The economic reports before and during the stock market open were almost uniformly negative, indicating declining economic activity - which inversely should argue for lower interest rates in the future and higher stock prices. Except that the University of Michigan Consumer Inflation Expectations came out at 3.5% vs 3.3% and may dissuade the FED from lowering rates. The stock market, as measured by the ES daily futures, ran away from the upper band yesterday, traded below the 18-day SMA and closed darn near the lower band. This temporarily both changed the daily bias to lower, and temporarily - at least - caused the daily slow stochastic to lose its embedded status.
Further, the drop was low enough, being 62% of the prior wave, that for the first time we can count a triangle on the daily chart, as follows.
Is this count correct? It is still difficult to say. For the first time, the trend line up from the January low was exceeded lower. Triangles often do this. Further, the MACD is as flat as a pancake and this, too, often happens during triangles.
But the item of concern is that the ES lead month contract (ESH2025) has simply not made a higher high since December like the cash market has. So, the formation might be a barrier triangle. And we're OK with it if it is.
But we ALSO can see the possibility of any of the following: 1) a larger triangle with the b wave where it is shown in red, 2) a lower ⓔ wave or 3) an even larger fourth wave flat for Minor 4 because the up wave is at least 90% of the down wave.
So, we must bide our time and count locally until we get a breakout or further breakdown. Yes, it is somewhat exhausting trying to count and wondering which pattern is playing out.
But, what else should one expect if we are getting a longer sideways pattern for a fourth wave? So, we look forward to what Monday brings to see if further information can be gleaned. IF there is an immediate, swift reversal of consequence it may reinforce the case for a triangle. But that remains to be seen.
Have an excellent start to the evening,
TraderJoe
TJ this is not meant as any kind of criticism but I am curious as to why your proposed counts from Tuesday , both the primary and alternate showed only bullish patterns. The reason I ask is I was wondering about a b wave possibility or a triangle both of which meant a significant decline was possible. I realize with EW counts we are always talking about probabilities and one cannot always chart every single one but I was surprised that a bearish count was not included as an alternate. Thx.
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