Market Continues To Stretch Higher

Today, we saw the market take the more direct path to the upper end of the Ending Diagonal topping zone that we had laid out over the past several days. We are now pushing the upper limit of where I would expect to see the Ending Diagonal, in its current form, put in a top. If this is going to reverse, it really should begin to do so sooner rather than later.

Unfortunately, I do not have a highly reliable alternate count that would suggest a strong continued move higher. So, if we do continue to extend higher, I think it likely would take the form of a larger diagonal off the 4/23 low. However, until we see more upside price action, it is very difficult to lay out that path with a high degree of accuracy at this point in time. For now, I will continue to watch for topping signals in the current pattern, and if they do not occur, monitor the structure to help provide further guidance in the days ahead.

As shown on the ES chart, we are now trading at the 7393 level and just over the upper end of the trend channel for the Ending Diagonal off the 4/23 low. Again, ideally, if we are seeing a top in wave (v) of that diagonal, we should see a sharp reversal sooner rather than later. The initial indication that a top has been struck would come with a break under the 7300 level, with further confirmation coming from a break under the 7200 level.

While there is no official invalidation of the ED to the upside, as wave (iii) was longer than wave (i), if this moves beyond the 7432 level, I think the ED in its current form would become less probable and make the alternate path shown in green a more likely outcome. With that said, I would still need to see a bit more price action under that scenario to have a better idea as to how that pattern would ultimately play out, as there are several issues with this, and any other, significantly bullish path at the current time.

So with that, for now, I will simply continue to monitor the price action and see how things react into the end of the week, at which point we should have a better idea, one way or another, as to whether this is indeed ready to put in an immediate top, at least in the ED off the 4/23 low, or if the market has other intentions and will continue to grind higher before seeing any significant pullback.