The futures are up some this morning and appear to be breaking out over the falling green trendline of resistance. Bears might want that gap filled from last weeks big down day, which is around the possible FP on the SPY of 319.12 that I've mentioned before.
Just in case you were wondering... I didn't do a morning update post yesterday, but it wasn't because I knew it was going to be another boring and sideways day. I went to an estate sale in the morning and didn't get back until around noon. Got lots of very old stuff as the house was built in the 1850's and the owner was a Lieutenant Colonel. It's Laura's business (my other half) and I'm just the free labor... LOL.
Anyway, as for the market, I've been saying all along that's it's a flip of a coin on whether we keep making these lower highs (the series of wave 1's down and 2's up) or run up to that possible FP and fill the gap. It's still unknown but looking more likely now with the premarket rally. Technically it's still a lower high but with today being Quad Witching you can't rule out some trickery before the close.
Plus I'm writing this well before the open, so it could squeeze higher and produce a bigger gap open... maybe right at the FP? But if SkyNet really wants to fool the most it should do a move up all day that hits the gap fill and FP in the last hour or so of the day. If I were SkyNet I'd do it going into around 2pm EST, then let the bears short it, drop it back quickly to make them think they caught the top, and ram it back up into the close for a slightly higher high (or double top) to shake the bears out and make them think we are going up even higher on Monday.
Bears will not want to stay short over the weekend if the market closes up and has clearly broken out of this sideways choppy range. Bulls will be happy and stay long looking for the breakout to continue, and who can blame them as the cup and handle pattern does point to much higher prices on a successful breakout.
Call me stubborn, call me stupid, but I do not think any breakout will be more then a fake out. Cup and handle patterns work best after a pullback, whereas the first move up makes the right side of the cup and a wave 1 and the sideways move creates the wave 2, which then a breakout move would be a wave 3 up that of course squeezes bears that shorted the first bounce up off the low of that pullback.
Those types of cup and handle patterns have high success rates, but this current one is near a bounce high and has a lower success rate. I think we can all agree that the market has went up strongly since the March 23rd lows and already did a wave 3, so and likely a wave 5 up too. The entire 5 wave move up probably ended at the high last week and that we are in a downtrend now with the wave 1 down bottoming this Monday the 15th, which puts us in a wave 2 up currently.
The first advance was a smaller A up and the sideways chop the B wave, last is the C up to end the wave 2 and likely fill the gap down from last week. As I've said many times, Elliottwave is not something that I've ever been able to use successfully to forecast the future, but added with other stuff it does help. Currently the EW count I've suggested points to a nasty wave 3 down starting next week, and that aligns up perfectly with all the other stuff I'm tracking that says a big drop is coming.
I'm talking about all the large blocks of shorts purchased recently on the SPY and longs on the VIX (likely by Mr. 50 cent guy), as well as the SKEW getting up into an area where large drops out of nowhere are more likely. The put to call ratio is at extremes too, as well as selling showing up every day in large volume... not exactly suggesting the big boys have any confidence that the market is getting ready to explode higher for the next several weeks.
So, if the bulls fill the gap and hit the 319.12 possible FP I'm an even bigger bear going into next week and the week after. Have a wonderful weekend and always remember that God is fully in control. Don't let fear take over your life, nor a stupid face mask.