CPI Sputters

The benign CPI report spiked the ES futures in the pre-market, yet - by the time of the cash open - the SPX had made a new high, but the SPY did not. As for the futures, they did make a new daily higher high bar as below but look to be closing in the lower half/third.

ES Futures - Daily - Close Inside the Band & Embedded

Note that after two consecutive closes below the lower band (odds about 4 - 6%), price travelled to the inside of the lower band and stayed there for the day. This close will likely reset the number of consecutive closes lower (this is being written with cash closed but the futures still trading).

Because of some of the discrepancies we noted, we started a possible contracting triangle count and are looking to see if we get a proper fourth and fifth wave down in one of two different ways that were outlined in the comments for the prior post. The second of the two counts doesn't follow a wave formation guideline really well, and also has a potential degree violation in it. So, we prefer the version that starts with the contracting diagonal, but they both have wound up in the same place. Let's see how it goes over the next couple of days.

Have an excellent start to the evening,

TraderJoe