Battle for the Line in the Sand - 3

They don't call it a battle for nothing. For the fifth day in-a-row the ES daily futures either touched the 18-day SMA or came within whiskers of it. Today, at the end of the day, prices prices closed back up over the 18-day SMA. First, prices made the lower low we suggested and turned the swing line lower - with lower lows and lower highs - but a down trend was filtered out by prices temporarily closing back up over that 18-day SMA. So, the market is current neutral with a bullish bias. The daily chart is below.

ES Futures - 1 D - Neutral

Neutral is as neutral does. Neutral means neutral. It means that prices are approximately as likely to go up as to go down. The daily slow stochastic has 'worked off' an over-bought condition - with both the %D and %K lines (red and blue) closing below the 70 level.  The bias is positive. The three sarcastic postulates I cited for this market segment played out again today. As a reminder - 

1.  No significant declines are allowed except in the overnight, until Europe closes.
   
2.  Then, after the opening decline, the algo's are turned on to grind every tick, so that ..
3.  Prices can close higher.

By 'grind every tick' I mean that virtually no retraces beyond 50% are allowed during the day. Here is today's intraday chart from the morning low.

ES Futures - 3 min Close - Only 38%?

As you can see, the largest retrace occurred in the afternoon and turned out to be only 38.2%. Then, the wave iii/c has almost no pull-back inside it. That's where the real 'grinding' occurs.

Bottom line, if this current three-wave sequence makes a wave iv and wave v, then after another retrace, higher highs might be expected still. Right now - even using OHLC candles - wave iii/c is shorter than wave i/a.

If price continues higher to make a new all-time high, then wave Intermediate (Y) might still be in play in this index. We'll address that as we see more. The wave sequences are getting increasingly difficult to count. This might be expected from a Primary ((B)) wave.

Have a good start to the evening.

TraderJoe