WOW! I really wasn't expecting that kind of drop on Friday. At this point we are not likely in Medium Wave 2 down anymore and have probably started that big wave 4 to 6000 that everyone is looking for, which I'll call Large wave 4.  I had hoped for a blow off rally into early November where we could see a crash happen, but that's looking less likely now.
This current drop has cut through too many support levels most likely, so while it's still possible to see the blow off top into November the odds are much less. Instead, we should continue lower to the 23.6% zone first, which is big horizontal support in the 6370-6440 ES area. That should end the A wave inside the Large Wave 4 down. This should happen this week if we are truly topped for now with Large Wave 3 at the 6812.25 recent high?
I had given up hope on Large Wave 4 as the market just keep going and going and going. I just figured I miss counted the waves some how and that it was some kind of choppy sideways pattern that already complete. But it looks like we are back on track with what I posted on September 3rd. Here's that old chart below...
Now I don't think we are going straight down as shown in that chart because the bearish period has passed for that to play out like that. We are still going to have a super bullish period during the second half of October, which if we were to bottom around Fridays low the door would still be open for a blow off squeeze into early November where the bearish period will show up.
But, assuming we are in Large Wave 4 down now, and that we hit the 23.6% Fibonacci area this week (call it the low 6300's), then I think that will complete an A wave down inside an ABC for Large Wave 4 down. However, it's going to be super tricky as there no way we will go straight to the 6000 zone with the super bullish period coming up the next few weeks. Most likely we will see a long drawn out B wave up into early November that subdivides into an ABC with 5 waves in the A, 3 in the B, and 5 in the C. In fact it could go all the way back up to put in what looks like a double top. Below is a possible wave count...
This more complex move is more likely to happen now because of the cycles that just are not bearish, but instead are bullish for the second half of October. The straight down type move could really only happen during a bearish cycle, which will show up in November. This kind of move shown in the chart above will trick everyone thinking we are off to new all time highs when we retrace back up to "almost a double top" around the end of this month or early next.
But since November has a bearish cycle it's not likely going to just blast off to the moon like everyone thinks it will. Instead we'll probably see a nasty Medium Wave C down inside Large Wave 4 that makes all the bulls puke and give up. But then it will bottom into the 6000 zone and from there we'll see the big blast off into next year.
The Super Bearish Count...
However, my worry is still the same... everyone is looking for that 6000 zone for a wave 4 (of some larger degree), and from there we start the massive rally up to 7400 and beyond. What if that 6000 zone is the bull trap area? Maybe everyone goes long there? It's so obvious that maybe it doesn't hold? I know this sounds crazy but I think a lot of people have forgot about the two gaps on the ES, and they "rarely" happen on the futures, so they will be filled at some point... why not do it during this drop?
With November being a bearish month I have to be open to the idea that those gaps will get filled. There's one at 5715.25 on May 9th, 2025 and the lowest one on April 22nd, 2025, which is at 5339.25... and let's not forget about the plans the government has to inject massive QE into the market at some point. If they wait until those gaps are filled they will be able to avoid a crash in 2026 and can get another huge rally instead. Forget about 7400 as if we hit 5300 we'll reach 8000 or more... it will be a crazy rally with an extreme high.
Anyway, that's just something to think about in the coming weeks as the market unfolds doing what it does best... trick bulls and bears alike. Let's just remember this when we get back up to a double top later this month and everyone is all bulled up again.
Have an blessed day.
