Market Remains In No-Man’s-Land Territory

After moving higher yesterday and into the retracement zone for the blue wave b, the market moved slightly lower today after stopping at the 61.8 retracement level right on the nose. While holding and turning at an expected retracement fib is typically a good early signal that the primary count may indeed be following through, we still do not have a clear five-wave move down off of that level.

We could make the case that we have five down in leading diagonal form off of the overnight high in the ES. However, these patterns are far from reliable and need further confirmation in the form of a corrective retrace followed by a break of the end of that leading diagonal.

So with that, we are still basically where we were yesterday, with the cleaner count continuing to call for lower levels before breaking higher. But as Avi noted yesterday, we still do not have enough confirmation to give that path a strong edge.

Also, please keep in mind that if we do indeed move lower, that move is still likely to come in the form of a larger ending diagonal off of the 8/13 high. This will make the subdivisions within that diagonal difficult to project with a high degree of accuracy. When these types of patterns are developing, patience is important, as attempting to overtrade within these structures will often lead to frustration. Ending diagonals typically produce overlapping and choppy price action with very little sustained follow-through in either direction.

From here, we simply need to see how the market reacts and how the pattern develops over the next several sessions to establish a clearer path forward on the smaller-degree timeframes and whether the yellow or blue count will become the operative count.