Getting Close - Market Analysis for Dec 19th, 2022


The MACD on the daily chart is now striking the minimum target we set weeks ago which would re-set that indicator to support another rally higher. Moreover, there is even arguably a positive divergence on these lower lows now being struck on the 60-minute MACD, which is somewhat faint, and not the ideal structure I had wanted to see.  But, there is enough of an argument to view this as a full 5-waves down for the c-wave, which is the ALTERNATIVE count I have now placed on the 5-minute SPX chart.

In the meantime, the primary count remains as shown on the 5-minute ES chart.   We have broken down below the 1.236 extension of waves 1-2 in the c-wave in this wave count, and I can view this as completing wave v of 3 at this time.  Therefore, I have accordingly dropped the pivot on the 5-minute ES chart.   That is now our resistance.   Should we see a move back through that resistance, then I will have to consider that this decline has potentially completed.

As far as positioning is concerned, I noted in the trading room that I have begun to add initial positions on the long side.  We are within 100 points of the bottom of our support box, and we are within 5% of our stop out point on the SPX chart.  That is the maximum risk I am willing to accept at this time on a long attempt in this region.

The next time we move over the high struck on Friday will either indicate that wave 4 is in progress, or, alternatively, the bottom has been struck.   My main expectation remains for the 4-5 to be seen.  But, due to the potentially small positive divergence seen on the 60-minute chart as I write this as we are striking lower lows in price forces me to consider that alternative at this time.

5minES
5minES
5minSPX
5minSPX
60minSPX
60minSPX
SPXDaily
SPXDaily
Avi Gilburt is founder of ElliottWaveTrader.net.