Post Market Thought

I continue to expect lower prices.

That said, the price action is not behaving as I would expect it to for a genuine impulse wave to the downside. The rally today was too high. It lacks the feeling of a “2,” and, in the case of the cash session it even took out the origin of what I had labelled as minuette (orange) 1 in this post.

That said, breadth is not at all good here, and this still feels like little more than continued short covering, and a bonafide rally that does not make. Furthermore, we still have not closed decisively above the prior area of consolidation (green arrow in the chart below).

If you don’t have these in your head, review the options I laid out at the end of this article, in particular options #3 and #4. I had been leaning to #4, but we haven’t failed hard enough where we should have for that option to be great here (it’s still possible). But, option #3 now looks better again because this recent price action is—once again—adopting the look of a triangle here, moving up and then down and then up and then down and then up, giving us the setup for an A-B-C-D-E:

ES

That may be good news for the market (and the world), as an ending diagonal means we’re just going to visit the 250-week and the bull may resume, like this:

ES

None if that actually rules out the very bearish possibility, and so we can still go much lower, but this ending diagonal looks good again now. If we do go down there as I expect but totally lose that 250-week EMA, then we can look to much lower prices, but right now this—at least for the time being—looks again like matching triangle “B-Waves” for the pink “4” and the pink “5” (and if you squint at the chart above, you can make out the head and shoulders pattern that produces).


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