Gap & Fill

I have written before in regard to degree labeling that stock indexes rarely make 2.618 waves in typical impulses, although they do sometimes in diagonals and triangles. That was the case today. Stock indexes & futures made a new low below the October 2021 low around a 2.236 extension, and then reversed. The daily chart is below.

Ira Epstein (broker with the Lind Group) might say (paraphrasing), "There were four consecutive closes below the lower daily Bollinger Band, and the probability of a fifth consecutive day has very, very low odds - around 1 - 2%". That wisdom proved itself today, as well - with prices closing just inside or perhaps right on the band.

The up wave is likely at least a portion of a fourth wave - given its size. The question for an impulse is whether the 50% retrace of the third wave is respected or not. If it is, or perhaps if the fourth wave forms a triangle, then an impulse wave, downward, might occur.

But I do have some concern about the internal wave labeling, and it is possible the downward wave might turn into a diagonal. So, we'll be watching the wave in the next couple of days to see how the count develops. Again, right now an impulse is still possible, but let's see if that develops or not.

Also worth noting - at a low of 4,212 the down wave came very close to the 38.2% retrace from the Sep-Oct 2020 low! That level in the futures is at 4,193 - 4,203, depending on which trough you use for the anchor.

Given that, it should be clear how the market makers are 'jerking the market around' getting close to levels and not making it, etc., making gaps and not following-through, etc. I have no beef with this, it is 'market survival time' and it is likely the powers-that-be are taking extraordinary measures to see that this occurs. There is no other way to comprehend it. The market makers are using your account and my account information (balances) and market-making-algorithms, that I wrote about yesterday, to make sure that the landscape is as difficult to understand as possible - and to maximize their profits at the expense of retail.

One just needs to be aware of this, and not get emotional about it, because as Ira clearly indicates in his videos there are a lot more algorithms using statistical and numeric (account balance & position size) information to run the market than programs using Elliott Wave counting. And using Bollinger Bands is a coarse example of it.

So, now we need to see if an impulse forms or is invalidated, or if a diagonal forms or is invalidated.

Have a good start to the evening.

TraderJoe