ES Morning Update December 10th 2018

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This week is do or die time for the bulls and bears as the following week the bullish seasonality period starts. That means the bulls just need to hold their ground and not give up that Jan/Feb low zone by more then just a fast pierce. The bears of course need the opposite as they are running on borrowed time. They need to break support below and get the bulls in a panic to force sell stops to hit hard.

For today the bears would be best served if they let the market close green to reset the consecutive down days in a row count so they can start it back again tomorrow. Short term chart were pretty oversold on Friday so odds do favor the bulls making that happen today. The bad news for them is that all these moves up and down have setup a series of lower highs and a possible wave 3 of 3 of C down pattern.

Now again, I'm not an Elliottwave expert but I can count and when I study the daily chart it looks like that wave series is possible. It also looks like an "M A" pattern, whereas the "M" is already formed and the left side of the "A" could be created today. The same pattern formed with the first big drop and recovery rally earlier this year. It failed as it should have because the market was still above most moving averages, above support zones and rising trendlines.

The opposite is true now as the market has broken important rising trendlines, is below many moving averages and has some very bearish looking weekly and monthly charts. The bottom line here is that there's much higher odds of this "M A" pattern working instead of failing like the one in the February to May period did. This rally up (if it continues all day today and closes green) could be the perfect bull trap. It will be exciting to watch it all play out for sure.