Count & Alternate

On the ES 4-Hr chart, below, here are the waves as we have actually counted them since the break of the wave (iv) trend line and possible truncation of wave (v). We haven't labeled the most recent down wave yet until we find out if it's a nested wave beginning or if Friday was just a small degree fourth wave Flat, as we suspect.

A key question will be whether the Support / Resistance line at 4,100 holds or not.  If it doesn't hold, it is up to the bulls to prove they can get over the 4,200 level. With that idea in mind, here is the best alternate count we could imagine on the daily chart, and then how that translates over to the 4-Hr chart.

The above daily wave chart suggests it may be possible to construct a contracting diagonal on this time frame. But, so far, there are some things to be cautious of. First is that the diagonal did not make a full 62%+ downward wave for minute ((ii)). Second, the fourth wave, ((iv)), would not really have looked to touch the lower trend line yet, although this could change. And, as far as the Elliott Wave Oscillator, there is the expected divergence on ((iii)) versus ((i)), but a fourth wave has not yet shown a good signature close to the zero line. This could change, too. 

So, here is a 4-Hr count that would agree with the above, but it has some problems that are discussed below the chart.

So, above, minute ((iii)) in the daily chart would be at the high, and minute ((iv)) would be under construction. But the problems are that if minuette (b) is a triangle, then the 'c' wave of the triangle is 99%+ the length of the 'a' wave of the triangle. That would be a very unusual relationship for a triangle. Further, within wave (a) down, wave ii is likely a degree violation because the ((B)) wave portion, the down portion, of ii would be 'longer-in-time' than its wave i counterpart.

So, all-in-all, the odds favor the current downward count. The onus is on the bulls to get price back up over 4,200. If they do, it would be 'mildly' surprising, but not too difficult to handle in the count. All we can do is count and analyze the waves. We don't make them. But we will be fair & balanced and try to provide both sides of the argument as we see it. 

Sentiment is 'mid-range' here and is not of too much help. Yes, it is true that the Fear & Greed Index recently hit a significant high. But, sentiment surveys and put-call readings are mid-range. The VIX might indicate a kick-off but needs to make a higher daily high. So, one must remain flexible, calm and patient.

This is the type of work that is involved in real-life wave counting and it is likely few people undertake it in this detail.

Have an excellent rest of the weekend.

TraderJoe