No Significant Changes to Analysis; A Couple of Additional Observations

On $ES, I’m still looking at the two possible outcomes, though I am leaning more strongly towards the bearish resolution, presently. This is based largely on the shape of the structure we are forming in the indices (other examples here and here).

Is it much easier for me to look to bearish outcomes after a squeeze, and this may have been just that. Breadth has not been great in this rally, which does trouble me (in addition to the “shape” of the structure).

Let’s reexamine some of the technicals and fibs.


In the last update on the S&P 500, the bearish view warned of reaching “equal legs” between orange “A” and orange “C,” or going a little higher to the 50-61.8% retracement of the decline from 5/30. And, as you can see, we passed “equal legs” and did poke into the box:

ES

However, those levels were predicated on my using the absolute low from 6/17 as the end of pink “1” and the origin of orange “A” (green arrow in the chart above).

Let’s look at what happens when we move the origin to the low to its left (the low from 6/16, which is also valid).

For starters, we get a perfect fib retracement strike at today’s high:

ES

And second, if we modify the triangle to put green “E” to the low at last night’s low, which looks better (green arrow in the chart below), we get 5-waves from that point, making the orange “C” a 5-wave move, which it should be. And in doing this, we get equality of legs also at today’s high:

ES

All of this is consistent with this rally being a countertrend rally, possibly now complete.


For the bullish view to work, we will need to go higher still—to orange box or higher—(as we’re in a 3rd wave, and haven’t gone high enough yet for that), after which we need to stay elevated, consolidate, and then have another 5-wave rally after that (for blue 5).

SPY


Both options seem to me to be possible here, but the bearish interpretation looks more likely to me at this time.

I hope you all have a lovely weekend.


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