The market went a little lower then the early downside level yesterday before the open but not by much. The low was 4520, so that was just 6 points lower. It certainly looked and felt really bad but the bulls never gave up the 4500 level and that has to be looked at as still bullish... at least somewhat as they did lose the 50 day moving average, and that's held up for a year now. If the ES can get past 4600 and hold the odds of it going on up and making another new all time high will greatly increase.
I say that because in C waves the bounces are small, like 23.6% or 38.2%... and once you get past that the C is usually finished. Plus let's not forget that most bears missed this 3 day drop and will pile on short at the 38.2% level... and especially at the 50%, and that's fuel to squeeze higher. Then you are going into a holiday so normal trading volume is lower, therefore it's harder to push the market down. And we have the wildcard with Biden speaking, which then this whole thing is likely going to be a "sell the rumor, buy the news" event.
So, a 38.2% bounce would take it to 4605.50... which that 4600-4590 zone will be resistance now on the way back up. If only a 23.6% bounce then 4573.07 is the target. This morning we are at the 38.2% basically, so if it holds and we start pushing up higher then a new all time high is very possible. It will be on the backs of bears getting squeezed trying to short it, and light volume into the holiday.
If we see this happen then the correction will likely be turning into a wedge pattern with that higher higher projecting a lower low to follow. This means we could top out into Christmas and rollover the following week and start another decline, and since it will likely catch everyone off guard that decline should be the one to take out the 4500 support level once and for all. It could take us into the first week of January I guess and finally end this correction. Do that and we are off to the races on the upside the rest of January and into February I believe. Have a blessed day.