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Is 2018 Setting Up A Stock Market Crash Or Inflationary Based Mega Rally?

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February 18th 2018

A Strange Pattern Is Developing and so far I don't see anyone talking about it...

It's been over a year, maybe several years, since I've done a weekend post and video but I feel compelled to share what I've discovered recently. It's something I hope doesn't play out but so far is tracking out day to day almost perfectly.

Of course there are just as many diehard bears out there that are still calling for a stock market crash today, tomorrow, or soon... just like they have been for many years now. And there's the mega-bulls that are looking for the DOW to hit 100,000 or some crazy number. Which one is right, or are they both right? So far the crash callers have been wrong time after time as the market just keeps on going up and up and up.

The market has changed a lot in the last 18 years I believe with computer algorithms making up 84% of the trading each day, and with the Fed's injecting trillions of dollars into the system with one Quantitative Easing program after another to keep the market going up. That's at least until recently as they are now slowly rising interest rates and attempting to reverse the money injection, which some say caused the recent 10.8% drop in late January into February.

Others say that it was caused because Jerome Powell replaced Janet Yellen as the new Federal Reserve Chairman and the deep state that runs the stock market didn't like it... therefore they decided to tank the market to punish Trump for his decision. Some say he isn't Jewish as well and that the deep state always put a Jew in office as they are "one of them" and can be controlled. I don't know what to believe about that issue but certainly the market was super overbought from a technical point of view and needed to pullback anyway. The timing of it was and still is suspicious.

Anyway, what I have to show you deals with "codes" and "numerology" that the deep state (the elite, illuminati, cabal, skull and bones society, free masons, or whatever name they hide under?), use to tell their buddies on the inside what's going to happen next in the market. Now a true member (which I'm NOT) could read these codes perfectly and know exactly what's coming next, when it's coming, and when it ends... but I have to just guess at it and use the knowledge I've discovered over the last 9 years while writing this blog.

So, with that preface I must add that there is a super computer "AI" (artificial intelligence... I call it "SkyNet" from the Terminator movie) that reads every post, page, blog, website, tweet, chat, etc... on the internet and if certain things are said that "they" (the elite) don't like then it tends to get no traffic or worst the site gets attacked by "bot's" to slow it down to a point that no one can get it to load where they can read. In fact, SkyNet even watches youtube video's and converts them from speech to text so it can decide again if it gets traffic exposure or not.

Therefore I have to be careful on exposing this information to SkyNet as I only want to help a few fellow traders by giving them what I've discovered so they can be on the look out for it and not get caught on the wrong side of the trade should this actually happen? In order to keep this information away from SkyNet reading it I've decided to password protect it and require a real person to login to my site to get access to the password so they can read it. I apologize to those of you who think is too much trouble but I really must keep this information only in the hands of real people and NOT spread over the internet where SkyNet can read it easily. So I ask you NOT to copy the text or the video and repost it on the internet. It's free to view for all, so that's not too much to ask of you I think. I'm also putting the video up on Wistia instead of Youtube so hopefully it goes unnoticed by SkyNet.

To read the rest of this post and view the video you must create a new account and login to get access to the passworded page... which is located here:

Is 2018 Setting Up A Stock Market Crash Or Inflationary Based Mega Rally-Part 2

http://reddragonleo.com/2018/02/19/is-2018-setting-up-a-stock-market-crash-or-inflationary-based-mega-rally-part-2/

The password is: 1987

 

ES Morning Update May 24TH 2024

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The bears held the line yesterday and stopped the bulls from breaking through. The bulls tried really hard but got exhausted and the bears pounced on them producing a nice pullback. But today is Friday, which is typically bullish, so I would expect a "calming down" of the market.

I doubt if we see another large down day but most likely we'll bounce and close green, or at least a smaller red day. Odds favor a green close but if the rally is early in the day it could fade by the close and end red. Now from a technical point of view the daily chart is just getting started rolling over, so if the bears can keep the momentum going next week there is plenty of room left on the downside.

If this happens then I'd look for the end of the month for the bottom where a strong rally back up should follow. Now I don't know if that will be "the bottom", meaning we are off to new all time highs again, or just "a bottom", meaning we will have just a bounce and then another leg down in June. That's impossible to know, but from a "common pattern" point of view around the end of every month is where turns commonly appear. Lastly, don't forget that we are close on Monday for Memorial Day.

Have a great weekend.

ES Morning Update May 23rd 2024

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Well, the pullback came before Nvida came out and then they used it to erase the pullback completely and rally back up to make another new all time high. We have the jobs number out this morning and that's the last chance for the bears it seems as it's looking quite ready to breakout to the upside now.

The only resistance is the overhead green rising trendline and white one. If bulls get through it (almost toughing it now) then I'd expect to see 5450+ pretty quickly. Bear must hold that line and take it lower today or tomorrow to get the weekly closing candle to put in a topping tail and roll the MACD's over.

I don't see another week under this overhead resistance as bulls are super close now to breaking out. Only a hard drop into the close on Friday to stop the weekly chart from turning bullish will save the bears. Will it happen? I just don't know? It's impossible to call the next direction from a week plus sideways move.

Bulls are very strong now and bears are super weak.  Odds are in the bulls favor of breaking out but don't forget the common pattern of "turns" happening over a 3 day holiday weekend.  We are close Monday for Memorial day, so bulls need to bust through the rising green trendline this week, like today ideally.  Then backtext it tomorrow and make it support.  If they can do that then they could grind higher next week.  But if they fail then they risk the bears making an attack next week.  So this overhead resistance is truly the goal line for the bulls, and I think this week is their 4th down.  If the bears hold it then they should take the ball next week.

The rising green trendline (5380) is the big resistance from the 2020 high, connecting to the 2022 high.  The rising white one only connects the recent highs in March, and it around 5415 this morning.  That's the zone basically that the bears need to hold.

So, everything is in the bulls hands right now as they are at the goal line.  Just a little more and they can rally to 5500 or more next week.  The close this week is super important as it will decide the fate for next week.  The weekly chart currently is turning bullish on its MACD's but it could also fail and rollover if the bulls don't score a touchdown here by getting through the overhead resistance this week.

Who will win?  I wish I knew but I don't.  I never saw this rally being so strong.  I was completely wrong on it, so I'm just watching to see what happens.

Have a blessed day.

ES Morning Update May 22nd 2024

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More "basing" yesterday, which again is bullish 70-80% of the time. We have Nvida earnings today, which could cause a breakout or breakdown from this current range. A 100+ point move is coming and sadly for the bears it's looking like it's going to be up.

I have no way of knowing for sure but the daily chart still isn't overbought yet, at least not to the point where a pullback is needed to cool it off. It's doing the "cooling off" right now with this multi day sideways basing, so there's just as good of odds of this market rallying again as it is selling off.

Tomorrow we have the jobs data, so I don't think we are going to stay in this tight range much longer. A breakout or breakdown is coming, but I don't know which way.  It's coming soon though as I doubt if we can get past Nvida earnings or the Jobs numbers without some volatility.

Have a blessed day.

ES Morning Update May 21st 2024

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Another nothing day on Monday as the market continues to "base" to setup the next big move, which at this point it could be in either direction. This is the worst pattern for the bears as the bulls get a rest and that opens the doors for another breakout higher, not breakdown lower.

While a pullback is much needed that doesn't mean it's going to happen. Technicals on the daily chart are still bullish and NOT overbought yet. Yes, they don't have to get fully overbought before we pullback, but it does keep the door open for more upside.

The longer we go sideways the less the odds are for the bears, and the higher the odds for the bulls. I really just don't know which way this market is going to break, so this is really just a full gamble to take a short or long as it's 50/50 now I think. I don't have anything else to add. Just have to wait and see as sideways movement is impossible to trade.

Have a blessed day.

ES Morning Update May 20th 2024

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This has been a huge failure for the two FP's on the SPY from the Yahoo site as I'm still scratching my head as to "why" they were put out if they aren't going to hit them. It's been super frustrating to miss this big rally and to short it many times on the way up, only to see it go higher.

I'm sure we will have a pullback soon but with so many bears that are toast now, and all the bulls that missed the move up, it will be bought when it comes. And the technicals are still not overbought on the daily chart yet. That doesn't mean it has too get fully overbought before it pulls back, but it does mean that it could continue higher first before we see any pullback.

However, the 6hr chart is overbought so the upside should be limited now. We can see that is already happening as after the ES made a new high we've just been grinding sideways to slightly up.

I could make a case that it's "basing", making a bull flag, and that is true, but I think for that to work again I'd estimate that we'll need a week or more of "basing" to have another strong breakout leg higher. For example, back on 12/29/21 it went sideways until 1/5/22 to "base", which was after a new all time high too. But it failed to breakout and rolled over to start a year long correction. Now I'm not expecting that to happen again as the technicals aren't the same now as they were back then.

Technicals are closer to the 11/8/21 to 11/29/21 period, which produced a pullback to hit and slightly pierce the 50 day SMA, which is around 5205 currently. So from a technical point of view a pullback to the 5200 zone seems likely, and I think many others are looking at the same scenario. Of course if too many people see the same thing happening then odds are it won't be that simple.

I think I'm dreaming here, or just "wishful thinking" but if everyone buys that zone then we know it must go lower, so maybe it still does go down to the FP? I'm sure that's just a dream but I'm going to just let the technicals talk to me. If and when the 6hr chart gets oversold again I'll look for a strong bounce.

Then I'll look at the daily to see if it's oversold, or if it can go lower. Lastly I'll look at the weekly chart to see what it tells me. Right now it's trying to turn back up, but the moving averages have not done a bullish cross yet. That's not a "must happen" requirement as long as the monthly chart is still bullish and support the market, which it is.

But it's getting extended for sure, and I doubt if it can go more then another 4-6 months. The volume peaked on that chart in March and since then it has been declining. Back in 2021 the volume peaked in August and the market went higher into a top early January of 2022, which was was 4 months basically. If this repeats then we should top in August, September at the extreme, but could top as early as July. It's not some exact pattern that will repeat the same every time but it is a "sign" that the final high is just months away. You can't keep going higher and higher on lower volume forever.

It will end soon, and the average is about 4 months from the highest volume. Now if this month makes another higher high on the volume then that technical pattern will be reset from a March volume monthly high to a new on in May. With still half the month left it could make a higher volume bar, but right it's not happened. I don't have much else to talk about right now as until we get a turn down there's not much to say or do.

Have a blessed day.

ES Morning Update May 17th 2024

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A "pause" day yesterday as the bulls finally took a breather.  Still no damage to the bull case.  Bears MUST have a large down day to break support if there's going to be a real correction start.  Nothing really to say until this happens.  A sideways move for several days will be a bull flag, which bears don't want to see.

I don't expect much today as it's OPEX, but next week will be super important for the bears.  They need to start breaking support, and fast.  The week after will have Memorial Day on Monday the 27th, so the market will be closed.  Around that period would be when I'd expect to see the low come in for the correction.  Either before it or after it, but I lean toward after it.

Why?  Because of the common pattern for the market to have "turns" around holidays.  Many times I've seen sell offs happen into them and complete shortly after them.  There seems to be some bad news event released over those 3 days that just happen to come out, and that's is usually the "capitulation" move to finish it all.  Will it happen this time too?  I don't know but it's something to keep in mind if we do indeed get a move down started next week.

Have a great weekend.

ES Morning Update May 16th 2024

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Blow off top? We got the rip after the CPI that I was looking for, but they skipped the dip. They just gaped up and squeezed the rest of the day to put in an early all time high on the SPX cash and late one into the close on the ES futures. From a technical point of view it looks like it can go higher as the MACD on the daily chart is still pointing up strongly with no sign of turning down. But that's not something you can use to forecast a "turn" as it won't show any weakness until after the move down has already started.

This morning we have the jobs number coming out before the open, which might be used to get that turn down? If not then there's not much left as far as "events" that can stop this bull it seems.

I've not had any new FP's on the QQQ since the 4/18 low, but we finally got a one yesterday before the open.  Here's that chart...

It's never a guarantee of course but during the early part of the A wave down from the 3/31 high there were many FP's that appeared, which caused a ton of "whipsaw" action until it got later in the move.  Then the FP's stopped appearing and we just went down and bottomed at 4965, where there was still no more new FP's during the entire rally up to the current level.

What does this mean?  It's hard to say for sure but it might mean that the lack of any FP's means we will be in a steady trend move and when the FP's appear again we'll go back to the wild up and down swings as the market makes a turn to start a new trend, which would be down this time around.

However, the technicals are currently still bullishly aligned on the daily chart, and with the new all time high happening we could just continue much higher and the 2 FP's I have on the SPY might not get hit until some future time that's weeks or months away.  That's the downside to the FP's you never know when they are going to get hit.

As for today, I really don't have any clue.  I'd say simply that we will continue going up until we don't.  Every time I think we have topped it keeps going higher, so I'm just going to let the market top and turn whenever it wants to.  I can't force it, but double tops usually produce a pullback of some degree, so I'd have to think that's coming soon.

Have a blessed day.

ES Morning Update May 15th 2024

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A slow day the first half yesterday but late in the day the squeeze started. This "front running" of the CPI should cause the stops to be run overhead before any turn back down happens.

I don't know if it's going to make a higher high on the ES or lower one, but I wouldn't be shocked to see a new one on the ES and lower high on the SPX cash as there will be an hour of time between the 8:30 am EST release of the CPI number and the 9:30 am open for the cash market. I've seen this before where they do the squeeze in that hour period but by the open it's back down to around the close from the previous day.

In fact you can look at 12/13/2022 as the perfect example, as the CPI came out then and the squeeze on the bears caused a rally up to 4180, but by the open that day the SPX only hit a high of 4100, and that day put in the top for the rally. After that we saw a multi-day decline, which was a "higher low" then the 10/13/2022 low (probably 50% retrace), and that's what I believe most traders are expecting to happen again.

I would think the same thing if I didn't have the FP but since I do I must be open to a flush out drop. Back in 2022 we already had a year of a correction and was below the 200 day moving average, and we were coming up, but currently we are near all time highs and above the average.

This tells me the opposite can happen then what happen then, meaning a lower low is possible this time around. It's certainly not expected by the majority of traders as I know most people are just looking for a higher low to get long at, but isn't that just too obvious? I think it is, but until it happens I'm just guessing I guess. If for some reason the CPI doesn't cause the move then it could happen from the jobs number tomorrow before the open. They are very sneaky, so I wouldn't be shocked to see a move down at the open from the CPI that gets fully reversed into the close to shake out the early bears. Then down for real Thursday after the jobs number comes out.

Have a blessed day.

ES Morning Update May 14th 2024

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A pause day yesterday as we wait on the CPI tomorrow before the open. We also have the PPI this morning and Powell speaking today as well. I don't expect much from those events but the CPI should cause a move in the market.

I don't know if it's going to cause a run of the stops overhead or not, as it might run them... or just might not and instead start the correction I'm looking for. Many CPI days have some stop run happen and then a reversal but it's not something that can be foreseen in advance. It's truly a flip of a coin, a "roll the dice", a guess basically. I'm looking for a short sooner, but I'm not sure if I'm going to wait until after the CPI number or before it.

I don't expect any straight down move to happen, as even if it rolls over after the CPI and doesn't run the stops there should still be some bounces to get short at. But since this should be a Large Wave C down those bounces might not be a strong as the early ones that followed the start of the Large A Wave down from the all time high.

And at this point most traders are only looking for a higher low, so we might not see a good bounce until we pullback to about the 50% level of the rally up... basically around the 5000-5050 zone. That's all I have.

Have a blessed day.

ES Morning Update May 13th 2024

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A flat day on Friday as the market clearly is showing signs of exhaustion. At this point I think most all of the bears have given up on the lower low and are now looking for a higher low from the future coming pullback. I think that I would also be looking for a higher low if I did not have the 2 FP's on the SPY, but since I do have them I must keep the door open for them to be hit before another new all time higher high is put in.

We are super close now to just that, and one might even say we are at a double top. But I think we need to be a little closer to say that, like it should be within 10-20 points in my opinion. I think we are closer on the DOW to hitting a double now, but even its' not there yet. And really it would be a triple top as we've already had a double top on it from the 3/21 high and the 4/1 high.

It doesn't matter really as we are within spitting distance of a double top (or triple) on all three of the major indexes, so a turn down is coming soon. Will it wait until after CPI this Wednesday or will it front run it and start today is the question?

If too many people are all looking for the same thing then we know it's not going to happen. So are there a lot of traders looking at the CPI as the likely "turn date"? I think there must be as most traders know it's coming so I'm leaning toward the market starting to pullback in front of that event and do the typical wild swings up and down after it, but when all the dust is settled we continue in the pullback.

This week though is probably going to be choppy as it should be the "topping week", and that's where the final smaller degree waves on the upside finish and the smaller degree waves on the downside form and overlap to setup the larger down waves. Those waves would of course the wave 3's inside the Large C Wave that should complete by the end of the month.

We have Memorial Day coming up on Monday, May 27th and the market will be close since it's a holiday, so I would not be surprised to that 3 day weekend used for the bottoming period. Many "turns" happen over a holiday weekend, and this one would line up perfectly with a bottom.

Meaning it happens before the weekend (Friday the 24th) or the few days right after the weekend (the 28th-30th). I'll be looking close at Friday the 24th as if we are around a double bottom from 4/19, then it's the perfect bull trap to make the market look bullish in the holiday but then do the flush out drop to hit the FP after it with all the bulls holding longs during those 3 days. You gap down on Tuesday the 28th and keep going until the FP is hit over the next day or so.

Then the bears will pile in short as the bulls give up, and that's when the low is really put in. Just a theory of course, but based on how common it is for the market to put in "turns" around holidays, so it's not out of the question to see it happen. Not much else to say until we start to rollover.

Lastly, here is last Fridays wave count, which has us in the final 5th wave up this morning, which would be Tiny Wave 5, inside Small wave 5, inside Medium Wave C, inside Large Wave B.

Have a blessed day.

ES Morning Update May 10th 2024

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The market failed to due the pullback for small wave 4 yesterday that I was expecting, so it suggests that I'm wrong about the subdividing waves inside of Large Wave B up. I posted an updated chart yesterday in the chatroom and on twitter. I've just taken out the Tiny Waves basically, which should put us in Small Wave 5 up now inside Medium Wave C of Large Wave B.

It speeds things up basically and suggests we top faster, like today possibly. Then the first move down next week should be part of the Large Wave C, and any bounces back up should not make higher highs but a lower high. It's went a lot higher then I thought it would as I thought it would stop at the 61.8% retracement level but we are at the 78.2% level now. Will it stop here? I just don't know? I only can say that we are overbought fully now on the 2hr and 6hr charts and a turn down can come at any time now. Here's yesterdays updated chart...

I didn't put Large Wave B on the chart but it's where Medium Wave C and Small Wave 5 are at. We are there now, and into strong resistance from the 4/5 to 4/10 chop zone. Will it get through that zone? I don't know? It's possible that they us the CPI number next Wednesday morning (or PPI on Tuesday morning) to "run the stops" above that level, and then drop. It would be a double top basically as running the stops above there would get us to 5300+ I'm sure. We've seen the CPI cause big turns in the past, so this could happen again. In fact it's been awhile since we seen it used like this, so we are due for it to happen again. If that is the plan then I'd only look for a small pullback on Monday and Tuesday, which must stay above the prior 5200 level of support. It would be a subdividing Small Wave 5 I think, and the chart below explains it.

As you can see I've labeled the move up as either completing Tiny Wave 1 up or Tiny Wave 1, 2 and 3 up. Hard to say which but if we go with the market being in Tiny Wave 3 then we should have a little more upside today and likely do an ABC down for Tiny Wave 4 into Wednesday morning. Then the CPI can "run the stops" for Tiny Wave 5 up, which will complete Small Wave 5 inside Medium Wave C of Large Wave B.

If not, then we could be topping today as the Small Wave 5 won't subdivide into next Wednesday and will end today or possibly Monday. It could subdivide, as it's likely that the low on 5/9 before the open at 5195 would be Tiny Wave 2 down, meaning Small Wave 4 ended before the open on 5/8 at 5188... which is what I think is accurate.

I guess I could say that the 5195 low was a "truncated" wave C in an ABC down for Small Wave 4 with the wave A being lower at 5188, and that could be accurate? That would then have the current rally up from the 5195 low being just Tiny Wave 1 inside Small Wave 5 up. That is possibly but it looks more like a wave 3 and not a wave 1, but in the end it's not important if the CPI number is going to be used to put in the last high.

I can go back and figure it out after the fact, so I'm not too worried about it. My goal here is to just let today, Monday and Tuesday play out, as even if we top today and drop into early next week the CPI number will still (very likely) be used to produce a stop run above. Maybe it's only back up to the current high and point lower? If so then we will have a Small Wave 2 up inside Large Wave C down as the pullback in front of it would be Small Wave 1 down from some top today. Either way it looks like next Tuesday by the close or Wednesday morning after the CPI will be the ideal short. That's all the possibilities that I see.

Have a great weekend.

ES Morning Update May 9th 2024

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It looks to me that Tiny Wave 4 down finished early yesterday and Tiny Wave 5 followed the rest of the day. It's either finished or should finish today, and then Small Wave 4 down should follow, which might last in tomorrow or Monday? Target is still a test of the 5150 zone, which it might pierce and reach 5100, but that's not something I can predict for certain.

After that, which will be next week, we should see that last Small Wave 5 (possibly Wednesday?), which might make a slightly lower high (truncated 5th), or higher high. I lean toward the higher high as that will suck in the most bulls to finish Medium Wave C up inside Large Wave B up. That's the ideal move to trap the most traders on the wrong side before we get the drop for Large Wave C down. It might end before the end of the month and then we get a quick bounce up and back down for a double bottom around May 30th or 31st where "turns" commonly happen.

That's a tough call to figure out in advance, so I'll just have to keep adjusting as we go forward in time. If I can see 5 clean waves down for Large C into say the 24th (for example), and we hit the FP, then I'd look for for a bounce the following week that gets retested into the 30th or 31st as I don't think we are going up huge until the start of June.

Have a blessed day.

ES Morning Update May 8th 2024

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A pause day yesterday that closed a little positive but not much. Overall it just held the 5200 level as every attempt to breakout over 5230 failed. The market is basing for a big move, and most of last month I would say that the "basing" is bullish, but not this time around. If bulls can't get through the big resistance zone up to 5170 by the next day or so they will be forced to punt the ball to the bears.

But... I don't think we are ready to start the drop to the FP yet.  The window of time has run out I believe.  Instead I think we will get a pullback to support from the falling white trendline around the 5150 zone.  From there we should go back up but it might take a week or more to take out yesterdays high.  Here's the possible wave count...

I discussed this as possible last week, and while I wanted to see the FP hit already it's just not looking good for that happening now.  This looks to me like it's going to drag out into the end of this month.  OPEX is typically a bullish week, or at least a choppy one that doesn't tank hard.  A rangebound trading zone is possible for that week, which is next week.

That would leave the last 2 weeks of this month for the large C wave down to play out and hit the FP, which should have 5 medium waves inside it and of course 5 small  waves inside the wave 3 of that large C wave.  But that's looking more and more like it's going to happen during the second half of this month.

This is needed I think for the weekly chart to have enough time to cool off from being so overbought into the April top.  If the whole month of May is used to reset it then June can be a strong rally month where a new all time high will likely happen from.  So for now, this wave count and forecast is what I think will play out.  No amount of rooting for, begging for or praying is going to make the market do what you want it to do.  You have to accept what it gives you and what it's telling you is most likely to happen in the future.  This is what I think it's telling me, and will happen.  Of course I'll adjust as we go forward.

Have a blessed day.

ES Morning Update May 7th 2024

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Another nice up day yesterday. It's truly amazing to see it reach my 5192 target, and pierce through it. From everything I see there's really nothing left on the upside here as it will be like picking up pennies in front of a steamroller because the nickels, dimes, quarters and dollars have all been picked up already.

I took another short yesterday and will be adding my last one today so I can average into my position. We have a big drop coming and it should happen this week. My biggest worry is that they hold it up all week as then the drop could be much larger then just down to my 2 FP's on the SPY, which are new to me as they are from Yahoo and not Think or Swim. So I don't have a multi-year track record of them being accurate like all the FP's on Think or Swim.

But again, just what's the odds of 2 of them being put out pointing to the same area and disappearing the next day? I have to give them attention as they also align up as the expected target from prior declines in the past. Like for example, this decline looks similar to the 9/3/21 ABC correction into the 10/4/21 low, and for that low the first A wave drop was followed by a similar 61.85+ rally, which then was followed by a C wave down that equaled about 75% of the A wave.

I find it common that in many pullbacks inside a larger bull market, in where it's an ABC, the C wave is truncated short of the A wave. That was the case back then and could be the case now too? Ironically the 75% mark down for the C wave coming next is about where the FP will be at. The MACD's and RSI look similar to back then too, so there are many reasons to suggest we will have another leg down before this correction ends.

Nailing the exact day it turns down though isn't easy, but we should be finished now as the 61.8% retrace level has been hit and pierced. Nothing left but some chop I guess, or just rollover and start the decline.

Have a blessed day.

ES Morning Update May 6th 2024

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We got the rally I was expecting on Friday, and it stopped right at the falling white trendline of resistance, which is shy a little of the actual 61.8% retracement at 5192, but this isn't an exact science.

The market never makes it that easy, and will commonly either pierce that zone or fall short, so I took my short Friday and will ride out anymore upside if it happens. The last move down is still coming in my opinion and should happen this week. The double conformation from 2 fake prints of 483.07 and 483.62 on the SPY gives me high confidence that we will hit them.

Currently, as of the close Friday, the ratio between the SPY and the SPX would put the SPX at 4844.77 if the 483.07 FP on the SPY is hit. If it's just the 483.62 FP then the SPX should hit 4850.28, and with the the ES closing at 5161.50 on Friday, and the SPX at 5127.79, that's about a 33 point difference.

Now that could be off a little as the ES did trade a little longer afterhours, while the SPX closed at 4pm EST, so I'd lean closer to about 30 points higher on it as I think it went up a little higher. The close right at 4pm EST was 5156.50, so that's like 29 point difference to be precise. Anyway, you get the idea. We should hit the FP on the SPY and pierce it by some amount. That's the exit for my shorts and I'll look for a long right afterwards.

Have a blessed day.

ES Morning Update May 3rd 2024

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So far so good for my thoughts as discussed in yesterdays post. The market held support yesterday and went up nicely afterhours from the Apple earnings. This morning we have the jobs data coming out before the open and we've made a nice bull flag after the close just under resistance. If there's ever a time to push through and run the stops overhead it will be today.

Just rig the jobs number (they always do anyway) and we should push right through. I'd then look for my upside target zone (posted yesterday) to be hit, which will complete a 61.8% retrace. If that happens early today it's a short, and I think we could see complete reversal by the close as well. It should then start the drop to FP into early next week. Once it starts I don't expect too many bounces, if any?

The scarier it is the more powerful the squeeze back up from it... meaning we could see next week completely reverse the down move and put in a nice bottoming tail candle on the weekly chart. They should let anyone catch the coming down move to the FP after it starts. So I'll be looking to short it today if we reach the upside target zone, which is just a littel under 5200 on the ES basically.

Have a great weekend.

ES Morning Update May 2nd 2024

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Sheesh... what a curve ball yesterday with that fast squeeze up after the FOMC that got fully reversed by the close. Insane move, and one I did not see coming. But after it rallied I thought to myself that it had to be a wave 2 up in the C down that should hit the FP in the next day or so. I then drew up a wave count and posted in the chatroom, which is below.

The market rolled over after I did that chart and I thought I was a genius as we were starting a wave 3 down inside a C wave, and the FP was within spitting distance now. WRONG! The market stopped right back into the breakout zone around 5050 and just refused to breakdown after the close.

I mean, if I was right we should have dropped 20+ points after the bell rang and should be opening up the next morning with a nice gap down. But instead we started grinding higher afterwards and continued all night, so I that point I knew I was wrong and something else is in play. Back to the drawing board I went and below is what I discovered.

One of the big things I covered earlier this week (and last week) was that the market should reach the 61.8% retracement level before another big leg down. And when we were going down in the large A wave I thought it would bottom at the FP on the SPY (around 4880 ES) and then we would rally up to that 61.8% retracement level (about 5162 roughly... if it was going to play out, but it didn't).

Instead we bottomed early at 4963 and then ran up about 50% and stopped. From there we started down, which was that big drop on Tuesday (my small wave 1 to 2 move), and I thought that we would be continuing lower after the FOMC meeting yesterday to hit the FP and then we'd rally up to the 61.8% level.

But you see if it happened like that then we should go down lower again to 4600, 4400 or even 4000 as the large A down would have been just one big move straight to the FP, but that didn't happen. Instead we are going to get a complete ABC down to the FP, and that large C will end the entire correction and we will not go to any of those lower targets. Instead we'll start the multi-month rally up to 6000+ into the summer. This playing out like this make me confident that the FP is "the low" for the entire correction.

The only thing needed to confirm it is for the large B wave up to rally up to the 61.8% level, and I think that's going to happen into Friday. I think afterhours yesterday started a tiny Wave 3 up, inside small wave 3, inside medium wave C of large B. The upside target of 5187.50-5192.16 should be hit Friday, and I say that because I think they will use the earnings for Apple after the close today (4:30pm EST) to push through that falling white trendline and squeeze all the shorts out that have stops above the 5150 zone.

This will look super bullish to most but to me it's going to be the ideal short for the large C wave down that should end sometime next week. In fact, it could start on Friday and everyone will try to buy the pullback but it will likely keep dropping all day if it does start then. This is a super sneaky move, and one that I would not have figured out if I didn't go back to the drawing board and ask myself "what is missing"? The answer is the 61.8% retrace and the C=A point match... and the running of the stops over 5150. Get all of that done by Friday morning and this market is toast I think.

Have a blessed day.

ES Morning Update May 1st 2024

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WOW! What a nice drop yesterday. As of the close we are only about 150 points away from the FP on the SPY now, so it could hit today after the FOMC meeting, who knows for sure? I'll be ready to go long after it's hit, whether that's today or tomorrow or Friday. Ideally we hit it today as then everyone will be super bearish calling for much lower prices, but since I have the FP I know it's a low and I'll be going long. The SPX target is 4851.50 for the 483.62 FP and 4845.99 for the 483.07 FP, so 30 points higher on the ES would be its target now it's that's the current spread between them.

It was about 36 points last week but it's getting closer as time goes forward and should be close to equal when the June contract for the ES expires and we roll into the September one. Anyway, my focus will be on the hitting and piercing of the FP on the SPY as that's when I'll look to exit my short and go long.

I suspect that Apples earnings at 4:30pm EST on Thursday will be used to turn the market back up and start the big rally. That's after the 4pm close, so I'm hoping that we will see the FP on the SPY hit right before so that bears will be trapped short at the close Thursday. Then Friday they can gap it up and squeeze them all day to recover a lot of the move down, which should continue into next week as well. The FP could be hit afterhours Thursday as well (this assumes it's not hit today), but that wouldn't make sense with my thoughts of them using Apples earnings to start a short squeeze as they will want to hit the FP prior to that coming out.

So that suggests they will hit it beforehand, as with only 30 minutes from the 4pm close to the 4:30pm earnings announcement that's not much time to hit it. Maybe it happens though, who knows for sure? If we are close to the FP going into the close Thursday then I'll look to exit my shorts and get long. I'd love to see it hit today though, but that might not happen. Anyway, that's my thoughts for what could play out. We'll see.

Have a blessed day.

ES Morning Update April 30th 2024

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A nothing day yesterday as the market is in a "wait and see" mode it seems. Really not much to add here as the 50% retracement level has been hit and pierced so there's nothing left for upside in my opinion. Yes, there could be another squeeze to hit the 61.8% level, which would probably reach 65-70% before it finishes.

I say "could be" because of the FOMC meeting should have some wild swings from it, which is common really with most meetings. And we have Amazon earnings today as well as Apple on Thursday, so there's lots of "events" that could cause another squeeze. There is also the common pattern of a "turn" happening around the end of the month, which could happen at the end of any month or the start of the next month.

We are right in that window now of time, so even if we get another pop higher this market should rollover and start a pullback that should last into next Monday at least. Last Thursday I posted this chart, and it could still play out.

But... if we reach 61.8%+ (5192+) before we make that turn then I have to think the top is in for this rally and that we'll be going down to the FP on the SPY next. That means we should not go back up into OPEX for a higher high, but a lower one. That's if they don't just just flush it down for 3-4 days quickly to end it this week or by early next week, which is very possible as we are only around 260 points or so from the FP, and that could easily be hit in just a few days.

Yes, they can just do a small dip for a wave 1 as shown on that chart and then chop into OPEX and finally drop for the last move. And that kind of move would suck as it will be so hard to trade and very boring. We have already had a choppy move down for the A wave shown so it doesn't normally repeat the same pattern. Typically near the end of a move there is a final capitulation drop, so I'm still leaning toward that happening. They certainly don't make it easy, that's for sure. That's all I have for now. We'll see how it plays out.

Have a blessed day.

ES Morning Update April 29th 2024

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We got the rally to the 50% retracement that I was looking for on Friday by coming just 2 points shy of 5148, so that's a hit in my book. This week tells all for the bull or bear case I think as we are still in a bigger term bull market but the correction should not be over with just yet.

At least that's "if" the FP on the SPY of 483 is a real one and I think it is. In fact it was put out twice, once on March 1st for 483.07 and again on April 11th showing 483.62, so I have to think they are real and will be hit before the bull market resumes it's next big leg up. This week is when that FP should be hit as we have the FOMC meeting that can be used as an "event" to blame it on. We all know that the market loves to use "events" to trigger big moves, of which many are traps. I tend to think this one will be a trap as well.

I don't think we are going to rally up into the meeting but instead I think we pullback into it but save the hitting of the FP until right after the meeting. It will be a great way to scare the bulls out and trap the bears with a fast drop to the FP, which then bottoms and turns back up just as fast.

There won't be any bulls on board and bears will be shorting the crap out of it, which will be the fuel needed for a big squeeze to start from. I would not be shocked to see us pullback to around 5000 on the ES going into the meeting, and then flush down 100+ point to hit the FP (around 4880 on the ES roughly).

And then a full reversal back up to above 5000 by the close, with 5100+ possible by the end of the week. This is my dream scenario and one that would trick the most traders I think. The FP low would be the Head in a likely "Inverted Head and Shoulders" pattern that I still think will form. After the squeeze is finish, which could last for a week plus, there should be a pullback for a higher low to make the right shoulder as the left shoulder is the current low from 4/19 at 4963.50, and might take all of May to unfold.

The correction in December of last year to January formed a nice inverted head and shoulders, and I think this current correction can form another one. All just speculation at this point, but certainly possible. Now if a new FP comes out, which shows a lower low then the current 483 ones, then that right shoulder won't be accurate and we'll just drop to the new FP I guess. But right now I'm only looking for a higher low on that last pullback, and then the bull market to resume.

For the short term, pretty simple really, I'm looking for a pullback into the FOMC starting today, and that's even if we go a little higher first. It changes nothing as this rally up from the bottom is still just a bounce in a correction that isn't over with in my opinion, and won't be until the downside FP on the SPY is hit. If for any reason it is not hit this week then I don't think we'll see it hit until the last week of May.

Have a blessed day.

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