Unreliable Structures - Market Analysis for May 7th, 2025

With the market spiking below the 5601ES support level, it has provided us with a minimum pattern for a leading diagonal for wave i down, which can be seen in red on the 15-minute ES chart. While I view leading diagonals as not reliable trading cues or structures, this one came up 3 points short of the 1.618 extension of red waves [i][ii], which is the minimum expectation I would have for a 5^th wave in a leading diagonal.  This does make this even a bit less reliable.  

So, for now, I am going to leave the wave iv on the table, allowing for one more higher high, especially since the 5601ES level did not see a sustained break.

But, if this rally is a corrective rally, then we could interpret it as wave ii in red, which if followed by an impulsive decline to the .618 extension of waves i-ii will make this a much higher probability structure.

So, unfortunately, I do not have a reliable pattern upon which I can rely to either strongly claim that a top is in place, or to claim that it is not.  I guess we will have to take the Fed position of “data dependent.” (smile)   But, our data will be the continued structure we see in the coming hours and into the rest of the week.  A corrective bounce followed by a break down below today’s low will make that top in place as a higher probability.  

In the bigger picture, nothing has changed.