Flexibility Required - I'll try to show Why

The market - as measured by the ES futures - started the day flip-flopping around the zero line in what seemed like meaningless movement until a couple of patterns caught my eye.  Looking at the ES 30-minute chart, below, the first thing to notice is that the high on June 17th is within 90% of high on June 16th.

ES Futures - 30 Min - 90% Retrace Wave

So, if the wave count down to noon yesterday is only three-waves, and the wave count up to today's high is only three-waves, then that means price could be making a flat wave. (You certainly would not be out of line to also consider a triangle. I have, at times.)

The other item that caught my eye was the expanding shape downward from today's high. Here it is in the chart below.

ES Futures - 30 Min - Expanding Shape Downwards

That being the case, live & in real time, I decided to test the hypothesis that we might be making a lower wave after the mid-morning to mid-afternoon rally. I showed readers of this blog in real-time, and as fast as I could post it, this potential contracting diagonal c wave, which ended the afternoon rally. You can view the chart as this LINK.

I stated that if we had, in fact, made an ending diagonal wave c wave, then the start of the diagonal should be taken out in less time than the diagonal took to form. And, with interim charts, that wave was tracked lower - see the comments from the prior post if interested - and, in fact, both the start of the smaller c wave diagonal and the prior low were exceeded lower. So, at this point, the evidence suggests there could be the larger expanding diagonal lower - which is still forming.

And things could get bumpy here. It we do make only a true flat wave, then it could be a second wave of a move higher. The purpose of the flat would be to burn time while moving prices a bit lower to more deeply retrace the up waves from Sunday/Monday.

Yes, the alternate of a flat is that the 90% wave is the end of a move upward. It would have ended in a truncation. That is certainly possible, and will be watched for. But, at the present time, if the move down turns into a valid expanding diagonal, then we know it could either be an ending diagonal or a leading one.

This is how the market creates uncertainty. As a result, it is not a time for opinions. It is not a time for worry about the FED. It is a time to track things carefully and cautiously, until the lengths of the waves becomes more telling.

Have a very good start to your evening.

TraderJoe