Mixed Martial Arts

In the game of chicken to see who will blink first that we have been describing over the last few days, today the bulls flinched. They are by no means down and out for the count - just yet. But, there was at least a chink in their armor. By the end of the day, the NASDAQ 100 remained higher, the S&P500 and the Russell were lower, and the Dow was virtually unchanged but to the down side. For the ES E-Mini S&P500 futures, today was another outside day down, and a potential key reversal at that - if not exceeded to the upside.

This morning we had showed one version of a potential triangle on the hourly futures, made likely by the whipsaw nature of prices. A triangle did appear to complete, and a picture of that chart is below allowing a "five-count" up.

ES E-Mini S&P500 Cash Index - Hourly - Triangle Completion

The triangle was quickly and briefly exceeded to the up side. Then, as prices headed lower, prices both exceeded the lowest low of the triangle, and overlapped wave 1, as well - allowing the potential completion of a count.

And what is interesting about today - if it should be the top - is that there is not a gap at the high! That's different. What makes us cautious - of course - is the quite narrow point loss and the fact that, while turning down, the daily slow stochastic is still over that embedded 80 level. None-the-less, if today should end the upward movement, then both the S&P500 Futures (ES) and the Nasdaq 100 Futures (NQ) can be counted like this.

ES and NQ Futures - Daily - In the Same Count

Again, if this double zigzag holds, it would likely be the B wave, with a C wave down to follow. What is critical now is to see follow-through and some acceleration. Without it, there is something else going on.

So, flexibility, caution and patience remain critical tools.

Have a good start to the evening,

TraderJoe

P.S. There was a previous post today if you did not already read it.