ES Morning Update October 14th 2020


The high put in Monday currently seems to be the end of medium wave 1 up from the low around 3200 back on 9/24, but again I'm not sure if they try one more pop back up for some kind of small or tiny wave 5 to end it. These smaller and tiny waves are hard to figure out, but I'm still sticking with the move up from the 9/24 low being a medium wave 1 up.

If it's not quite finished then it should do so today or no later then tomorrow.  I say that based on the opportunity left for the bulls to turn various shorter term time frame charts back up, which I think they only have another day left at best.

So if this current pullback from Mondays high is some small (more likely tiny) wave 4 down and they plan to do a wave 5 up they need to do it today or tomorrow as that's the best time window for it to happen from a technical point of view. The 50 period simple moving average (ocean blue) is trying to hold as support but currently it's under it a little.

You'll notice how wide the gap is between it and the 200 period moving average (beige color), which is currently around 3427, and touching the rising purple trendline. That trendline started at the low on 6/15, connected to the 6/29 low and acted as support on the 9/11 low and 9/17 low. You can see it acted as resistance on the multiple hits on 9/29, 10/01 and 10/6 before it did that quick pop through it only to reverse and drop back down to the 200 period moving average.

That's where this strong wave 3 up (tiny or small... not sure what to label it?) started and topped out this Monday. So, that rising purple trendline is a focus point as both resistance and support. Therefore this pullback for medium wave 2 down could bounce there if it drops in and ABC pattern, or even just end there if it's a short lived wave. It's too early to tell right now.

In summery I'm thinking the odds are 70-80% bearish here with the top being put in on Monday and only 20-30% odds that it turns back up for some quick pop for a wave 5 of some smaller degree. Bears that can hold though any possible fast stop run (that again, should happen today or tomorrow at the latest) should be in good shape and be able to ride it down to at least that purple rising trendline and/or the 200 period moving average.

The time line on that move could extend into Friday or even next Monday I'm guessing. Keep in mind though that cycle wise the market should start to rally up into the election in the second half of this month. So a bottom for this medium wave 2 down should happen early next week if this medium wave 3 up is to get started on time and takes us up into the election. Have a great day.


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