Mostly As Expected

Unless you are counting the waves in real time, it is hard to imagine the differences between futures and cash. The futures are making wild overnight swings that never even show up in cash. Yesterday, we said we might get a failure wave (see yesterday's post). We did. We also commented that the up wave could be over or it could continue. It did continue, and it still failed. Furthermore, we said one of the ways it could continue would be to form an expanding diagonal - even though that was  more rare than a third wave down. That expanding diagonal did form, and the up wave still failed. Here is that overnight diagonal on the ES 15-min chart.

This is a truly staggering wave. Wave ((4)) is a full 30+ points in the overnight market, and it never shows up in cash. And the diagonal formed perfectly in every detail. Wave ((5)) is longer in price and time than wave ((3)), and wave ((3)) is longer in price and time than wave ((1)). Wave ((4)) is longer in price and time than wave ((2)) and it overlaps wave ((1)), but is does not travel beyond the end of wave ((2)). Each sequence is a zigzag.

Because of how overnight stops might have been hit compared to a cash chart, it almost seems like it is time to relegate the cash charts to the rubbish bin. Ira doesn't use them (except for ETF's).

After the up wave, we counted five waves down on the ES 5-minute chart, in an impulse as below.

ES Futures - 5 Min - Impulse

Wave ((2)) is a zigzag and - for alternation - wave ((4)) is a double-combination flat failure that does not overlap wave ((1)) at it's terminus. There is a lower low at the end of the day.

Rarely will you see waves like these. There is a lot of compression in the wave structure. Yet, we are seeing failure waves - waves that fail to meet their typical upside price targets. That is a solid warning to the wave counter: something is going on that is quite different!

So, taking the waves we have so far (in the futures) and putting them all together looks like this on the ES hourly chart.

For the nested i, ii count, then micro  wave ((2)) should remain below the trend line from the top. And, of course wave ((2)) 'must' remain below of wave ii.

Have a good start to the evening.

TraderJoe