Market Action Still Sloppy On The Smaller Timeframes
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Today we saw the market move higher in the early morning session only to drop lower as we moved into the afternoon. We have currently retraced much of that afternoon drop but are still holding under the HOD as we move into the close. Given the structure of the move up off of the 7/7 low I am learning for this to see at least a shorter timeframe downside resolution but we still would need to see a break of support below to suggest a larger degree top may be in place. So even if we do indeed push lower I still will be watching the lower support zone to give us an initial signal that a top may have indeed been struck but unless and until that occurs this still may have some unfinished business to the upside before a significant top is seen.
From a micro perspective, I still am going to be watching today's HOD at the 6315 level and as long as we remain under that level I am leaning for this to resolve lower as part of a wave (c) down. If that wave (c) down ends up holding the 6185-6135 zone below then we still could be working on a wave iv which I am showing on the ES chart in yellow. Should that zone break then I will continue to monitor the 5929–5793 support zone closely, along with the structure of any forthcoming pullback. Should we see a five wave structure to the downside and/or a break of that larger support zone then it would give us an initial indication that a larger top may have been struck.
Without a sustained break of that region, and without a clear five-wave decline, this market still retains the potential to extend higher. That said, given the stretched nature of the current count, I remain cautious here. We are likely approaching the final stages of a larger-degree move, one that should give way to at least a notable retracement before setting up for a more sustained advance in the weeks and months to come.
