Break of 0 - 2 Trend Line

U.S. Debt Clock: $23.16 Trillion; prev $23.15
ES Daily Candle: Lower High, Lower Low, Lower Close: Follow-through Candle
Market Posture: Neutral
Daily Swing Line: Neutral
Daily Bias: Up (Settle Above 18-day SMA)
Resistance: Upper Daily Bollinger Band

ES futures prices were about 5 points higher overnight, but by 4 AM they began selling off. Stocks traded lower after the open.

ES Futures - 4 Hr - Break of Trend Line

By the close, the cash market came down to 90% of low, but didn't break it. As a result, we can only count three-waves-down. A gap-down open and lower low are needed to count five-waves-down. While we will watch for that, because that didn't happen today, we note that price did get down to the 23.6% x wave ((3)) Fibonacci retracement. If it can make the 'five-down' then it has one of two chances to get down to the 38.2% retracement of wave ((3)).

The first way is to make that lower low, and form an impulse 'a' wave for a zigzag. Then there would be a retracement 'b' wave, and a 'c' wave lower - probably to the 38.2% level at around 3,200.

The second way to extend the decline to that level, and close a larger cash gap, is to form a double zigzag. Today would count as the first zigzag, and then perhaps tomorrow would be a gap up instead for an 'x' wave, to be followed by another zigzag downward.

But, if the 'Smart Money' is done with their window-dressing today, and they can't stand the thought of missing out on the 'first trading day of the month' gains, then perhaps they will begin forming a triangle upward, with today as the (a) wave down of that triangle. If so, such a triangle could start from this level. The Elliott Wave Oscillator, above, is acceptably close to zero (+10% to -40% of the wave three peak).

It is not for me to say which happens: it's The Fourth Wave Conundrum that I have written about before - and it occurs at every degree of trend. By not making a new low today, the Powers-that-Be saved the daily slow stochastic from losing its embedded status. Price is still over the 18-day SMA which neutralizes for the time being a daily swing line that has made a lower low bar.

Over the weekend, we looked at the last (B) wave in the U.S. Stock Market in 2002 - 2007. If you were Holiday-Busy, and did not see that post, you are encouraged to review it now.

Have a good start to the evening.

TraderJoe