Corrective vs. Impulse

Two charts are below. One is the cash S&P chart (cartoon of the Road Runner, meep meep, and Wyle E. coyote). The second chart is the ES hourly futures.

S&P500 Cash Index - 15 Minutes - Double ZZ to 1.272

This chart carries the original count from the bottom, and shows (y) at 1.272 x (w) to a pip. You can see where we labeled the ending diagonal. Today, Wyle E. Coyote was spinning his legs fast and furious to avoid dropping over the cliff. But you can see he made lower prices today before higher ones.

The next chart is the one of the ES hourly futures.

ES Futures - 1 Hr - Channel Count

Reasonable people can agree on these observations. You'll note the futures definitely did make a new overnight high. One very big question is, "Why didn't cash?", as in the cash chart at the top.

Next, you should take your Fibonacci ruler and verify that you can measure a near exact 1.618 extension of the third-movement upon the first in the futures. Is that 1-2 & a 1.618 wave 3? Or is that A-B & a 1.618 wave C? And why couldn't cash make a 1.618 extension, too?

A key inclusion in The Eight Fold Path Method is that 1,2,3 is the same as A,B,C until it is not.

So far, IF the downward wave stopped somewhere near this location, the chart could very well have alternation. It would be a flat for the second wave, and a zigzag for the fourth wave.

Still, we have shown that a typical fourth wave would generally retrace between 38 - 50% of it's third wave. That would put the lower limit at about 2,890. Below there and the odds of a true fourth wave get increasingly minuscule.

Will the fourth wave hold? If it does, an impulse might be claimed in the futures. If it doesn't then, the minute ((b)) wave count at the high might be the better count. Stay tuned.

And have a good start to the evening.

TraderJoe