ES Morning Update January 26th, 2017

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So far so good.  Looks like we ended some kind of wave 3 up yesterday and should have a smaller wave 4 today and possibly into Friday morning.  After that we should see another run for the current high for the smaller wave 5 up.  That should take us into the close Friday if all goes as planned.  Of course SkyNet is tricky and change anytime but I do think this plan has good odds of playing out.

As far as support on the pullback... we can clearly see the futures are currently riding the black rising trendline that they busted through yesterday.  Typically what I'd expect here is the futures to either "A" hold that trendline all day as it rides it back up a little until the close, or "B" pierce through the trendline to find stronger support at the green rising trendline.  If "A" then I'd still expect the drop to the green rising trendline but not until Friday morning.  I would look like a small ABC wave down to the trendline at that point, which should end some degree of a wave 4 pullback.  Then the wave 5 up into the close Friday should end the whole move up and setup the next week or two for a 70-100 point pullback.  There's NO negative divergence yet on the MACD's so that helps to support this forecast for another push up to make at least a double top by the close Friday, but most likely a higher high.

All in all it looks too me like the best short setup for swing traders will happen on Friday.  Today should be a "pause" day with the futures trying to hold that black rising trendline all day long.  Even if they lose it at some point today they will likely come back up to it again and leave the "touch of the green trendline" for Friday I think.  We had the newest FP on the SPY from several weeks back now that shows 219.26, so that might be the target low in the coming weeks.  Do note that I personally don't always catch these FP's and am very grateful that I have a team of like minded traders to look for them too and share them with me and others.  I post them in the chatroom when I get them and we all together try to figure them out.  Anyway, that's my thinking for today.