Markets Still In A Bit of No-Mans-Land On The Smaller Timeframes

After pushing higher yesterday and trading around the pivot the market for the most part consolidated at that pivot region overnight and for most of today's session. We did finally begin to see a bit of a break higher in the afternoon but we still have yet to break over our key 100ext at the 4008 level. So with that I do not have too much to add to what I had noted yesterday as until we can either breakout over the 4008 level or see a break back under the 3920 level we are sitting in a bit of No-Mans-Land on the smaller degree timeframes.

Yellow Count
The yellow count is still suggestive that we are in the wave 3 of (c) of the larger wave a up off of the lows. What is still a bit unclear is where that wave 3 will actually top. Because the entire move up off of the 7/14 low is likely a diagonal under this yellow count the entire substructure should take the form of ABC corrective wave action. This type of action is less reliable than when we are dealing with impulsive wave action and therefore allows for more variable paths to be taken. Further complicating things is that we did not see a proper retrace for the potential wave (ii) after hitting the pivot zone overnight thus making the 100ext at the 4008 level even more important. So with that, I now have to allow for the wave 3 of this yellow count to have a potential top at the 4008 region under which case we should see a pullback towards the 3900-3850 zone which should then be followed up with another wave 5 up to finish off the wave (c). This path is shown in orange but is a variant of the yellow count. It would take a break back under the 3920 level for this orange variant of the yellow count to trigger and as long as we hold that level then the more immediately bullish path will remain in play.  If we push directly higher through the 4008 level then it still would leave the door open to see a larger wave 3 targeting the 4081-4126 zone before seeing that retrace for the wave 4. So again 4008 is quite key in determining whether we see more of a direct break higher towards that 4100 region or whether we see a pullback occur first.

Green Count
The green count is almost identical to the yellow count at this point in time and as I noted above but we need to get through that 4008 level. If we fail at that spot then we are likey dealing with the orange variant of the yellow count. If we do breakout above the 4008 level then we still really won't know which path we are following (yellow or green) until we top out near the 4081-4126 zone overhead and I will lay out the parameters if and when we get to that zone.

Red Count
The red path would suggest we are topping in a wave iv and still needing another lower low for a wave v as Avi had laid out in his weekend update. I am not viewing this path as highly probable at this point in time but will leave it on the charts for the time being. I would need to see a break back under the 3818 level to suggest that we may have topped in this red count and unless and until that occurs the near-term pressure will remain up per the yellow/green counts as described above.  

So while today's action has not changed much the micro pattern is still quite key here and what happens over the next couple of sessions is really going to help let us know whether we have another week of fairly clear and predictable price action or whether things will get a bit more difficult and choppy.  Either way and as I noted yesterday, we likely are just about done with the easy part of this move and things are likely to get a bit more complex as we move into the various degrees of the fourth and fifth waves of this price action up off of the lows.

ES  30m
ES 30m
SPX  60m
SPX 60m
Michael Golembesky is a senior analyst at ElliottWaveTrader covering US Indices, the US Dollar, and the VIX. He contributes frequently to Avi's Market Alerts service at EWT while also hosting his own VIX Trading service.