LH - LL - LC

I had mentioned in a previous post that the ES futures price could trade higher into Monday or Tuesday. They did. They made a higher high on Monday. And, when trading started for the Tuesday session, prices traded higher than the prior close. But they couldn't take out the previous session high, and collapsed on a turn-around Tuesday, closing lower than the three previous closes. Apparently, the higher employment cost index, the higher housing prices and the much lower Chicago PMI reading (37.9 vs prior 41.4) were too much for the market to absorb.

Today was, coincidentally, also the end of a calendar month. So, there may have been an element of the typical end-of-month "window-dressing" involved in the mix, as well.

So now, tomorrow is both the first of a new month (which often sees the typical inflows from company bonus plans, 401K's, dividend reinvestment schemes, etc.) and an FOMC announcement day with press conference following that. The FED could decide not to change the rate structure but might decide to tinker with the pace of the quantitative tightening - or not! 

So, there is some significant potential for price retracement, but there is no guarantee. Sometimes the investment committees decide to wait on the announcement results and make decisions the day following. Then, too, there are lots more economic reports yet again on Thursday & Friday.

So, a lot of things are possible tomorrow. A whippy session can not be ruled out. However, a suggestion would be to treat yesterday's high as a 'wave-counting-stop' until we know more. 

Keep in mind we still have the lower daily Bollinger Band and the 100-day SMA below the market. There is no change in wave count yet from the prior post, but since there isn't really a significant upward overlap, I also have to still reserve the right to call a new lower low - just five-waves-down in an impulse (rather than the bullish falling wedge). 

We'll see how it goes, and I can only say that one "old dog in the business" - Ira Epstein - tends not to like to trade through major reports. He has someone who agrees with him on that score - at least not until the results are known and the algo's have had their say for a while.

Have an excellent rest of the evening,

TraderJoe