The Dog Days Of Summer are here as the market continues to trade in a range. It did a fast squeeze last week on the 13th to make another new high, but has fell back since then. I was hoping that would be a nice "one day" wonder down day of 100-150 points but it squeezed higher instead.
Now we are in the pullback mode, and while I had hoped that we'd see the 787.13 FP on the get hit into the end of the month (still possible) I lean toward that turn date window to becoming a low instead. I suspect we are in an ABC down right now and yesterdays low ended the A wave, and we are in the B wave up now. It's probably some kind of wave 4, and I suspect it will end around the end of this month, which could be either the 26th, 27th, 28th, or 31st... that's the 4 day window.
Question is... how low will it go? I don't know of course, but I don't think it will take out the July 29th low. Most likely it will be a higher low then that level, and probably in the 50% to 61.8% pullback zone from that rally up to the current high. That rally started at 7324 and the top is 7838, so half of that would be 257 points down, or 7581. If it's 61.8% then that would be 317 points or 7520 roughly.
After that we should start back up for the final rally, and a lot of people are looking for 8000, 8200 or 8500 into mid-late September. It could happen but I just can't stop thinking about the 787.13 FP on the SPY as if we only reached that level (about 7900 ES) everyone would be so bullish, calling for 8000+, that it would be the perfect spot to top out and reverse back down with everyone long.
However, if this is going to play out I have to think we will pullback deeper first before doing the last big squeeze. I could be wrong and we could just chop in a wider range between 7500 to 7838 into the turn date of September 11th, where a low should appear. It's from that low that the market should start the strongest part of the last rally up. I'm thinking that the ABC wave 4 down, that we are likely in right now, will end around the end of this month... then a wave 1 will go up into early September, and a wave 2 pullback into 9/11, and from that low the wave 3, 4 and 5 starts for the final 5th wave up to wherever.
Again, we could go to 8000+ but I just think we might stop at the FP on the SPY and that's all we get. Maybe the pullback expected in the 11th will be back to 7500 or so... like a double bottom from the current ABC down for wave 4 that I think we are in now. From there we could easily squeeze 400 points in a few days to reach the 787.13 FP and then stop and go sideways for awhile to build a bull flag so that all the bulls load up long around that 7900 level looking for the breakout to 8000+, but then something happens and the market rolls over hard and starts the big drop to at least the 692 FP, if not the 600.14 FP on the SPY... who knows for sure?
Bottom line here is that I don't see anything I can risk a trade on until either the end of this month, or most likely the 9/11 expected low. It's a low volume market that the big boys aren't trading now but will be back after 9/11 to start putting money back to work. Will we get the blow off to 8200 or 8500 from it? Anything is possible but my past history with FP's tell me the top will be the slight piercing of 787.13 SPY in mid-late September.
Have a great weekend.
