Monday’s trade was somewhat surprising as both the ES and NQ slide through levels that should have contained a small 4th wave within an ongoing 5th wave up.  This brought up the possibilities that I discuss on tonight’s update — I’ve adjusted the labeling for the Minor C wave still in progress by adjusting the minute 3 waves completion point to Friday’s high.  This then suggests that today’s downside was all or most of minute wave 4, with a minute wave 5 yet to come.  I also discuss the possibility of the larger Minor C waves being complete again at Friday’s highs — which isn’t totally out of the picture at the moment.  However, having said that the markets would need to continue to sell off without hesitation to give the final word on the Intermediate 2nd waves being complete.  I discuss what look for should this be the case.  I also added Fibonacci retracements for the minute 4th waves and the estimates for Fibonacci extensions as indications of where minute 5th waves could reach.  The same levels in both the NQ and ES continue to show up – so upside is still expected to reach 12400 to 12600 in the NQ and 4200 in the ES.

Tomorrow pre-market the Employment Cost Index will be released at 8:30 AM EST.  While marked “green” on the Econoday site, this is a report that may show a stronger increase in inflation due to wage inflation created by less unemployment claims being filed and more people finding jobs.  Thus, the release of the data may give a strong indication of what the FED is deciding since we already know that the FED wants to see higher unemployment numbers to present a more convincing argument that inflation is falling and not increasing.  Long story short the release of the data may create a larger than expected move and yes that would include in either direction.