Lower Low Day

Although the day included a new ES daily lower low, the downside price movement is still mild, at best. That being the case, a prudent look at the alternate suggests this could still be a fourth wave. And there could be a higher high to result. The ES 4-hr chart, below, explains this case in some detail as price is now at the lower end of an internal parallel trend channel shown in blue.

Again, this larger red fourth wave, ④, does not need to occur. And, in fact, the degree labels might work out better if it does not occur. But it certainly 'could' occur so we explain it here as best we can.

The daily bias is still higher, and the daily slow stochastic (regular calculation) is still embedded. These are other reasons to at least have the alternative in mind. At this point, there is one level of divergence from the high. Another could occur. Nothing says that price cannot drop quickly away from this inner channel, but so far it has not. 

So, we remain patient, calm and flexible until the market tries to make a better statement in the face of a holiday-shortened week including a Payroll Employment Report on Friday.

Have a good start to the evening,

TraderJoe