Strongest Signal in Technical Analysis

According to Ira Epstein, the embedded slow stochastic reading (daily or weekly) is "the strongest signal in technical analysis". He's a broker with over 50+ years of experience and has interviewed scores of the developers of technical analysis. So, he might know. Yesterday, we pointed out the embedded reading and said we might expect another lower daily low. That did happen today. The ES daily chart is below.

The embedded reading persisted into the cash close. Further, while a contracting diagonal invalidated today - with a third wave that is too long - the benefit is that two necklines of possible head-and-shoulders formations can now be located. See above.

From an Elliott Wave perspective, the down wave is at two different 38.2% retracement levels. But the down wave is hard to count as finished. So, if a fifth wave is in progress, then an expanding diagonal might work. We'll see. There is still a lot of whipping around to do for that formation.

If instead there is an over-sized gap lower tomorrow, then a nested 1-2-i-ii count would be the alternate. If we made Minor C at the high and Intermediate wave (2) / (B) at the same location, then such a large gap could not be ruled out. But, at this time, I am just counting waves and not trying to predict. Let's see how it goes.

Have a good start to the evening.

TraderJoe