Well, another down day starting off this morning. We had an intraday FP on the SPY yesterday showing 266.75 but we are already lower then that right now in the premarket, so at this point I'm unsure if that's going to be a level it turns at and bounces. Normally FP's are hit and then a turn the opposite direction starts, so that would of course be up today since it's now hit in the premarket. I have my doubts on that happening now and will just let the bulls prove themselves to me at this point.

We've been tracking the 1987 path for awhile now, so days are almost exact, and others not but still in the same overall pattern. If we don't retrace 38.2%-50% of the move down starting yesterday at some point today then we'll be off that "exact match day" path but remain on the overall pattern for 1987. To continue on the path we need to gap down hard again on Wednesday with the Jan/Feb prior lows in mind as a target. Then this coming Friday (and/or Monday?) the big drop could happen.

That's if we continue to follow the path "day for day", which doesn't seem likely to me, but more then likely is we follow the same pattern with most days the same and some days off a little but the overall big picture is the same. So, if there's a rally today I'd look for that consolation zone tops from yesterday to be the top... which is the 269-270 SPY area. A quick pierce of that level to take out any shorts and lure in bears might happen? Then rolling back down into the close today would be required for an exact match of the 87 path, versus just staying down all day today which would be just staying with the same pattern of having a down day today. It's a very tricky time right now so I'll just play it by ear and update everyone in the chatroom as I see things change. But for now the odds aren't good for any bounce back up that high. If it happens, great. If not, I'm happy with the shorts I have. Good luck to all.

Finally... the bulls stepped up to the plate and rallied up to a nice green close yesterday. But can they do again today is the question? If you are a bear sitting on the sidelines you welcomed that rally but in order to get another large drop I do believe we need a second rally day (today) to lure in enough bulls and shake out enough bears so that the odds will be greatly increased for a nasty down day on Monday.

Yeah, seasonality-wise next week is bullish as it's Thanksgiving week, but the chart tell me otherwise if today closes up nicely. What I'm looking for here is for the bulls to exhaust themselves by rallying strong two days in row, versus hard the first day, rest the second, and rally the third, etc... In other words, the bears best chance is for the bulls to keep on running today without resting.

Now that may or may not happen as clearly the futures are down this morning and they have not pushed through the falling light purple trendline of resistance, which I'd hoped they would have done afterhours yesterday or premarket this morning. Above it is an orange falling trendline, which would be the ideal target to hit going into the close today. It appears to be right around the high from yesterday in the 2730 area. If the bulls can hit it and close up there (or higher would be fine too) that would likely be a green close, which would show exhaustion and lead me to believe we'll drop hard on Monday... fooling the masses expecting a holiday rally.

But if we close red then odds will flip back to the normal bullish holiday pattern, which would be a light volume melt up next week. Therefore I'll only be rooting for the green close today as I hate that light volume crap that puts me to sleep in boredom. P.S. While it doesn't usually happen on Holiday's if we get that green close today to setup Monday for a big down day it could continue right into Wednesday and hit that prior low of 2600 SPX... might even take it out? Look at how they dropped the market this past Veterans Day, so holiday's aren't something forbidden currently like they have been in the past. I've got my crash helmet ready just in case. Have a great weekend.

This 6 hour chart of the ES Futures appears to be turning back up, or at least it's trying to turn back up. That would support those looking for a C wave up rally to start, which should last for several days and likely into next week. And I must agree that normally I'd think the same thing is going to happen. After-all we have a very clean looking "Inverted Head and Shoulders" pattern, as well as positive divergence forming on the MACD's.

But the big picture suggests otherwise. The daily chart of the SPX does not have any positive divergence yet and its Full Stochastic already peaked with the 2815 high and are pointing down right now, which appear to be in the 55 area or so. Since they usually swing from just under 20 to over 80 it tells me there's more room down yet to come before they bottom and turn back up. This also tells me that the SPX is likely to make a lower low then 2600 when that happens.

It "might" then put in positive divergence on the MACD's? If so, then I'd look for a nice rally to setup. Of course all this is just normal charting and excludes the codes and FP's I've discussed in the chatroom. So when this all sets up I'll be left we a choice on whether I believe the charts suggesting a bottom and a rally to start, or if I believe the codes and FP's will override them and cause a crash. We are not there yet (fortunately) but I do think we'll be below 2600 soon and setup all those positive signs suggesting a bottom is in and a rally is to follow.

Only then will my mind get mixed and not know what to do. Until then I'm still looking for small bounces that get sold each day as we continue lower toward 2600 and below. Others see a move up to retest and go over the 2815 recent high to make a small C wave up of a larger B wave up. Targets range up to 2900 fo this move, to just slight over that prior high. I see a monthly chart and weekly chart that are very overbought still and pointing down on their MACD's with moving averages crossing negative and Histogram Bar's going negative too... with plenty of room on the downside yet to go.

These factors when all added up together tell me bounces will be small and short lived as we continue to drop lower each and every day until we reach a sub 2600 level where some things start to appear positive on the charts. For today it's unclear to me. A green close would be welcome for the bears as it would reset the number of "red close days in a row" and allow them to start down again tomorrow. But the futures are flat and charts are all mixed, so I'll just call for a mixed day with no opinion on the close.

Well yesterday was uneventful as the market choppy all day but in the end dropped into the red a little. Today is looking a lot like yesterday with the futures making a lower low (then yesterday) at 4am EST this morning and have been climbing back up ever since then. It really is trying to stage a rally it seems but it might need another day of chop before it happens? If it manages to do it today then it should be a weak rally as it's probably not going up much past the 2750-2760 area from what I see.

At that zone it will run into some tough resistance and likely get overbought on the short term charts too. I'd say that would be the last rally high before another drop that tests the 2600 SPX (2630 ES) prior low. But bears should welcome this rally as it will get them a chance to get short if they missed it and open the door for a deeper drop to follow. There's another resistance area from the falling red trendline pointing to around 2780-2790 but I really don't see that today.

If it hits it, then it's the ultimate gift for the bears. I just don't see the charts aligned up strong enough to hit that zone on this first rally up attempt today. The "lower low" in the futures is a sign to me that this rally will be weak. Let's face it, the trend is now down and the market makers are going to do the same thing to the bulls this time around as they always do to the bears when the market is in a bull trend.

They do gaps then choppy sideways action, then more gaps and more sideways crap. The bull market was relentless every day with tiny 20 point pullbacks and then 80-100 point rallies right afterwards. Rallies up here should be weak too as this is a C wave down of some large degree and it's a widow maker for traders on the wrong side. There will be a nice strong rally up at some point, as there will be too many bears short and they will need to get them out. But I don't see that as the case today.

All I hear about is the obviously Inverted Head and Shoulders pattern with upside target of 2850-2900... so as long as that talk continues I still think the next big move is down. Probably not today, maybe not tomorrow either, but next week should be an ugly one. For the reminder of this week we might be just setting up a series of wave 1's down and wave 2's up, each of lesser degrees, which will ultimately break to the downside in a wave 3 of 3 of 3, etc...

What a surprise! A large down day on a holiday. Strangely I've seen that act before, but predicting in advance isn't easy. The good news though is that forecasting a "pause" day is, and that's what I expect for today. Ideally it closes green but there's no guarantee of that. Tomorrow might be a second pause day too, so keep that in mind. I don't see them rallying up too high to allow the bulls out or the bears in. Dropping it hard yesterday on a holiday was the trick to catch traders off guard. Now that they are trapped I don't expect Mr. Market to let them out.

Everyone see's the "Inverted Head and Shoulders" pattern so I'd expect some bulls to dip their toes into longs, but if this goes like I expect that pattern should fail and the next big drop should follow. At best I think we have two days of choppy sideways consolidation (pause days) before it resolves itself one direction or the other. My thought are that we continue lower. Anyway, I'll just keep this update short as I'm still bearish over all but I'm looking for chop day today so there's not much else to add. Best of luck to you... especially the bulls.

This morning the premarket session is up again but I suspect this is the last move up from this rally off the bottom as it's into tough resistance now and pullback is likely next. Many people are looking for this move up (a B wave of some degree) to subdivide into an ABC up pattern, which would point to a 2800-2850 zone on the SPX for the final C wave of this larger B up.

It's certainly possible that we subdivide and this move up is just the A wave of the larger B up. Assuming we top out today (looks likely) the B down of the larger B up would then happen Monday/Tuesday of next week, which makes sense when you think about it as it's right in front of the election and some uncertainty is normal. If you listen to the main stream media I believe they have the Republicans keeping control of the Senate at least but mixed opinions on Congress, and that's probably the reason they give for the recent rally.

We traders know it's just technical and in the charts but the talking heads have too talk about something I guess. So if this election does goes as planned and there's no surprises then most traders will be looking for another rally a little higher afterwards. This kind of thinking supports this larger B up subdividing into 3 smaller ABC waves... but what if that doesn't happen? What if the move up from the low is just a one wave pattern "larger B wave up"? That means that after the election the move down in front of it would just continue lower and not turn back up for the final smaller C up of larger B up. Then we'd be looking for a larger C down to be in play and that one would take out the recent low last week and head for the Jan/Feb low... which should also be taken out. Yeah, it's a scary wave down.

Anyway, back to the short term. I think we top out today, and probably close up near the high... meaning a sideways day to burn time is likely. I'm not expecting much higher today then the premarket high (276.19 SPY) as we've filled the gap from 10/22 to 10/23 and are hitting tough resistance overhead. Next week should be interesting for as the fate of market depends on the elections and the FOMC meeting on Wednesday. Have a great weekend and enjoy the fall weather while it lasts.

Today looks like a "pause" day after yesterdays monster rally. All eyes will be focused on Apple earnings after the bell, so I'm not thinking there will be much to do today but wait. However, I do think that if everyone is expecting one thing the opposite is likely to happen. Meaning, if everyone thinks Apples earning are going to tank the market on Friday then it should do the opposite... regardless of if the earnings are good or bad. I don't have much more to add to this mornings update so I'll leave it like this... short and sweet. Hope everyone had a great Halloween yesterday.

Think or Swim is retiring this Prophet chart platform soon. They are having issues with missing data, like entire days disappearing. Anyway, there's a gap on the SPX around 2755 I believe, but I can't see on my SPX chart due to missing data. However, on this ES chart you can see the general area where that gap is at. I do think we'll fill it before rolling over again next week. Probably tomorrow if I had to guess but maybe Monday too?

Today I have two upside targets... the first is 271.00 on the SPY and the second is 273.77, and the determining factor is the speed of the move up. If it drags out all day then the lower target is likely all we'll get, but if that target is hit early in the day then the higher target could be reached by the close. Then Thursday we have earnings by Apple and that's a big part of the Nasdaq, so if it's not a big winner then we could roll right back down... and hard. The downside I target I have for that is 263.69, if they disappoint of course.

I'd love to see the market rally up hard today and drop hard on Thursday, but for now we'll just look to see what today gives us. The open is very close to 271 so if that holds then the higher upside target should be in play for today. Previously I'd looked for higher upside targets, like 2800 to 2830 SPX, but I feel that since everyone else is looking for those levels too it must not happen. SkyNet is a master of tricking the most... I know first hand as the last couple of weeks it has tricked me many times.

How can it trick the most people now that we've started a rally? In my opinion the best trick would be to rally up out of the falling wedge to a zone that has both bulls and bears thinking the low is in (so they exit all shorts) and that a rally to much higher levels is coming (where the trapped bulls will look to exit their longs and go short with bears looking at the same level). To me that level or zone is the 2800-2850 area as it's in the 61.8% to 78.6% Fibonacci Retracement range.

But if this sell off from the all time high really is the start of a bear market I think the bulls will not get such a nice retracement to exit at and become bears. The 38.2% and 50.0% levels are around 272 and 276 on the SPY, and since we have a "possible" FP at 273.77 (plus a lot of horizontal resistance) I think that's the upside target. It might be hit today from the looks of the premarket rally? To me this is just an "end of the month window dressing" move so the October candle on the monthly chart doesn't look as bad. Today or tomorrow is where I think this rally up will end.

I could be wrong again as SkyNet has tricked me a lot lately but my gut tells me that it's not going up to the 2800-2850 zone that everyone is looking for, but will fall short to keep the masses confused. If right we should start back down tomorrow and continue this series of wave 1's down and wave 2's up until after the election where it should start the crash wave down into the end of November.

It seems that everyone is expecting a bounce to 2800-2830 on the SPX, including me. But we all know that if everyone is expecting the same thing it never happens. I'm not saying that there won't be a bounce but I'm lower my target to the 2750 area and I'm expecting this bounce to only last one day. What I'm speculating is going to happen is some good news released spark a short squeeze.

Doesn't matter if the news is real or fake but after it's over with the squeeze should shake out most bears and lure in new bulls expecting 2800-2830, which should never come if this trick plays out like I think it's going to. That's a big "if" as I've been wrong too many times lately as this market continues to fool me with quick pops that are completely reversed by the end of the day or next. I count at least 4 fast rallies that were wiped out within one day since the 2817 SPX high. It's a series of wave 1's down and wave 2's up I guess, which ultimately will lead to a very large drop.

The "when" part is of course the tough part to figure out. I can only guess like everyone else, and my best guess is still for this rally to happen this week, before the midterm elections. It should happen before the end of the month to close out October will less damage on the monthly candle but with only today and tomorrow left that's not looking good so far. If this rally does still happen I suspect a lot of people will be saying the low is in and we'll be rallying for several weeks or more, but my fear is that such thinking is just a trap and that after a one day (maybe two?) rally that doesn't get to 2800+ but stops around the 2750 area people will become bullish again and will buy every dip.

But if this is the last pop higher before the crash then that 1-2 day rally should be the last one before the crap hits the fan after the elections. I know many are expecting a Republican victory but people also thought Hillary was going to win too. Meaning that what we expect to happen in many cases is completely wrong. Now I don't know the outcome of this election but I do think the market will continue down afterwards and not up like others think. Anyway, for today I no opinion on the direction of the market.

Looks like the bulls are staging another rally attempt this morning. I have to think this one will stick as the prior 3 failed, which increases the odds of this one holding. Plus there's the "end of the month" to worry about for them, and I'd be very surprised if we don't rally up into Wednesday to close out the month of October with a lot less damage on the monthly candle chart. How high is anyone's guess but when you study the 1987 chart you'll see that the move up we seems to be starting now rallied up a little past the equivalent of the 10/17 high (2817 SPX) we recently had. Today the tough part for the bulls will be to push through various trendlines of resistance overhead.

I do not know how high they are going but history tells me that it will last until the end of this month... meaning this Wednesday. After that the market could chop around some or start right back down again, but once they close out the month of October they are free to do whatever with November. My best guess is that they will some wave 1's down and wave's 2 up into the midterm to setup a series up of them so right after the elections are over with they can drop the market hard is some wave 3 of 3 of 3 of whatever. So this coming Wednesday is likely to be the last stop on the bear train before plunging into the abyss in the following 2-3 weeks. But for today and into Wednesday I'm on the bull train, looking to get off by the close on this last day of Spook-tober.

Another rally and any sell off. The market is very tricky here as I thought the bottom was in and we'd rally up into the elections but the market obviously has other plans. It's doing a great job of tricking people as I've been tricked several times now, so for SkyNet only "I think the market is going down hard again today" (you readers ignore that).

Midterms are just a week and two days away and this sell off certainly doesn't look good for the Republicans. I'll just keep this update short as I've been wrong so many times recently that maybe it's best to just watch for today. I still think there will a strong wave up before the crash but calling the "when" part is something I've gotten incorrect so far, therefore I won't put a date on it. Without a doubt SkyNet reads the internet... LOL. Have a great weekend.