Last Friday certainly took me by surprise as I thought it was going to be a typical boring sideways consolidation day to put everyone to sleep. But it was nothing near it the market dropped more in that one day then we've seen in a month or two. Fears of a recession are popping back up now as the 10 year treasuries dropped lower then the 3 month one's, which has resulted in a recession starting within a year later every time going back a 100 years according to some. I'm going to include two video's here by others that explain better then I do. But the bottom line is that unless this condition can be reversed quickly the odds of a bull market starting after the coming low for my FP target are not good.

I still firmly believe the FP I have will be the low for the year, but since this statistic points to a year out before any recession normally begins it's still possible to put in this FP low for this year and rally some, then next year start the recession. And lets also keep in mind that we've had recessions before that simply produce a range-bound market between some high zone and low zone. So it doesn't mean for certain that we are going to crash and go into a full blown depression. However, I do think it's important to continue following this situation to see if the government can reverse it... and quickly before it's too late to change the odds. Moving on to the short term.

This week I suspect we'll have some type of attempt back up early on (like Monday to Wednesday), but if the bulls fail to take out last weeks high I'd expect a larger drop to happen Wednesday to Friday, which the 2750's area would be the target low. From a wave count point of view the move down on Friday would be the A wave, then the move up into mid-week would be the B wave. Finally would be a C wave down into Friday. After that... who knows? I'd assume another rally attempt back up in April would follow. This rally up from the December lows has been super powerful so I don't expect it to give up and drop straight to my FP on the first down move attempt. There should be several more rallies I'd think as the bulls rarely give up that easily. Anyway, we'll just take it one day at a time. Happy Monday.

Another tricky move by the bulls yesterday as the rally up surprised most and went further then many expected. The only good thing for me was I didn't get caught shorting it on the way up, but I never went long either and missed a great move. As far as wave counts... they seem to be wrong the A down was about 40 points, then that FOMC squeeze up was 30 points (the B wave) and the C down was only 35 points, so does that even work? I don't know?

Elliottwave never seems to work in forecasting the next move correctly as far as I can tell, but I still use it with other indicators to assist me. Anyway, as far as today goes I simply don't know? I have zero clues on the direction. It's looking like it's going to open down but will it continue all day like the rally up yesterday or will it get reversed after the open and go back up? From a historical point of view most strong up day are met with a pause day afterwards. Meaning it chops sideways in a tight range to consolidate the prior days gains.

Then there's the fact that today ends the week as it's Friday and many times nothing much goes on all day. Mondays seem to be the same way many times as Tuesday to Thursday is where all the big action appears the most. But those are old patterns or rules that might not apply too much anymore with all trading being done electronically versus having real people on the floor of some stock exchange executing the orders. Still though, real people are placing trades, even if it's sitting at their computer screen and not using a phone to call a floor broker.

So I have to think that those "real people" still come into to work on Monday a little tired from the weekend and need some time to get caught up on emails, drink some coffee, study the market, and plan their trading week. Then by Friday they wrap it all up by closing out positions and try to sneak out early for the weekend. So whatever happens early this morning is probably going to be the only action today as the light volume should take the market into pause mode into the close I suspect, which is usually sideways to slight up.

My best guess is that the weakness this morning is just traders from yesterday closing out longs and that it will be over with in a few hours and the market will float back up the rest of the day. I'd be shocked if the entire rally up from yesterday got erased today on an equal move back down. I guess anything is possible but it's not something I can see in advance and so I won't chance shorting or going long today as I don't have any high odds setup for either direction... just "best guesses" based on past "patterns", and that's not something I want to bet real money on. Have a very blessed weekend.

Yesterday's FOMC produced a nice fast squeeze up that was most like some kind of B wave with the A wave down starting the day before and ending midday before the meeting. Then before the close that strong bounce rolled over and fell sharply into the close to completely reverse it all but stayed a hair higher then the midday low. Was that the start of the C wave down or does the B wave up still have more to go?

If you ask me that yesterday afterhours I'd said that odds favored the B wave subdividing into 3 waves as the futures were up about 8 points then, so it looked like today was going to open up strong but this morning you can clearly see that the 8 point rally got reversed completely and we are now about to open red this morning. The futures also went lower then the low yesterday, so I have to conclude now that the B wave up was just one wave and will not subdivide. That doesn't mean we can't rally some today but odds favor the market being in a C wave down right now.

We know it's common for them to subdivide into 5 waves so it's possible that the drop yesterday into the close and continuation this morning is just the wave 1 down of that C wave and any bounce back up today is a wave 2 of the C down. Catching it at the top of that wave 2 is the goal for those looking to short it. Since the A down went about 40 points from the 2858 top the midday low of 2818 yesterday, and the B up ended around 2848 the C down so go to 2808 if C = A, or deeper of course as C's commonly do. I suspect we go deeper but that's just a guess of course. After this move down completes I'm expecting another rally back up to start for a second attempt at taking out the recent 2858 high. Good Luck as always.

More grinding up again this morning it seems. This is of course done during an FOMC week as we certainly don't want to see the Fed's get blamed for a down market do we... LOL. In the past I've noticed that "turns" (down) don't happen until a few days after an FOMC meeting, and are blamed on some other event. The weekend after an event is commonly used to release some bad news so the next week starts going down.

So while a top could show up this Thursday or Friday this early market strength makes me think they will wait until next Monday. Why? Because usually there is some kind of small weakness the day before an FOMC meeting to start the series of shake out waves. Basically a series of wave 1's down and wave 2's up repeatedly during the entire FOMC week to end the last one on Friday and therefore allow the wave 3 down to start the following Monday.

Since it's looking strong today (at least for the open) I suspect those series of waves will start after the meeting this Thursday and Friday and best short will appear next Monday. It's more of a gut call here based on patterns I've noticed during prior FOMC weeks. As for today... I have little to give you. It's starting off bullish and will likely end that way too. Good Luck.

Welcome to FOMC week where the market does a lot of nothing until the Fed's speak... which is this Wednesday at 2pm EST. But a short-able top is very near, so hang in there bears. In the past the market was held up until 1-2 days after the FOMC as the Fed's don't want to take the blame for anything bad but instead just brag about the good they do (which isn't much in my humble opinion). So writing a long post this morning is really worthless. I'm not expecting much to happen until after the meeting is over with, so I'll likely be in and out of the chatroom through out the day today and tomorrow doing something productive around the house.

The bulls are up against some tough resistance overhead in the 2850-2880 zone from many angles. I really doubt if they can push this market up much more. All the bears have pretty much been squeezed out as shown by on this chart (courtesy of Twitter @OntheMoney) where volume dries up in the price zone above. There are other things too that says a pullback is very near, like the negative divergence now on the daily chart as well as Elliottwave counts suggesting we are in a final wave up of some degree.

Putting it simple... this week is the most likely week to top out and start a move down of 100+ points or so. But again I don't expect a lot until after the FOMC, so enjoy the warming weather until then if you can. For me it's getting up in the 50's early this week and 60's later in the week, so I'm ready for spring to come and winter to leave. Hopefully the bears are waking up soon too as I'm ready for a trip down south. Have a great day.

More grind today again it seems... at least here at the open. I'm not expecting much to happen today as again this is Quad Witching week and I'm sure the market makers have already picked the level where maximum damage will be done to the bulls and bears both, so the "pin" level is near. The SPY dropped about a $1 today to adjust for the quarterly dividends, so it's about flat while the futures are up 10 points or so. This is normal and happens every quarter. Anyway, today looks like another boring light volume day, so I'm not going to write a long post here. Next week though should be very interesting and a lot more exciting. Have a great weekend.

More grind up yesterday was the name of the game. This morning the futures are about flat so not much clues there on where the market wants to go next. And the prior 2817 high from a couple of weeks ago was taken out yesterday by a few points... which makes me think everyone shorted it, and that says "squeeze coming" to me. Maybe it rolls over here some but usually it's never this easy to just short the double top.

Most of the time they fall shy of hitting it by at least 5 points if not 10 points... or they run up through it to clear out the stops, which is what I think is coming before any meaningful pullback starts. And, the longer they hang out around the double top zone the more powerful the squeeze. Instead of only 5-10 points over it on the first hit and reversal, which could have happened yesterday but didn't, they might now need 15-30 points higher to run out all the bear stops.

It's boiling down to some "hold the zone" manipulation right now until this Quad Witching Expiration is over with tomorrow. If all goes well today and Friday won't see too much movement up or down and then Monday or Tuesday we'll see that final squeeze higher to end this long rally up from Christmas and start a playable correction.

Again, I do not expect it to take out that low last year but instead to make a higher low and then resume the bull market back up. And, I'm still 50/50 on whether this coming move down is going to start that correction or if it's just as small pullback and then back up quickly into April or May... and then do the big correction down for that higher low.

Anyway, for today I don't know what's it's going to do. I have no clues for the direction, and I already told you what my thoughts are for the next two days... but again, that's just guessing at best. Sometimes I get lots of evidence that gives me the next move with high odds certainty, but today isn't one of them. Have a blessed day.

Futures are up again this morning as the grind up continues. It's hard too be sure if the small pullback in the afternoon yesterday was a tiny wave 4 down or not? It's pretty obvious that the rally up on Monday was a tiny wave 3 of some degree (Micro?) but did it end or not? If the small drop yesterday was a wave 4 then we should be in the tiny wave 5 up this morning.

Catching this top exactly will not be easy, which is why I like to wait for the entire 5 wave series to end first and then let the 1 down and 2 up happen so I can see clearly that the 2 up isn't going to make a higher high then the one put in on the final 5th wave up, so that's where I want to short it. Yeah, I'll miss the exact top but better to do that then to be wrong shorting a 5th wave up that keeps extending higher and high with you trapped short.

A double top from last Mondays high of 2817 is near but I'm really not thinking it will make it up that high. From past experience I've noticed that the first attempt to get up to a double top is usually the one that falls shy of it by just enough points to make the bears miss it that were waiting to short... which is probably in the 5 points lower and 5 points higher area. For me to risk a short on this I'd want to see the open get sold into (the possible end of the 5th wave up and the start of the 1st wave down?), and then it bottom and turn back up into the close to make a slightly lower high (then the open) at the close today.

That "could" be the wave 1 down and 2 up that starts the next series of waves down. I say "could" as you are never really sure with EW counts in advance as the market subdivides many times into another smaller series of waves. But considering how close we are now to a double top I not expecting another subdivision to occur. In short, I'm "on the lookout" for a short today. It's not some guarantee on this one and it's not one with super high odds either. It's basically on some EW counts, resistance overhead (technical analysis) and a little bit of "gut feeling". So don't hold me to the fire if this forecast is wrong, but I'll be taking a short if the criteria s I've mentioned all play out today. Happy Hump Day.

The bulls did indeed win yesterday as they rallied hard all day long. Glad I was leaning bullish and not bearish... LOL! So what does it mean for today? Usually "consolidation" happens after such a large move up. And since the futures are now back up 5 (was pretty much flat a few minutes ago), and were even up 6 points or so last night, I'd have to think today we'll see mostly sideways movement with some more upside yet to come later in the day or even on Wednesday. It's not something I'd try to trade here as there's no strong setup yet for the bears, nor any guarantee for more upside on the bulls.

The big move was yesterday and today and tomorrow the bulls will battle hard for extra ground. It's pretty clear they want to revisit the prior high last week around 2817, which I don't know if they will bust through it or top out just below it... but "try they will". Regardless of whether they fail to get through it or do pierce it another pullback is near. This one should be bigger then the recent 90-100 point drop we had last week, so that's what I'm focused on right now.

I suspect it will appear by this Thursday or Friday. I'd like to see the bulls grind up a little today and tomorrow with positive closes on the daily candle to give the bears the best chance of a drop. I don't want to see the bulls take a day off and let the market close down as that would reset their chart enough for another 2-4 days of upward movement. Remember that a red close in this case is like giving the bulls a first down in a game of football. Keep them pushing but not gaining much ground is the name of the game for the bears. Let them gain small today for their 3rd down and small tomorrow for the 4th down. Then they have to turn over the ball to the bears. Anyway, that's my thoughts for today. Go Bulls!

This week is a Quad Witching week where 4 different classes of assets expire, so it could be a wild one. In fact it's already starting off on a strange note as the ES Futures are up +6 and the DOW futures are down -130 or so. Certainly not the norm to see one up and one down. So who knows where we end this week but I'm still leaning more bullish then bearish. Today I don't have a clue about where we are going. So I'll just keep this update short and add anything new in the free chatroom through out the day if I see anything. Welcome to Monday.

Futures are down again this morning so I'm glad I waited on that long I was thinking about taking. But I suspect this is the last down move before a rally starts back up into next week, so it could be a buying opportunity. There's also an upside FP from 8:16 am this morning, so that should be hit at some point today I believe.  I don't expect a lot today on the upside but I'm certainly leaning toward today putting in the bottom and some kind of rally up happening.

Reading twitter yesterday one of the people I follow pointed out that the TRIN was at +2 on Wednesday and the last time that occurred was Christmas Eve, so a bottom is very likely near. Of course that doesn't mean we are going to rally up a 1000+ DOW points like the day after Christmas did, but it's signaling that a rally is coming. If not today then Monday, but with that early morning FP I'd have to think it will get started today.

Maybe it only puts in a DOJI on the daily candle but that bottoming tail should be enough to keep the market going back up next week. Some others think we could go back up to 2860... I don't know? But it's certainly possible to at least "double top" this past Mondays high. I pointed out in the chatroom yesterday about the "lack of" a negative divergence on the daily chart for the MACD's, so a slightly higher high in the market and lower high on the MACD's would create one... which is why I can't rule out a move up over Mondays high next week.

Will it be to 2860? Don't know but next week is the monthly options expiration week, and that's usually a bullish week. It was very consistent in the past but since the introduction of the weekly options it's not as strong of a pattern, but still possible. For those that used too follow Danny Riley of Mr. TopStep he always called it the "Thursday/Friday low before OPEX". This was a common pattern the market makers did whereas they would run the market down on the 2nd week of the month into a low and then ram it back up into the 3rd Friday to make all the puts they sold expire worthless.

But the addition of the weekly options in the last couple of years has skewed that pattern to where it works just sometimes and not "all the time" as in the past when there was only the monthly options available. However, they still have larger volume on the monthly options so it's still something to be aware of since we have been going down all week long during the week prior to that monthly expiration.

In any case, that's my thoughts for today. Have a great weekend. P.S. It's supposed to get up to 62 degrees this Sunday where I live and was only 38 degrees yesterday... but what do I wake up to this morning? Several inches of snow... LOL! Have a great one and God Bless you and your loved ones.

Looks like the chop I expected after the Monday drop is going to continue today as well. The market has been playing pin pong between the high and low put in on Monday but at some point soon one level or the other should break... preferably the low as it's hard for me to even think about going long up this high in the sky already. But if the bulls drifted down lower for several more days (closing down on each one) I'd start thinking that they were working off the massively overbought conditions and were planning to make another run higher again. I hope that's not the case though as I'd rather short this fat pig instead. But that requires some more chop I think with some positive closes too.

Basically we want to see the bulls make some type of ABC up pattern from the Monday low to put in a lower high and exhaust themselves while doing it. Or a sideways bear flag would work too... just chop again between the Monday low (a pierce is fine but nothing big) and Tuesday high, which was about a 50% up move of the entire drop on Monday. Looking back at the September 21st, 2018 high and drop it took until October 3rd (12 calendar days) before it finally broke-down hard and fell off a cliff. This past Monday was the 4th so 12 days forward is the 16th of March, and a Saturday.

Next week is the monthly options expiration week too. So if history repeats we could expand this zone a little lower to the downside and then run back up for a double top that following Monday the 18th (or Friday the 15th) and then drop big afterwards similar to the October 3rd top and drop. From an "manipulation" point of view this makes perfect sense as the monthly options expiration next Friday should have the most open interest and therefore the market makers will have the most reason to "pin it" where the most puts and calls expire worthless.

Therefore, thinking outside the box here and just looking at history for clues, we could drop one more time (like tomorrow or Monday) to make a C wave down, whereas Monday was the A down and we are in the choppy and sloppy B wave up now. That ABC down could be followed by another ABC up into next Friday for the options expiration pin. Then starting after the 18th the big drop happens. The first ABC down would be a larger A down, then the second ABC up would be a larger B up... and finally the larger C down would start after that. Wishing thinking, but possible.

So far, so good. The market is just chopping sideways for the most part as expected. How long will this last is the question of course. My guess is that it will end today and tomorrow we'll drop again. But I'd like to see it rally up a little more today first and close firmly green. Then it would look like a completed ABC move up from the low on Monday. The next move down isn't likely to be the big drop though as I fully expect it to be bought up as the "buy the dippers" come in looking at the pullback as a opportunity to go long.

There could be several of these drops and rips going into next week to fool bears and bulls alike. I tend to think the biggest drop won't start until after the monthly options expiration is over with next Friday. So the week starting on the 18th should be the big move if this market follows the previous patterns... and I think it will. I see no reason for SkyNet to make it easy this time around by just dropping hard from the first top. I fully expect it to do the dance up and down several times to trick both sides before the real move down starts.

So if we end this move up at the close today then tomorrow should be down, but if that's another one day drop like Monday it could end the first series of waves down as well and then another series of waves back up should appear going into next week. I'm not a Elliottwave expert but the market does move in waves, and I'm just trying to guess which ones will form before they happen to the best of my abilities. Good luck.

Finally! We got our first drop! Yesterdays pop and drop was what I've been looking for to happen. It's the sign that the big boys are unloading more shares faster as they know the next big correction is closer. You'll notice the volume picked up too in the SPY, so this tells me insiders (who have been selling small for several weeks now) know about when the market is going to drop hard and are trying to get out before it happens.

Today, tomorrow, Thursday and maybe Friday we should see the market try to float back up... but I suspect it will again be sold into. However, I don't think it will be big volume again like yesterday but more like what we've seen over the past several weeks. This may continue into next week too, if it follows prior patterns. It's really hard too pick the exact next day they will let the bottom fall out again but it's coming... the when part is the tough question.

I don't see any danger of it today, probably not tomorrow either. But Thursday forward I'd say the market is on borrowed time as it tries to make a higher high again. Failure isn't an option for the bulls as it will increase the odds greatly that another large drop will follow. The "when" part is always the hardest to figure out. I just try to guess by counting waves and looking at divergences the best I can.

So at best we'll see an ABC up with many or all of each of those waves subdividing into 3 or 5 wave patterns. Most of the time it's just the C wave that subdivides into 5 waves but the A does too every now and then. My best guess is that we top out by this Friday with a lower high (then yesterday) and next week starts the big drop. But, since next week is the monthly options expiration week there could be some tricky downs and back ups to "pin" the SPY at max pain for option writers.

Looking at previously patterns just now I see that after the first big drop (like yesterday) there was about 2-3 days of chop, then another large drop (this Friday?), then more chop the week of the monthly options expiration. After that (the 4th week of the month) is when larger drops happened. As for today I don't expect much... chop most likely. Tomorrow will probably be the same. Thursday and Friday is when things could get interesting. And for anyone having a hard time signing up for the free chatroom just email me directly and I'll manually set you up. Red (at) RedDragonLeo (dot) com.

This Monday morning the premarket session is up with a high so far of 2819.75 being hit last night. We still haven't seen any capitulation move up happen but we didn't see on at the low last Christmas either... so the old rules again seem to be changed as SkyNet runs the show without any real floor traders left at any exchange. With this higher high (then last week) there's not much to do again but wait. Every time the bulls make a higher high it's like they got another first down and will have the ball for a total of 4 downs now.

Again, I think we are close but it's hard too short this thing without first seeing some weakness... like a top, drop, and rally back up for a lower high (aka, a wave 1 down and 2 back up). I have no idea what the small wave count is as it seems to just keep subdividing, but the bigger picture is still an InterMediate Wave 1 up of Major Wave 3 up (again, using Tony's last wave count as discussed on Fridays update).

When we finally top and drop it should be a nice one. I think it will be timed to happen with some bad news on the political front... Mueller, Mueller, Mueller, Mueller, has anyone seen Mueller (really Bueller but you get the picture). Bears should get the wave 1 down out of the way as should as possible (like today would be great) and then the wave 2 back up into midweek... which then could (should) have them set up for a nasty wave 3 down whenever they find Bueller (LOL).

Kidding aside the market seems to always have bad news timed around big drops, so if it's not some Trump related news it will be something else. I'll post further updates in the free chatroom throughout the day if I see some setup appear (bearish hopefully and I certainly don't want to go long this far up and over extended). Have a great day.

The bulls are running hard this morning it seems with the futures up nicely. Are they going to make a higher high or lower one is the question. If they make a lower high then there's still some hope for the bears in the short term, as in next week. But if they make a higher high this bull market can drag out longer. How long? Wish I knew for sure but it will of course end when all the bears become bullish.

It certainly feels like we are close but I don't have any real numbers to back that up... and how extreme does the put to call ratio really need to be anyway before you can say that the bears have given up? I know I'm getting tired of trying to come up with something to say each morning on these updates as technicals are worthless and wave counts are just "best guesses", so I must be getting close to capitulating myself... LOL.

Fortunately though I'm not in any position so the only pain I'm suffering right now is that of "waiting" for some high odds setup to appear. With a red close on the DOW and SPX yesterday the bulls got a rest day to reboot, but this morning they are up nicely, which is too soon in my humble opinion to start another long sustaining rally. They should instead just wear themselves out again today if they close green and come back down again next week.

Of course this doesn't mean that they must make a lower high for this to happen. They could make a higher high too, but I don't think they can hold it unless they can pullback steady for 3-4 days in a row, and then rally hard. So NO, I don't think this is the next leg up in the market starting that will take us to 2900 or 3000 on the SPX. Maybe they reach the 2830-2860 area on this thrust but I don't see it holding.

There must be some multiple days of red closes to reset the overbought charts before a strong push up can hold. Otherwise it's just up a day down a day, etc..., which over time could indeed push up to much higher levels, but that's not the characteristics of a wave 3 up. Our now lost friend Tony Caldaro has us being in an Intermediate Wave 1 up (IM1) inside a Major Wave 3 up (M1). I'm trying to catch the top of this IM1 so I can ride the IM2 down and then go long for the IM3 of M3 up into the summer for the 3000+ rally high expected.

This IM2 should retrace a bare minimum of 23.6%, but more likely 38.2%... which if you did a rough calculation you'd get the following numbers. From the 2325 low up to the 2814 high you have 489 points so far. A pullback of 23.6% is 115 points down, or 2699, and 38.2% is 187 points, which is a move down to 2627. We hadn't had any pullback at all hardly since this rally up started.

So logic suggests (ha ha... logic, as if that really works in this rigged market) that we should not make a new all time high on this move up from the December low and should top out soon to end IM1 up of M3 up and then pullback for IM2 down of M3 up. So far we are up over the 78.6% retracement level on the DOW and the SPX, which again suggests there's not much more to go before a pullback starts. So bears, hang in there. We must be close. I refuse to believe we are off to a new all time high and beyond from this first rally wave up. A meaningful pullback will happen when we least expect it. Have a great weekend.

It certainly has been a choppy week so far, with the market really not going anywhere yet it seems. I'm not sure if it's bad or good but usually there's a time window where that if the bulls can go sideways long enough they can reset the very overbought charts to a point where they can get another thrust higher going. But a failure is certain death as then the bears will attack in full force. What is that time window you ask? It's flexible and not written in stone.

But I'd say this, if we drift down small again today and close red, then do it again on Friday and Monday I'd say the bulls will have won this battle at the SPX 2800 zone, DOW 26,000 and Nasdaq 7600 areas. But if there's more upside with some green closes, but not too much, the bears will have stood their ground and will have a great chance of taking the market down next week. You want to see the bulls continue to thrust up each day and the bears to "hold the line" and push them back (small at first).

If the bulls stop trying here and just fall back to a lower level it will result in them getting enough rest to push back up hard next week instead of tiring out from exhaustion by try each day to move up and failing. If we compared it to war then this battle at Gettysburg is one where the Confederate troops (the bears) want to keep the Union troops (the bulls) attacking and fighting every day, trying to push forward and gain ground. Don't let them rest by pulling back some as they could get reinvigorated by some speech their leader tells them and come out strong and over take the bears on the next attack.

In football this would be the half time speech by their coach. Bears don't want this to make it to half time. They want the clock running and no time outs for the bulls. That's the only way they are going to get the ball back in their hands. So if you are a bear you don't want to see some slow steady pullback today, tomorrow and Monday happen that puts in small red closes each day. This would be the bulls "resting" before another attack.

Ok, for the short term the only clue I have for today is that the SPY did put in an early low this premarket morning at 278.30, and I find it common that those lows (or highes) are retested during the normal trading hours. From there it's anyone's guess? We are in a topping mode this week... or a resting mode before another thrust higher. Have a great day.

The market still seems to be in slow motion doing a whole lot of nothing these past few days. It is showing some signs of weakness but that could also be the bulls resting before another move up... hard too know which? But when I look at other charts, like the daily on the SPX, I see clear evidence that a pullback is near. The MACD's have fallen from a peak just over 20 back in mid-January to almost zero right now, so the bulls are running out of steam here for sure.

It doesn't mean the high is "in" and that we are going to new lows, as there's NO negative divergence yet formed on that daily chart... which suggests this first move down will be bought back up at some point for a second up move attempt. It's at that point where we'll see if the bottom was in last December or not. For now though I still think we are about ready to start that pullback... maybe today or tomorrow, not sure? But within days is likely.

However, I need to keep this in the back of my mind as many times in the past when there's been some multiple days of sideways action before a drop there is usually some fake out move up at the last minute to take out all the stops of those shorting. SkyNet doesn't want anyone to catch the move and when you do several days of chop the bears have plenty of time to take a short position.

This makes me very wary of the Monday high being "it" before the pullback starts. It's not something written in stone that there has too be a fast "pop and drop" to squeeze out the bears, but it's certainly a common thing. So keep your eyes open for such a fake out move. Maybe it doesn't happen and instead we just rollover tomorrow or Friday but it's important to be aware of so you don't get shaken out (if you are short already?).

Most likely there will be some news event timed perfectly with the drop, as well as the "possible" fast move up. Some fake news out that gets quickly retracted is possible... which might cause the squeeze up at first and then back down when it's not true. We've seen that before as I remember last year some news reporter stated something that quickly got reversed. Can't remember what it was but it did move the market.

Anyway, that's all I have for now. Look for one more move up is what I'm thinking. Maybe it's just a double top from Monday or a fast pierce through? Technically it should be a slightly lower high to make a wave 2 up with the current drop being the wave 1 down, but guessing on what wave count we are in is just that... guessing. Have a great day.

Finally... the bulls are looking a little tired. Yesterdays early morning peak high now is the challenge for the bulls as while it would be normal for today to show a little weakness Wednesday will be the "do or die" time for the bulls to run back up and take out that high on Monday. Failure to do so will likely lead to the start of a nice pullback later this week. But if the high is in already then the drop in the afternoon into this morning would be the first wave down... call it the A wave of some degree, which should lead to a B wave up later today or Wednesday.

This should setup Thursday/Friday for a nice drop from the C wave down, if this unfolds like that. The key will be to NOT see a higher high for the B wave up into a possible top tomorrow. A double top is fine... maybe even a slight pierce higher by a few cents as some EW Charists say B wave's can go slightly higher and still be valid. In any case today should rollover again from the early high and drop yesterday and into early this morning as this move up from the premarket lows looks very much like a bear flag to me.

So I'd expect it to drop one more time today just to finish this possible A wave down. Then back up into Wednesday for that B wave, which could even happen into the close today and rollover instead on Wednesday. So if all goes well for the bears we'll see one more move up for a lower high or double top either later today or into Wednesday. From there I'd be looking for a nice pullback to begin. The bottom line here is that any down move today should be reversed back up either later today or tomorrow (possibly into Thursday).