Tale Of Multiple Markets

Based upon the primary count I left you yesterday, the market came down today in a nice size 4th wave.  At the time of writing this, we only have 3 waves down off the highs.   However, the market has still not given us 5 waves off the lows to signal that wave 5 of (5) has begun.

At the same time, XLF seems to have developed into a nice potential impulsive move down off its highs, and if it makes further lows, it looks like a nice 5 wave structure down, which could signal that it has topped right in the region we have been targeting for over a year.  This region represents an a=c target of larger multi-year degree, as well as the .500 retracement of the 2008 decline.

The next movement in the market should give us a bit more clarity.  If the ES should drop to new lows, we can arguably have 5 waves down in a leading diagonal off the highs.  Again, I do not like to trade diagonals, as I do not see them as reliable enough to place money upon.  However, if any rally from a new low is corrective in nature and is unable to make a new high, then we will likely be heading down in the yellow c-wave.

But, for now, our primary expectation remains that this is a 4th wave, as long as we remain over today’s lows.  This means we should see new highs being made, potentially even tomorrow.  From the larger perspective, as long as we remain over the 1826/28ES support region, I will be looking up, unless given a good reason not to, as described above – a new low followed by corrective action back up.

And, I will continually remind everyone o how important I see the 1866ES region.  Any very strong move through there will get me into the uber bullish camp.  Until such time, I see this as a topping pattern in the ES.

 Elliott Wave Chart