Top or Diagonal ??

Based on the internal wave counts today, it is possible that we will make a local five wave sequence higher. I will post that chart in a minute. But, if we are to make a diagonal wave out of the top, then wave (iii) must both go over the top and stay shorter than wave (i). A chart of that possibility is shown on the ES 4-hr chart, below.

A higher high, tonight or tomorrow is likely needed for the 'a' wave. This is how we counted it internally today. You are encouraged to read today's comments to understand what all went on today and to understand how the count was developed.

So, if wave iv largely just travels sideways to slightly lower in the overnight, followed by a higher high, it would lend to a count that is 'five waves up'. That 'could be an 'a' wave up. So, we have now placed it, the potential diagonal, on the table. 

Is there a way the market could fake us out and just drop lower? Why yes there is! On the first chart above, look at the portion of the expanding diagonal down wave, labeled a,b and awful stuff. Here is another way to count with five-up if that occurs tomorrow.

This count would consider than the little tiny (a) wave is not a full on b wave as in the four-hour count. This count says, "hey, that wave was just plain too small to correct anything!" Further, this count is one of the very few that is made possible because minuet (b) at the bottom is just smaller in price and a lot smaller in time than the diagonal downward as the larger degree minute ((i)). The Fibonacci ruler shows how and why that base was hammered out where it was. Thus, there is no degree violation in price or time. Wave minute (b) is smaller than it's larger degree counterpart minute ((i)), pure & simple.

So this is what they mean, "It's not over 'till it's over." Neither wave count is proven or disproved at this point, and we will just have to wait and see. But I don't think you'll find rational analysis of the pros & cons at too many sites.

Have a good start to the evening.

TraderJoe