Market Still Searching For A Local Bottom


Today we saw the market open higher but we were unable to see a sustained breakout higher and we have since traded in a fairly flat range most of the day and at the time of this writing we are trading flat from the close on Friday. 

The action on the smaller timeframes remains quite sloppy and this does not look like it is quite ready to break out higher just yet and while I can not say with a high degree of certainty that we will see another lower low it is looking like we will at least see this consolidate a bit further before any sustained breakout to the upside is seen. 

Drilling down to the smaller timeframes I have support for the yellow wave (b) come in at the 5470-5443 zone. If we do indeed move lower and hold that zone then I would be looking for a five wave move to the upside to signal that we have begun the yellow wave (c) of larger wave a up. 

If we break below that 5443 level then it would open the door to seeing yet another lower low. I likely would still lean towards that low being an extension of the wave iv that lower low would open the door for this to be following the red count as we could make the case for five down. That five down would have to take the form of a leading diagonal so it is far from the most reliable pattern but the case could be made for five down nevertheless. 

Of all the charts that I am watching the RTY does seem to have the cleanest micro pattern as I can now make the case that we have five down off of the highs. So that pattern is also helping to suggest that the ES and NQ may not quite be ready to break out higher to the upside just yet. 

The sloppy micro partners leave a bit to be desired. While we may see some shorter timeframe setups develop on some instruments we still not do have clarity or patterns that are in good alignment across all of the index charts. So for now being nimble and patient is going to be how I approach this market in the short term. 

ES 5min
ES 5min
SPX 60min
SPX 60min
Michael Golembesky is a senior analyst at ElliottWaveTrader covering US Indices, the US Dollar, and the VIX. He contributes frequently to Avi's Market Alerts service at EWT while also hosting his own VIX Trading service.


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