The Market Pulse

This chart was presented in yesterdays video edition of Heard On The Street . If you missed it I highly recommend watching it. Two levels of significance were cited (1293.75 and 1352.25) in the video. Today's low of 1291.25 was significant for two reasons.:

1. The print below 1293.75 effectively eliminated the running flat interpretation BUT the DOW and NASDAQ have not confirmed (see additional comments below). Given the length of each wave from 1252.25, a leading diagonal (that would allow for overlap) doesn't have the right structure therefore a 5th wave cannot be underway and,
2.  The area that we were watching on an intraday basis was reached, i.e. 1290.75.  In RT and as the market was declining, I said "$ES-F: also watching the 60 min chart... 1290.75 is .618 of 1352.75- 1252.25 swing. Also 3 sd ". When  price reaches a 3 sd ....  99% of all price action should be contained within the Bollinger Band.....so I was looking for a completed move at these levels. 

This after-the-fact chart  shows that price was actually contained within 2 standard deviations of the 20-sma  by the time price actually reached 1290.75. The significance here is that a 2 sd typically contains 95% of all price action. The high probability that price would be contained and the fact that the .618 retracement was in agreement  suggested that a turn was due. For tomorrow, I'll be watching the following resistance zones: the 20-sma to act as resistance. As of the close, the sma crosses 1304.75. Additional resistance (not shown) is 1305.25 - 1306.25 and the open gap.


Additional Comments:

At the daily chart level, the running triangle remains my alternate interpretation due to the reasons provided in my weekend video. While I haven't provided a count, my preferred pattern is the bearish pattern described in the video. The general shape and outcome are clear. Once the DOW and NASDAQ confirm the same overlap that is found in the S&P, the three indices will be aligned. At that time I'll discuss the larger trend. Until then we'll stay focused on a wave at a time.

Best of Trading