Starting To Lean Towards Wave [2]
Yesterday, the market had an opportunity to begin a rally to higher highs in a more extended structure for wave V, as shown on the 5-minute ES chart. However, today’s action broke below yesterday’s low, which invalidated that immediate potential.
Oftentimes, when the market has an opportunity to follow through on a pattern, and chooses not to do so, it suggests that it will not complete that pattern. Therefore, it leaves me leaning towards the current action being in the midst of the wave [2] pullback.
While the market has indeed still held the 1.00 extension – the common support for a 4th wave of a 5-wave structure, the rally off that support this morning is not exactly what I would call a clear 5-wave rally structure. Of course, it can be a leading diagonal for wave [i] of v, but with what I outlined above, I cannot rely on that potential, as I would not say that it represents the highest probability of outcomes.
So, for now, I am viewing the current action as being part of a b-wave (potentially an expanded b-wave) with lower to come in the coming days in the c-wave.
Nothing has changed my larger degree view as outlined in yesterday’s and the weekend update. As long as that support box holds for wave [2], I think we need to be looking higher.
I am going to add a note about IWM and NQ, which I posted to the full membership earlier this morning:
"As an FYI - I have begun to again track the potential for a bearish count again in IWM. This does NOT mean I am aggressively shorting. It means I am tracking it to see if the set up develops, especially since there is a potential 5 down. But, note that NQ has not give us a break down in the possible downside it can develop YET and still leaves the door open for another rally.
For now, the bulls are still in charge, and we have no clear indications otherwise just yet."