Charts are pretty mixed today and I don't see any clear direction. I do think we'll get a nice setup at some point this week that will give us a high odds short or long. I've drawn some trendline on the ES 60 minute charts and I'll be watching them to see how the market reacts when (if?) they get hit today or tomorrow. As far as wave counts it's still unclear if the bottom is in or not yet. We have a clear large A wave down from the Sept/Oct high in 2018 to the 10/29/2018 low.

Then a large B up into 11/8/2018 high. Next was the large C down that subdivided into 3 or 5 medium waves.. and that's the part which we don't know yet. If just 3 waves then the low is in, but if 5 waves then medium wave 1 down ended on 11/26, then up for medium wave 2 to end on 12/3, followed by medium wave 3 down into the current low on 12/26 and that puts us in medium wave 4 up with medium wave 5 down still to come.

This is all inside large wave C down which all 3 large waves (ABC) are part of extra large A down. If the low is in for the entire extra large A move down then we are starting the extra large B up that should take 5-6 months or more and top out at 2800+ I'd guess. Again, there's no way to know if we still have a medium wave 5 down of large wave C down of extra large A down... or if there was only 3 waves in large wave C down (which if so, they would have already been completed with the current low).

The important thing to focus on here is first... catch the top of this current wave up, no matter what it ends up being called, and then catch the bottom of it so we can go long. That bottom will either be a higher low or lower low, and that will determine the wave count. With negative divergence on this 60 minute chart I have to think a down move is near... like within a day or two. Lets see what happens.

Not much to add that wasn't said previously either in the morning post or in the free chatroom throughout the day. The bulls and bears are fighting it out in this zone and neither is winning yet. I looks like a series of wave 1's down and wave 2's up, which suggest the bears will win at some point soon (like next week some time) with some wave 3 of 3 down or something. But the sideways action "might" be viewed by others as a bull flag, so that's something to consider too.

The bottom line here as that one could make a case for the bulls just as easily as the bears. The monthly, weekly and daily charts are all still very bearish but the daily is still very oversold and trying to come up from that extreme low. The 60 minute chart became overbought on the MACD's a few days ago, which is likely why the market is struggling in this area. But the MACD's are still very oversold coming up from about -30 to just above -20 right now.

The Full Stochastic's have dropped from +80 to under +20 right now. They suggest a short term bounce (which we see in the futures this morning). My thoughts are that we need to see that Full Stochastic go back up to at least +70 and the MACD's to reach the -10 to -15 zone all while the Histogram stays positive but makes a low high to setup negative divergence.

This could take several more days I think but if that happens and the market doesn't breakout of the current sideways trading zone then the bears will have a perfect setup for another nasty drop. Time frame would be late next week for that to happen. If it did then I'd like to see a lower low in the price of the SPX but higher lows on the MACD's to setup positive divergence afterwards. Then I'd think the bottom would be in for awhile (several months) and the bulls could squeeze the bears into Spring/Summer for a lower high then the all time high last September.

The other scenario that might happen is that the bulls decide that they don't want to give the bears another lower low to setup that positive divergence and a multi-month rally, so they instead snort some crack to give them enough energy to ram it up hard the next few days into the 2550-2600 zone (a C wave up), which will of course exhaust them big time and cause worst damage later on when the bears take it back down even harder. This in my opinion would be very bearish as then I could see a multi-month down move... like into March or so before it bottoms.

If the bulls do this move (which would look like an ABC up from the lows) they are asking for more pain in the near future. They would be wise to continue to chop sideways another few days and let the bears take it down for a slightly lower low so positive divergence will form and then they can have a multi-month rally to have fun with. We should know in a few days which scenario is likely going to play out.

If we stay under the recent prior highs (around 2520-2525) then I'll be looking for that drop to start late next week to make a slightly lower low. It would then be called a 5th wave down (of a larger C wave down) and end the first larger ABC down from the all time high of 2940 SPX last September. Next would be a multi-month ABC up into Spring/Summer. I believe this is how it's going to play out but I won't know for sure until next week. Have a great weekend.

So far so good for the bears at least. The market took the bearish path yesterday by not taking out last Fridays high and then selling off into the close but closing green. Then afterhours it dropped more and again did not take out the afterhours/premarket low from Monday to Tuesday. Now it's bouncing back up some in the premarket session from a deeper low earlier this morning.

This should be setting up another wave up and wave down, which again if it doesn't take out yesterdays high and closes green again today (preferred but not mandatory) then bears will have pulled off another perfect setup for a wave 3 of 3 (or 3 of C) down to start on Friday. I should know more by midday today but you are a bear you want to root for a green close but just barely, and ideally below the 2520 high yesterday on the SPX.

If you are a bull then you'll root for a down day that closes below the low yesterday as that could kill (or delay to reset it for some future date) the bearish setup forming right now. For example, a drop down to hit the falling trendline (pointing to just below 2400 right now) would be perfect for the bulls to rip it higher on Friday and into next week. But if the bears want to drop it hard they will be working on setting up a wave 3 of 3 down into Friday by closing it up today to get the wave 1's and wave 2's out of the way and all set up in perfect alignment so a big drop will follow. Good luck to both you bulls and bears out there.

This coming Wednesday to Friday I expect another pullback to happen (so far, so good as the futures are down nicely this morning) but I don't see a lower low happening... not yet at least. Instead I'd guess that it will be a 50% retrace of the move up from the recent low. Call it a B wave down of some degree with the A up ending today or last Friday.

Then a choppy C wave up should begin and last for over a month I think. It should breakdown into 5 smaller waves of course and maybe subdivide even more? At some point though it will end (maybe up to 2750-2800 area?) and then we'll see another drop to take out the current lows. How far it goes is still unknown. But it's pretty clear to me that we've had a nice ABC down from the October 3rd, 2018 high to the low last week.

Each of those waves subdivided too of course. The thing unknown is whether we are going into a bear market recession or depression? If recession the move down expected in March or April from the 2750-2800 rally high will just take out the current low by a small about... like maybe 50-100 points.

If depression then we are going much lower, like down into the 1800's to 2000's zone for this spring/summer drop. From there another powerful rally would happen and then another powerful drop. In the end (2021?) we could retrace all the way back down to the March, 2009 lows (DOW 5,000 and SPX 600).

I really don't see that happening though as government will likely stop it will another round of Quantitative Easing and/or lower of interest rates. They already stopped the Christmas Crash when Secretary Steve Mnuchin conducted a series of phone calls with CEO’s of the largest U.S. Banks and the Presidents Working Group on Financial Markets (Plunge Protection Team) to take control of the stock markets and ensure a crash will not occur.

That happened on December 23rd and 24th... which clearly prevented the market from crashing as that was the path it was on. (https://www.zerohedge.com/news/2018-12-23/plunge-protector-mnuchin-reportedly-called-bank-ceos-calm-markets-ahead-monday-open) It's why we really never seen that huge "Capitulation" day in the volume. For today though it's looking good for that B wave down to make a higher low.

The C wave up MUST take out the recent A wave high last week or else the entire rally up from the lows last week will have just been one wave and not a 3 wave pattern (ABC). If that happens then I'd call that wave up a 4th wave and we'd then see a 5th wave down for a lower low... and that should happen this month if the rally is indeed just one wave instead of a 3 wave pattern.

It's really too early to know as we are just in the (possible) B wave down part this morning. On the next move up we'll have a better idea based on positive divergences setting up (or not?) on various time frames. But again, this next move up is where it's going to get tricky. So we'll just take it day by day. For this morning I suspect we'll see the low within the first hour or so of the day and then some bounce. Happy New Year everyone.

Today is the last day of 2018 and I'm not expecting much action in the market. A pin around the 2500 SPX area seems likely. The market will be close Tuesday of course for New Years Day. No point going into to much detail right now as again I don't expect much to happen.

On another note everyone in my free chatroom knows that that lost my beloved dog Suzy last week. She slipped a disc in her spine and it paralyzed her rear legs and body. I was up all night Christmas Day and so was she as the pain was horrible. The next day I took her the Vet and they said there was no way to cure her and I was forced to put her to sleep.

She was the smartest dog I'd ever seen.  She would go up on the hill side behind my house by herself and our other little dog Mickey (that we bought for Suzy to have a buddy to play with) would follow her up the hill. Then my two cats Simba and Sheba would also follow her as well. She literally would "walk the animals" herself without me! I've never seen anything like it in my life.

In the summertime I would take her and Mickey up the hill and both cats would follow too. But that was me walking them, not Suzy walking them without me. It's just been too muddy lately to go up the hill (for me at least), but Suzy missed those walks and would decide to do them without me.

She was incredible smart. I have 8 security cameras on the property and a monitor in the living room on the wall to the left of the big screen TV. Suzy would know the difference between what's on TV and what's on the monitor. She would lay on the couch and watch the monitor to see what's going on outside. Then if someone (usually a mail truck) would come onto the property she'd bark and leave the couch to go outside and meet them.

Micky doesn't have a clue what the monitor is or does, but he's still a puppy so maybe he'll learn? As most of you regulars know I lost my Dad back in March of 2016 and then my mother later that year in November. Suzy (my mothers middle name was Sue or Susan) was their dog first so losing her was like losing my mother all over again. She was less then 4 years old and should have lived to be 10-12... maybe 15? Needless to say I've had a very depressing Christmas. I can only think that my mother was missing Suzy in heaven and took her early to be with her up there. So this post is dedicated to Suzy. May she be happy again with my mother and dad.

Markets oversold everywhere and I'm expecting another big drop... aka, the crash wave. Yeah, it's crazy to even think that's possible during Christmas week but I'm still expecting it anyway. Today would be the most logical day to do it on as it's the day before Christmas and most traders will be gone. Plus the market closes early today at 1pm EST, so volume should be super light... but what if it's not? What if today is the day that we see that capitulation volume?

Last Friday at the end of the day I heard the closing bell ring twice through my Think or Swim account. It never rings twice. So was that a sign of a crash coming today like it was back on Black Monday, October 19th 1987 when the opening bell back then didn't ring at all? I believe it is a signal, and today would be the most likely day for another Black Monday. Everyone will be caught off guard due to the holiday tomorrow... which is a perfect time for them to pull the trigger I think.

Remember, all market debasements are planned by the elite that run the show. Nothing is random. While no one can guarantee something is going to happen on any given day I'll just say that the clues have been given for a crash this week and today seems to have the highest odds. If it doesn't happen today then great, I'll just look for lower prices in the coming days. Have a very Merry Christmas everyone, and may God bless you.

This could boil down to the most important week of the year... and the FOMC meeting the most important day? The goal today is for the bears to take out last weeks' low on a closing bases, and the bulls need to save it. It might be a fierce battle this week between bulls and bears and it could hinge on the FOMC meeting. Yes, the market knows the Fed's plan to raise rates again but it's main focus will be about what's in store for next year. So what Jerome Powell says about going forward in 2019 is what the market will be focused on.

I don't know who is going to win out between the bulls and bears this week but for the first time in many years it's bulls that are backed up on ropes right now. They are near a critical level and if they lose it we could see a free fall down much, much lower. If there was ever a week where we could see a crash it's this week. So it "do or die" time for the bears as well as if they can't break support before this week ends then I'd say the bulls will turn it back up after Christmas and never look back. Anyway, I'll keep this post short and just see what happens today. I'll give more of my thoughts in the chatroom as the day goes on. Good luck to both bulls and bears today.

The futures a down some this morning but there's nothing in the charts that stands out to me as bullish or bearish. And since the past two days has seen very low volume again I'd have to think we'll have low volume today as well. Normally this is bullish as the market tends to float higher on light volume but I'm not so sure today... at least not for any strong float higher. Why? Because these stats show that big funds are withdrawing large amounts of money currently, so while that doesn't guarantee we are going to crash it does suggest that we won't go up too much today.

Lipper reporting $46b equity MF + ETF outflow in the past week, which is huge, but at least half of this is seasonal end of year stuff. Last 6 yrs:
2013: -$13b
2014: -$18b
2015: -$13b
2016: -$21b
2017: -$22b
2018: -$46b

The largest equity fund outflow of the year almost always occurs in mid-December. Even so, this week's outflow of 0.44% of total equity fund assets is the largest in 15 years.  The previous record was 0.39% in mid-August 2011.

Next week the volume could get lighter if the bulls hold the current lows from this past Monday, and that would tell me a mild float higher into the end of the year. The crash window is from today until about the middle of next week or so. But it needs to breakdown through some critical support levels soon or this opportunity for the bears will be for nothing. They have setup a possible wave 3 of wave 3 of wave C down move in the charts, with a perfect "MA Pattern" as well.

Unfortunately they did going into late December when Santa usually shows up. If they would have done this in October we'd already crash by now. I can't say for sure what's going to happen but I can point out what I see in the charts, FP's and codes. Time is ticking for the bears here.

If they really plan on crashing the market they need to start soon. I've never seen a Christmas Crash so I'd be shocked if they actually do it. But the charts are perfectly setup to have one if they choose to pull the trigger next week? I'll say this, no one will see it coming if they really do it. Kinda needs some staged "event" (aka, False Flag) or some political shakeup to get the balls rolling I think. Have a great weekend everyone.

This week is do or die time for the bulls and bears as the following week the bullish seasonality period starts. That means the bulls just need to hold their ground and not give up that Jan/Feb low zone by more then just a fast pierce. The bears of course need the opposite as they are running on borrowed time. They need to break support below and get the bulls in a panic to force sell stops to hit hard.

For today the bears would be best served if they let the market close green to reset the consecutive down days in a row count so they can start it back again tomorrow. Short term chart were pretty oversold on Friday so odds do favor the bulls making that happen today. The bad news for them is that all these moves up and down have setup a series of lower highs and a possible wave 3 of 3 of C down pattern.

Now again, I'm not an Elliottwave expert but I can count and when I study the daily chart it looks like that wave series is possible. It also looks like an "M A" pattern, whereas the "M" is already formed and the left side of the "A" could be created today. The same pattern formed with the first big drop and recovery rally earlier this year. It failed as it should have because the market was still above most moving averages, above support zones and rising trendlines.

The opposite is true now as the market has broken important rising trendlines, is below many moving averages and has some very bearish looking weekly and monthly charts. The bottom line here is that there's much higher odds of this "M A" pattern working instead of failing like the one in the February to May period did. This rally up (if it continues all day today and closes green) could be the perfect bull trap. It will be exciting to watch it all play out for sure.

It's seems that what I wrote yesterday (below) started to happen in the afterhours so I'll just add some additional thoughts this morning. Short term the 60 minute chart is very oversold and due a bounce, but the 6 hour chart has more to go on the down side. We are at support from a falling blue trendline so a bounce back up today could happen. But the bad news (for the bulls) is that this looks like the start of a large wave C down and this first drop this morning in the the futures is likely just the wave 1 down of that C wave. So any wave 2 up bounce is likely to be followed by a wave 3 down (of C down) that should take out the 10/29 lows and 11/23 lows. Bottom line... it's likely to get nasty from here going forward.

Could it be saved? Sure, but that was back in the days when the Fed's were pumping money into the system via QE, and now they are taking money out with QT... along with rising interest rates. Anything is possible here but odds just shifted to the bears with the big drop on Tuesday and this mornings follow-through. As I said below (a post I did yesterday for today) I was looking for this big drop to start on Friday and would have shorted todays close but it fooled me. I wonder how many bears missed it? And more importantly is... I wonder how many bulls are trapped?

Everything below was written Wednesday afternoon (before the drop in the futures)...

Well, got my pullback to the 2700-2720 zone that I was expecting by next week... except it all happened in one day! Crazy market for sure! I was hoping they would hold the market up until Thursday and then tank it but that wasn't to be and instead it dropped 90 points on the SPX in just one day. It's like a wild wild west show in the market right now. So, where do we go from here you ask?

From a technical point of view we have the makings of a nice "W V" pattern with the "W" already formed with the lows on 10/29 and 11/23, and the "V" appears half formed now with the large drop on Tuesday being the left side of it. This "W V" pattern is a bullish pattern and is the opposite of the "M A" pattern that is bearish. What normally happens is once the bottom of the "V" is put in (might already be put in at the low on Tuesday?) the right side of the "V" goes up and takes out the horizontal top area and basically goes the same distance up from that level as it went down.

Meaning that if look at the horizontal top levels of 2823 on 10/17, then 2817 on 11/07, and 2814 on 12/03 you have around 2819 or so as a middle price range. So you take that and subtract the low of the "V" (right now it's at 2696 but it's not confirmed yet as the low of the "V") from that top and you get 123 points or so (2819-2696). Ok, now add that to the 2819 middle area to make the horizontal top of the "W V" pattern to get your upside forecasted target zone of the right side of th "V", or 2942 (2819+123).

That is your upside target if this plays out like a normal "W V" pattern... and it most cases they do indeed play out. We have the normal seasonality pattern of the Santa rally coming soon, and the bullish December month that rare has even seen a crash in it. So what's to worry about then you ask? Just go long and everything will be fine... right? Yeah, the bulls hope so. I can't blame anyone for buying this pullback as it looks "textbook" perfect to me. In fact I'll be looking at a long if we go down small today and close red a little on the DOW (I think it leads the market) with a decent "bottoming tail" on it. Short term charts will support that too as they are quite oversold from Tuesdays 90 point drop on the SPX.

Chart ONE:

Chart TWO:

Chart Three:

So while the current pattern doesn't have to follow the 1987 pattern day by day it could continue, and if it does then a slightly green close is expected Thursday with a long bottoming tail and long topping tail.  That might suggest a rally up to 2740-2760 SPX intraday and down to 2650-2670 on the downside.

Now afterhours the futures tanked to 2650 so that part is possible... let's see what today brings.  While most all of the "MA" bearish patterns and "WV" bullish patterns work and play out normally... what if this one doesn't?  Be prepared for a lot of pain for the bulls.  Maybe one of the FP's I have will play out to the downside afterall?