ES Daily - Outside Day Down

In somewhat tricky action the daily ES futures contract made an outside day down. And in doing so the daily slow stochastic lost its embedded status - all as of the cash close.

As we indicated in the comments for the prior post earlier, the DJIA (YM) futures made a new higher high today. We were expecting such and we also called a >78.6% upward wave in the ES today and began counting a downward wave. We said such a wave could be part of a potential smaller triangle. That smaller potential triangle invalidated. There could still be other downward structures - including a larger triangle - that would eventually result in a further new high, but the loss of the embedded reading is problematic, and the market will have to prove it.

In the ES, there is potentially a lower high and a lower low, and if price closes below the 18-day SMA it might trigger some more significant selling - perhaps to the lower daily Bollinger Band. 

So, we remain flexible, calm and patient. We did our best to count upward today; the market wasn't having it. Maybe it will eventually, but for now this remains to be demonstrated. 

So far, the Dow (YM), the SPY and the NQ are over their July highs. The ES, the SPX and the RTY are not. It's a fractured situation, but it is what it is. And one wonders of it could be resolved eventually. For the moment, we just count what we see.

Have an excellent start to the evening,

TraderJoe