Weekend Update ES

ES The equity markets ended the week exactly where they began. We did, however, gain a little bit of clarity with structure.

It appears that we are tracing either a barrier triangle (p. 50, figure 1-42, Elliott Wave Principle) or a flat. We had a 3 down that finished at the 985.75 L. We then had a 3 up that finished at the 1015.75 H. From that high, Friday's action was a 5 down with what appears to be a 3 up.

Everybody is calling for a triangle here. I'm not so sure. In order for the triangle to still be in effect, the minute [c] leg must be a 3 and not a 5. That means it will need another 5 down to complete a zigzag.

So, [c] is either not complete, or we have a flat and not a triangle. The flat is my preferred count. The triangle is my alternate.

I have seen where some people are calling for a "running" triangle (p. 50, figure 1-43, Elliott Wave Principle). This assumes that Friday's 992.25 L finished [e]. Again, [e] would need to be a 3.

There are other issues I have with this interpretation. I will quote from the good book, "Despite their sideways appearance, all triangles, including running triangles, effect a net retracement of the preceding wave at wave E's end" (p. 49, Elliott Wave Principle). The net retracement is by the slimmest of slim margins.

Off of the 992.25 L, which by the way was a 78.6% retrace of [b] to the tick, price has retraced to the 61.8% of (i) and conveniently stopped at the down trend line. 1006.50 was also the 261.8% projection of a.

Based on structure, it appears that we should have one sub-minuette leg up. This should complete (ii), or (b) of [c] if a triangle. Any breach of 985.75 invalidates the triangle scenario all together.

Likewise, if price prints 1016 we can say adios to the flat.

Here is my big picture look at cash. Notice I have ditched the triple zigzag. As I sated previously, it really doesn't matter, you end up in the same place, same time.

It should be noted, the 60 minute SPX chart has two potential setups that may come into play (outside of the triangle).

You can make a case for a H/S top formation. There is also a fantastic looking Bear Butterfly that would complete at 1025.

Both these patterns should be clearly recognizable on the 60 minute chart.