Unlike so many Fridays before - when the market was saying it was supremely confident - and the machines would literally jam the market to a Friday closing high - this Friday was different. The market was confident enough to make a new intraday high of 7,300 on the ES futures, primarily from the 'first-of-the-month' passive inflows, as we had clearly suggested, but it could not hold on to that level. And when word got around that a new truce proposal was advanced to the U.S., but was disliked, price actually sold off into the close. What? Price actually sold off on some mild profit-taking on a Friday?! Well, kiss my grits. The daily chart of the SPY cash index is below, reflecting the close.
As shown in the prior day's comments, we think we are counting a fourth wave very high up in the wave count until proven differently. Clearly, there is no outside reversal bar, yet, nor is there a lower low confirming candle yet. We outlined the options from The Fourth Wave Conundrum and sited that after only three-waves down there were a lot of options. But then the news broke making the upside less tenable than the downside.
So, in the chart above there is a trend line of interest that should be watched closely to provide more information. Are higher highs possible? They are. Can the price structure fall apart if some really adverse news is announced? It can.
Once again, I am taking things very gingerly. As of about 4:30 pm the ES futures are still well-above the 18-day SMA with an embedded daily slow stochastic. So, the price bias is still up along with one of the strongest technical market signals, the embedded slow stochastic. Until these situations change one must respect where the market is, but clearly with a skeptical eye.
I may have some further information on EW counting options later in the weekend.
Have an excellent start to the evening.
TraderJoe
No comments:
Post a Comment