S&P500 Candle: Lower High, Lower Low: Trend Candle
Market Posture: Neutral-to-Negative and Probing Waves
Swing Line: Neutral (Higher High, Lower Low)
If FED Chairman Powell's speech at Jackson Hole was meant to inspire today, it certainly didn't. Steve Leisman from CNBC almost fell asleep summarizing it. That, and some announced retaliation by China in terms of tariffs, sent the market reeling today. Price broke through the 100-day SMA and then the 18-day SMA and kept on going. In doing so, prices filled the futures gap (black circle at the arrow) we said could fill relatively quickly because futures gaps are just not as persistent as cash gaps. We will remove further reference to that gap from future charts.
|ES - Daily - Lower Daily Low|
While the swing line is confused, today we eliminated the alternate labels on the chart. A more than 2.618 wave was made in the downward direction on the cash 15-minute chart, and that means we should err on the side of a third wave. The bias of price is to the downside again, being below the moving averages. Further, if downside movement continues, the lower Bollinger Band would be a good initial target for the move. The moving averages have crossed over - as we noted yesterday - and today price is confirming the bear cross with lower prices.
The w-x-y failed double zigzag also counts like a good example of a second wave. It found a barrier at the 62% retracement and simply was not able to penetrate it. It tried hard even into last night, still reflecting the caution in the count, but it could not do it. The second wave (ii) is also nicely longer in time than (i), and the Bollinger Bands are now crashing down below the prior high - which should give the bulls some pause. The daily slow stochastic was in over-bought territory and, although it has not rolled over as of the futures settlement, if it does, it would likely confirm the lower daily high.
Any price movement below the x wave would also provide more confirmation of a top. One final reminder: Art Cashin likes to say, "stocks rarely bottom on a Friday".
Have a good start to the weekend.