"Just a Darn Tootin' Minute"

Between last night and this morning after the payroll report, stock prices as measured by the ES futures were headed higher. And as the daily chart of the ES, below, shows prices got up to - and over - the upper daily Bollinger Band.

It was there that the upper daily Bollinger said, "Hold on just a darn tootin' minute", and fulfilled its function of suggesting that the Smart Money would begin to exit at those prices. This is especially true with the daily slow stochastic above the 70 level and indicating 'over-bought' at the highest prices in history.

So, prices not only stalled there, but they also did a complete outside key reversal day down - making a lower low than Thursday and closing lower than that same day, and all from the highest high in the trend count.

This, again, while not completely 'fatal' to upward market progress, and a downward overlap of a wave i / a up shown this morning in the comments for the prior post, suggest that the market is struggling & failing to make impulsive activity up.

Price is still closing above the 18-day SMA, meaning the bias is still to the upside, and the swingline indicator still has a higher high after a lower low and so is still indeterminate by itself.

Still the outside-day-down cautions us that, "if the high of an outside-day down is exceeded higher within the next two trading sessions, then it can constitute a trap for the bears". So, we need to watch the next two days in particular, very carefully. From an Elliott Wave perspective, there are some remaining legitimate ways that higher highs can be made, but the odds are dropping.

Notice than the minute ⓑ-3 wave still does not violate degree definitions, so it can extend within reason if that is to be the case. Yet, triple zigzags are supposed to be pretty rare, so that is one reason why the odds are dropping a bit. Better odds would be provided by closes below the 18-day SMA, and a bonafide trend on the swing line under that level.

So, why am I thinking that this is still a ⓑ-3 wave, probably of an expanded flat, and not the end of the trend? Because, besides the EW count, if one looks at the NYSE Advance/Decline line, it is still basically at an all-time-high. Bear markets have typically not started in that position. And the weekly sentiment indicators - while getting steamy - just haven't fired off clear signals yet. Maybe someday soon. Meanwhile, the economy gives signs of weakening, and this often associated "B" wave type structures.

Have an excellent start to the evening and the weekend,

TraderJoe