Outside-Day-Down

Today, we were counting downward for the potential Ⓔ wave of a triangle representing the end-of-month and end-of-quarter window-dressing. We warned that the current scenario supported multiple counts, and we got one which broke the triangle lower in the futures - after the cash SPY had broken yesterday. The selling into the close was sufficient to make an outside-day-down, after we had counted three waves up. So, the conditions of the chart, below, are now an outside day down, and a swing-line indicator with a lower high and a lower low, and a close below the 18-day SMA.

ES Futures - Daily - Outside Day Down

The daily show stochastic is no longer over-bought, it has 'worked-off' that condition, but it is also still above the 50 level, and so, it is not over-sold. So, an analyst like Ira might give the advice that "until the high of the outside day is exceeded higher, then price might try to make a run for the 100-day, the lower daily Bollinger band, or - even possibly - the 200 day SMA."

And any low below the low of 16 Sept might set off the potential truncated top shown by the red asterisk *. So far, it looks like if we go up, it might be by diagonal, and if we lower there is one way it might be by impulse, but there are insufficient waves to show it yet.

So, tomorrow is the first-of-the-new-month, and the first-of-the-new-quarter. We'll see how many money managers want to fire all their bullets at the first of October, and who want to keep some powder dry. Since, a truncated top is a real possibility, no amount of downward movement should be perceived as out of the question. The question is whether further upward waves can be made or not. If they are, we have one count for that, but it would invalidate below that 16 Sep low.

Have an excellent start to the evening,

TraderJoe