Brutally Whippy

Yesterday, we suggested there could be a new low this morning. There was in the futures at around 3 AM, as this first ES 30-min chart will show.

However, due to the markets take on the PCE report, that low did not appear in cash. So, we got part of it right, part of it wrong. Does the market give 'partial credit'? The cash market gapped up at the open, and then retraced fully 78%, or more, depending on where one measures the low from. There is not too much to be sure of, but after showing this next chart of the cash SPY 15-min time frame, we can discuss what does and what does not appear.

First, as stated, the new overnight low did not appear on this chart. Second, yesterday, we had counted three-waves-down on the closing only 15-min chart, so we have left that in place as the equivalent Ⓐ,Ⓑ,Ⓒ down. Then, after that, the one item we are sure of - by measuring - is that the 90% up level was reached in cash before a substantial overlapping retrace wave occurred. (This 90% level was not exactly reached in futures).

So, there are currently two zigzags upward, and they appear to be in a channel. But here is what we do not know.

1. We don't know upward movement has ended for this wave. A third zigzag upward could be made.
2. We don't know what effect, if any, the 'first-of-the-month' inflows will have on the market tomorrow.

We also know it is whippy. Brutally whippy. We have urged the utmost caution, patience and flexibility. Maybe we are making a larger more complex flat wave, and this is all or part of a "B" wave up. But B waves can still do some mind-bending, head-scratching things, so by-all-means, be careful in this environment.

Have an excellent rest of the evening,

TraderJoe