ES Morning Update October 26th 2020

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Here we are again... more chop but no clear direction. We could still be in the medium wave 2 down or it bottomed last week and the first wave up from that low was a small wave 1 inside medium wave 3 up, which would put us in small wave 2 down right now. This would required the market to hold this current low area and not go much lower or else it would take out last weeks low and then we'd still be in medium wave 2 down.

I just don't know the answer here unfortunately. But we pretty much knew already that this current period was going to be hard to read. Too me it's still about letting these waves play out until it's clearer that they are all finished. Maybe we've started medium 3 up, maybe not?

But I do expect it to start soon and end right before the election. Then a nice pullback for medium wave 4 down (it should be a bigger one since wave 2's and 4's tend to flip, and clearly this wave 2 is a choppy, sloppy mess). After that the medium wave 5 up should take us into the middle or late November. My best guess is around the third week of that month as they are likely going to hold it up into that monthly options expiration to let all the bearish positions expire worthless.

We all know how they love to drive the VIX down after selling naked calls so they expire, which the November contract would end on Wednesday morning the 18th, and of course all the monthly options on the SPY and other ETF's would end on Friday the 20th. I expect some tricky moves going into that period, and a final squeeze on the bears is what I'm expecting. That's all I have to today. Have a blessed day.

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