It's the wild, wild west stock market with mini-flash-crashes it seems! I've missed a lot of big moves as it just didn't see them coming, especially not to the degree of depth that they went. What does it all mean? To me it says the end is near for the sideways rally up from the 8/5 low and the next big drop is right around the corner. Since the 7/29 high of 3029 on the ES, down to the 8/5 low of 2775 is a total of 254 points in total (to make a large A wave), one could expect a similar move down for the large C wave at the very least. If the 2940 high sticks for the large B wave up then 2686 would be the expect low if C equals A.
But many C waves go much more then just the length of the A, some even go double... which would be about 2432, and that's pretty close to the 245.29 FP on the SPY from 1/7/19. So I would not be surprised if that's the planned target low with the large C wave down. It's also looking like it might just go right into our passport code of September 17th, 2019.
Anyway, for the short term I'm expecting a bounce today, which we call already see that the futures are up nicely from the overnight low of 2810. What could happen (meaning... if I were SkyNet this is what I'd do) is move back down some right at the open as new shorts that missed the Friday drop pile on... and trapped longs try to get out with a smaller loss. But this should be a trap on the bears as a strong move back up is more likely then another large drop today. I would drop it early to tease the bears and somewhere between the open and the 11:30 am EST Europe close (and lunchtime for Americans) I'd turn it back up and start the squeeze the rest of the day into the close.
If fact if you really want the bears completely out before the next large drop you should take it all the way back up to the highs on Friday... yeah the 2940 zone! I know, that's crazy but there's a "possible" FP on the SPY after the close (looks more like a late fill, but could be a real FP?) showing 292.28, so don't be shocked if SkyNet pulls another move back up to that level today. I'm not saying it's going to happen, but it's very possible.
This isn't your normal market where you get perfect 50% retracements or so other Fibonacci level to short at. It's NOT the 70' or 80's market where only the insiders and professional traders had access to technical analysis. Now the sheep have the same tools as the pro's do, and thinking that the old school style of trading would continue to work today with the masses having the same knowledge and access as the elite is just foolish.
The market has completely changed since computers gave the sheep the charting ability of the pro's. If we do indeed get this rally back up today that retraces almost 100% of the move down on Friday (or even pierces through 2940 to run stops) I'll go out on a limb and say that's the last strong move up before the big down move starts into September (aka, the large C wave down).
Needless to say I'll be looking to short the close today if we get such a powerful rally. If we only get 50% (almost there right now if you include the Sunday night low) I'd be shocked and would have to decide on what to do at that point. I might wait another day or I might still short it. I'll of course post it in the free chatroom. Good luck to everyone today.