Gap and Grind

Last week on Friday - in the last post - we showed a daily chart of the ES futures, and showed how the daily slow stochastic lost its embedded status. We showed that "price and the 18-day" moving average often try to come together when these two things occur: The first is the ES daily slow stochastic must be embedded, with three days or more with both the %D line and the %K line above the 80 level in an up trend. The second is that this embedded status is lost by the %D line of the daily slow stochastic traveling below that 80 level. Here is a repeat of Friday's daily chart.

ES Futures - 1 D - Price meets the 18 D SMA

So, this expectation was met. How was it met? Well, initially on Sunday night prices gapped down substantially - from approximately 2,820 to 2,770. So, they gapped below the 18-day SMA. Then, they rebounded up through it to possibly begin the famous "battle at the 18-day SMA". Here is a fifteen minute chart of the ES below.

ES Futures - 15 Min - Gap and Grind

The main purposes of this second chart are to show that even though the market ground higher after approximately 21:00, it did so in a parallel channel. Further, it is rare that one sees this exceptional level of adherence to the daily pivot points. When the market gapped down, it opened at the S1 pivot, and traded down exactly to the S2 pivot. After reaching the daily central pivot P, the market sold off a bit in the immediate post-cash-closing 15-minutes.

Although according to Elliott wave 'rules' nothing has invalidated about this being a fourth wave in progress, in either cash or futures, it needs to be watched closely as too much further upside would give a warning with the EWO going above the 20 level.

One of the detractors of this site last night said, "According to this post the market will go either up or down. What a joke!" To which I responded, that he must be such a poor trader or market analyst that he has never seen a market do both at the same time.

Well, here is one example. Keep the above chart in mind. Overnight the S&P went down by -40 or more points. Then, it turned around and did exactly the opposite and a tad more. So which is it? Did he want me to say "up" and be wrong for the first 40+ points? Or did he want me to say "down", and be right for the first 40+ points, and then wrong for the next 50+ points?!! 

The fact is that people like him want only one thing. They want to feed their EGO. They want only themselves to be correct. BOTH camps - bears and bulls - were correct today. Take it as a lesson. Take this stuff easily and flexibly. Right now, until or unless there is a new wave down tomorrow - with a lower low on the futures, then we only have three waves down - as follows from The Eight Fold Path Method.

ES Futures - 15Min - Only Three Waves Down So Far

I'll say it again. 1,2,3 is the same as a,b,c until it is not. Right now, one only has a c = 0.62 x a wave, lower. Whether, I like it or not, any other count breaks "degree labeling requirements" in one manner or another.

IF this wave down is over and completed, could it be an X wave? Yes it could. Could it be part of a triangle or diagonal? Possibly. But, the key is FIRST one must establish that the down wave is over. So, keep one eye temporarily on the overnight futures if you like.

In the meanwhile, be kind to others, and have a very good start to your evening.

TraderJoe