My previously expressed thoughts (here and here) remain essentially unchanged. I am looking for at least a short-term bottom here. Not a one-day bounce, but either a multi-day bounce or a resumption of the rally to new highs. In a most basic way, ignoring possible counts, the structure alone on $ES resembles a falling broadening pattern. That in itself suggests a bounce. It doesn’t mean it will will bounce forever, just that I think it’s likely that we exit the structure to the upside.
Now, taking into account possible counts, I believe it is either an ending diagonal “C-wave” or a “1st” impulse wave (or, for that matter, even an “A-wave” of a much larger correction). The first area I would look to is the 50-61.8% retracement (orange box). But, if it is a leading diagonal, it may even retrace as much as 89% of the whole decline, as diagonals often have deep retracements. So, in other words, I would expect us to get to the box at the very least.
Today’s price action wasn’t too helpful. If we’ve finished a correction, we should see an impulse from yesterday’s low. Is it an impulsive? Ehh. Maybe? It could be a nest, I’m unsure here. Right now it’s just 3-waves.
Here’s a thought I have on $QQQ. It’s a remarkably strange structure, beautiful really. That centerpiece looks to me to be a triangle. And if we count it that way then we hit perfect parity between the lengths of minute (blue) a and c today, right on the nose. That’s notable. Is this a giant bull pennant? Unless we break down hard, it’s possible.
Few other points:
- $RTY struck its 250-day EMA and got a lift from that. I would expect more. As you know from earlier work, I believe that it may be putting in primary (pink) 4, and it’s common for that wave to end on the 250-day EMA.
- Both the $VIX and the $SPX closed back inside their respective Bollinger Bands. That is traditionally an S&P 500 buy signal.
- And, as noted previously, this high level of volume we’re seeing is often associated with at least temporary lows.
I would like to see a bounce still, and I would like to monitor its nature: does it look corrective or impulsive? And I don’t have enough yet.