Lower Low Day

ES futures gapped lower overnight and traveled far enough to create a lower low day. Before the open, they nearly touched the daily "line-in-the-sand", the 18-day SMA, as the ADP payroll number came in at +978k private jobs added. The daily chart is below.

ES Futures - Daily -

 

As we said yesterday, this was sufficient to turn the swing line from "up" to "neutral" as there is a lower low but a higher high. But, the local trend can not turn down without both a "negative" swing line and a close below the 18-day. By the settlement, it did not do that. Also, during the day, the daily slow stochastic threatened to turn under the 80 level, losing it for much of the overnight session, and then recovering during the day.

Currently, there are only three waves down with upward overlap and many wave options.

1.  We could still be in a flat wave from the high. IF so, a diagonal lower may be in progress.
2.  We could still be in a triangle wave. IF so, a double or triple zigzag lower could occur.
3.  IF we go over the all-time high tomorrow, an upward diagonal could be in progress.
   

It's the fourth wave conundrum - which occurs at all degrees of trend. It is lighter holiday-week volume, and the Payroll Employment report is tomorrow before the open.

Have a very good start to your evening.

TraderJoe