Squawk Evening Update: Unusual Action Continues

The DJIA did not turn down to quickly fill its opening gap, which had us looking for a new high.  We also needed that new high to end below 11,258.011 in order to support the idea of a a decline.  It remained just barely under that critical level before retracing most of its gains for the day.   Even though we have finally had some motion, it hasn’t resolved the questions that exist about direction.

The biggest challenge is that most of the recent moves, both up and down, seem to be in three waves.  As we’ve mentioned before, this is a sign of indecision.  A new high on three waves up can only come as an ending diagonal.  In the morning we’ll look for possibilities to count this out.  Even if we can find a count that supports it, since nothing right now is clean we won’t want to commit until we see some confirmation.

The Euro has not extended to five waves up yet.  That leaves open the possibility that the top is already in.  However, it is also still possible that it continues to extend upward.  Since the waves structure is not obvious yet, we’ll save additional Euro commentary for the morning.  Perhaps overnight action will clarify things.  If so, it might also give us a push one way or the other in our outlook for U. S. Equities.