ES Morning Update December 29th 2022


Yesterday I spent some time thinking about "what if I wrong" when it comes to the big drop. My concern was that the "very obvious" bear flag the market has been making for a week or so now could be a bear trap. I still think the super bearish wave count that I did on December 20th is the most likely wave count and that all the various bullish ones I've done in the past month, which ALL have the October low as "the bottom", are wrong as there's just nothing technical that support the low being in back then on October 13th. So what I wanted to explore isn't whether or not another new lower low is coming, as I do believe it is, but from what level.

This week and the first week of January is bullish from a Seasonality point of view, and clearly this week has been nothing but chop with limited downside and limited upside between about 3800 and 3900. We've had light volume all week as the big boys aren't here but still on vacation I'm sure.

They will be be back next week, so I have to be open to a rally up happening of some degree. I just can't blindly assume that this week plus long bear flag is just going to tank from here without some kind of squeeze move up to shake out the new bears shorting all week long.

How high is the "unknown" of course. Last Thursday the 22nd I did a chart where I purposed that we should go up in an ABC for Tiny Wave 2 to about 4000 or so. I suggested that Small Wave 2 topped on 12/13 and that we dropped in 5 extra tiny waves into a low of 3788.50 on 12/22 (this chart might have only been posted in the chatroom?). Here is that chart...

The chart above is just a close up of this prior chart from December 20th when I first create my super bearish wave count, which I'm reposting below.

Now I still think the bigger picture wave count is correct but I to be open to the top on 12/13 possibly being wrong. I have it marked as the high for Tiny Wave 2, but I decided to do this new chart yesterday on the daily SPX this time, not the ES, as it's got less trendlines drawn on it. One this new chart I've changed the top for Small Wave 2 to possibly be into January the 8th and that it subdivides into an ABC where that 12/13 high is only Tiny Wave A, and that dropped into 12/22 to make the Tiny Wave B low.

It might or might not be finished, but if it goes any lower it shouldn't be by much... and it should be today or tomorrow at the latest. If it's finished then we should be in the early start of Tiny Wave C up, which could top into January 8th... a date I pick because it's on the passport (explained on my special report update on Christmas).

[Sidenote: In that passport update I suggest it's a low, but I'm considering it now to be a high].

This new chart still is bearish on the bigger picture and the wave count is still about the same with the only change being where and when Small Wave 2 up tops and ends. Here is that chart...

All of the charts suggest a move up is coming next week, but they vary on how high. This new one suggests 4150-4250, and the one from 12/22 suggests only 4000 or so. Of course I could be completely wrong the the bear flag plays out and we crash from it with everyone and their brother short. Yes it could be just that simple, but I've just never seen the market reward the masses that easily. Anyway, I just think I need to be open to another squeeze move happening before we rollover for the crash like drop (aka... the Medium C Wave). Have a blessed day.

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