simply not reminiscent of a powerful third wave in an impulse, and therefore, it seems best - at this time - to call it the minute ((c)) wave of Minor 2.

The slow stochastic indicator is shown for reference only. While there is a cross lower - showing some loss of momentum - neither of the lines of the indicator have crossed below the 80 level. There is still nothing overtly bearish on the chart, and even today's price decline was quite choppy. Still, this is the best way that we can count and maintain the required degree labeling, so we'll see what develops in the next couple of days. 

From an Elliott wave perspective, the chart can be counted as if a top is 'in'. Now we need to see if confirmation occurs. An initial confirmation would be making a low beneath wave (iv) of the diagonal. Refer to yesterday's chart if unclear. A second level of confirmation would occur by overlapping the upward minute ((a)) wave in the downward direction. A third level of confirmation would occur by trading below the ((b)) wave in less time than the diagonal took to form. This would be the 'post-pattern-behavior' that an analyst such as Neely would expect us to obtain to call the count correct.

Have an excellent start to the evening.
TraderJoe

P.S.  Early in the morning, the DJIA made a new daily high. Shortly before 11:30 AM ET the S&P500 also made a new high. As a result, the minute ((b)) wave triangle can be re-established as the more correct count, as below. And, there are either five waves up or three waves up to the current high. Price is closing in on the 50%, and possibly the 62% Fibonacci extension on the minute ((a)) wave, as below.

S&P500 Cash Index - 90 Minute Chart - Back to Minute ((b)) Triangle

The alternate is clearly shown in red as minuet (iii), still.