Clarity Required

U.S. Debt Clock: $22.93 Trillion; prev $22.93
ES Daily Candle: Higher High, Higher Low, Lower Close: Yin-Yang Candle
Market Posture: Neutral and Probing
Daily Swing Line: Up (Higher High, Higher Low)
Daily Bias: Up (Settle Above 18-day SMA)

Yesterday, we said that if there were higher highs, it was possible to begin to make an impulse out of the minute ((a)) wave up, which started out as a diagonal. This morning there were higher highs - for a few brief moments. The three-block below shows why this 'third wave up' consideration is possible using the S&P500 cash, the NDX cash, and the DJIA cash indexes.

Is the Minute ((a)) Wave Extending?

You can see on the left and the middle, that is is possible to consider a short, running flat wave ii, (in the SP500) followed by a five-wave-up wave for wave iii. In this case, wave iii would be shorter than wave i. That is OK. There is no rule preventing it. The rule is simply that wave three is not the shortest wave.

But the Dow seems to be having none of it, and had not made an extension up yet that allows enough room for a fourth wave without overlap. So, is minute wave ((a)) still in progress? More waves are needed. 

With the FED announcement tomorrow, and such uncertainty in the wave pattern, it seems best to let a few things shake out. For the "diagonal-turned-impulse" sequence (ala the first two charts) there should not be overlap on wave i, as shown by the red dotted line.

And yes, if minute ((a)) was completed as we originally indicated, and as shown on the Dow chart, then it is possible that the wave ii, and a are really the minuet (b) wave after the diagonal minute ((a)) and we have started minute wave ((c)), upward.

Flexibility, patience and calm are required as well as some quick thinking here to see what wave pattern is becoming most prominent. So, get some rest, and ...

Have a good start to your evening.

TraderJoe