Weekend Update - ES

ES
The equity markets once again powered higher this past week on better than average volume.

This is a 15m pit session chart. It is pretty obvious that we are in a 4th wave of some degree. I have us ending a minuette degree (iii) at the 1071.50 H.

It is entirely possible that we finished a minute degree up there, as shown as the alternate at the bottom.

It appears that we may be tracing a triangle for this (iv)th wave. If that is the case, then it counts to this being an e leg currently. The c leg low of 1059.25 can not be violated or this will not be considered a valid triangle (basis December contract), as I have it labeled.

Once this (iv) finishes, we should have another push higher that would complete wave (v). We should get a more meaningful retracement at that point.

If a triangle, it measures 15.25 handles. Depending where e ends, this will target somewhere in the mid 1070's.

Should this not turn out to be a triangle, I have highlighted an area where price typically finds support, in the area of the previous wave 4 of lessor degree.

The minute wave [i] high = 1033 (basis December contract). Should price enter this territory, we would need to reassess the count. The wave (iii) retracement ratios are on the chart.

This is a snapshot of my trading chart with the breakdown of this current wave (iv) corrective.

There are several possible ways of counting this - this is one view.

It appears that a was a "double three" down to the 1056 L. The triangle form should be fairly easy to see.

There is a possibility that b turned complex as well. This means that it finished at the 1067.25 H, where d is labeled on the chart. If this is the case, then this is likely not a triangle.

We will need to see further price action to nail this in-process pattern down, however, under no circumstances can the 1056 L be violated. This would mean that the triangle pattern is dead.

We would then look for a normal 5 wave c leg to take place.

This is the potential wolfe wave chart I posted last weekend.

As I stated this past week, I don't believe this pattern plays out.

Not that I would mind, as I have some October SPY puts in inventory, but structure doesn't suggest this is in the cards.

In my opinion, the only way this plays out is if minor C has completed. I don't believe that is the case.

This is an OEX weekly chart that has been a couple of months since I last posted it.

I have trend lines of interest, as well as, a Fibonacci fan from the October 08 highs.

There are three things I want to point out.

First, we have broken and closed above the main trend line off the highs. It did not pose any real resistance, at least on a weekly basis. This could be viewed as very bullish.

Secondly, we are fast approaching the 61.8% fan line. Will it get in the way of the bulltards and prove to be a challenge for higher prices? I suspect we get some type of reaction there.

And lastly, we have huge negative divergence based on this simple stochastics. Price would have to go significantly higher to erase this. The bottom indicator is a simple MACD. It too shows divergence based on the histogram.

Bottom line - price action off the 1071.50 H is corrective in nature - not impulsive. After this is done, we once again should see higher price.

This doesn't mean that price will take out the 1071.50 H. We can always have a truncated (v)th wave. Regardless of where it completes, expect a decent correction of price and/or time.

We are setup for a very nice KoolsTools cycle peak for Tuesday. This is based on the days of 8/17 and 9/2. Notice the "bowl" that Kool is so fond of pointing out.