SP500 – Daily Analysis
The waves that all indices formed today deserve close attention. Let’s take a look at the S&P 500 alongside the Nasdaq, Dow Jones, and Russell—it’s quite a story. As always, we’ll start with the candles.
CANDLES
All four indices closed with concerning candles and combos. IWM—the most bearish now—technically confirmed a top on three candles. SPY and QQQ printed strong, technically supported Bearish Engulfing patterns. DIA is on track to confirm a Dark Cloud Cover. Several larger frames close tomorrow, and we could see additional Bearish Engulfing on the 2D—an extra concern.
Short term: SPX — bearish
Mid term: SPX — bullish so far; could flip if momentum holds
Long term: SPX — bullish
Elliott Waves
Mid Term
No changes yet to the mid term. The purple count remains primary and the green count stays on the chart.
Short Term
Today’s move was concerning; it could morph the wave into an Ending Diagonal—especially if ES falls below $6743.50.
Micro Level – All Indices
The micro-level study was lengthy, but one thing stands out: all indices made their first wave off the recent tops as impulses (I reviewed futures for continuity).
ES and NQ are near twins—strong impulse off the top, followed by a corrective flag (ES details on the chart below).
YM has several options; an (abc) correction would be the best-case scenario for a quick reset. The potential green path is the most concerning.
RTY is the most dangerous. If the current wave up (possibly 4) does not overlap the prospective wave 1, and the index drops to a new lower low, it could form an impulse of a higher degree—signaling the correction is just beginning. Remember IWM was the most bearish by candles? It could be the harbinger.
Below is the prospective path for ES for tomorrow. After the impulse down, the current move up looks very corrective—potentially a lengthy flag. Wave c could complete as a diagonal. The blue path would be the fortunate one. If the index makes a sharp wave down that exceeds today’s decline, be prepared for an impulse of a larger degree with all the related implications.
At this point, the waves are very young—I examined them on 3-minute charts. Once they mature tomorrow, we should have a clearer picture.
SUMMARY
SPX flipped bearish on the short-term frame, with risk of momentum bleeding into larger frames. The end of the week will be pivotal for confirming direction.
Short term: SPX — bearish
Mid term: SPX — bullish, risk of change this week
Long term: SPX — bullish
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Happy Trading!
