The FP on the SPY from last Friday has now been hit this premarket morning. As for the wave count... it looks like the move up from yesterday was some kind of B wave with the entire move down from the 8/25 high of 2849.50 to the low yesterday at 2791.00 being the A wave. I'm unclear on how it broke down so I won't even bother to try and label all the sub waves.

The most important thing here is that today should put in a top for that B wave and the C wave should start down next week. I'm still not sure about how big of a drop this is going to be so we'll have to play that one by ear... so to speak. It could be just a shallow move down to 2750-2770 area (the baby bear scenario) or a much deeper drop to 2600 or below (mamma bear). The only thing I know for sure is that I fully expect the masses to be fooled.

I'll be shorting today and will be prepared to hold until the end of August if need be. If this turns out to be mamma bear then the 2750-2770 area might just be a large A wave and after some Fibonacci retrace level for the B wave the C takes us down to 2600 or below. If so it should all play out in the month of August.

Typical moves like this take 18-20 calendar days, so let's all try not to get fooled on this move. For today I expect sideways action most of the day within a range of 282.50-284.00 on the SPY. We'll probably close nearer to the low range due to "option pinning". Have a great weekend and if you are a bear go get your dinner table set as the next several weeks you can feast (hopefully... LOL).

With the future down again this morning the ABC up wave count is now toast. The 7/30 low to the 7/31 high must have been a simple one wave structure to make a B wave up instead of my thoughts that the B wave would sub-divide into 3 smaller waves to make an ABC "B wave" up. So that high of 2827 is where the C wave down started, and since they subdivide a lot into 5 wave patterns (or more) we appear to have had the wave 3 down of 5 in this premarket session.

Any move up today will likely be shorted as it's probably a wave 4 of a C down. Then the wave 5 down should end it all in the next few days. This is now looking like the bear cub sell off from the 2850 recent high and not the momma bear drop. It should bring into play the prior target zones of 2750-2770 as a low for the 5th wave down of the C wave down, which should be hit early next week I'd guess.

This has been a tricky move down for me as I've gotten half the calls wrong from the recent high. The big short got killed yesterday that was going to appear at today's close, as the bulls are stair stepping this market down slowly each day to keep the damage to a minimum thereby allowing the next move up to be a powerful one that takes them to new all time highs and beyond. If they would have closed green yesterday and today they would have brought on mamma bear and we'd seen a much larger drop happen, which would have set the bulls back on their rally up into an October high and push it out a couple of months into December I believe.

But as long as the bulls hold the DOW above 25,000 on a closing basis the rally up should start soon and peak in October. The bottom line here is this move down does not look as bearish now as previously thought. It should end soon and the bulls should take back control. There's been no fear on this drop as every day continues to produce light volume on the SPY, which tells me it's a very controlled move down. So again, a bottom is near. It could be today if I get the wave count wrong again? I'm not an expert at Elliottwave so I could have missed a wave somewhere? Anyway, that's all I see for today.

Looks like another flat day is upon this Friday morning. Clearly the markets are being held up this week. Next week is the end of the month so that would be about the only time left for the bears to make their move I'm afraid. After that I think we'll start our move up into October with a high likely of 293.90 on the SPY (give or take some of course as since that FP has been out their so long everyone has seen it now, and therefore they will likely pierce or fall short).

I don't expect some big drop on Monday either but that could be the day we top out into the close. Then the rest of the week we might see that pullback, but I have to think now that the bulls have cleared out 2800 nicely the drop isn't likely to be some 100+ point move, but instead could just pierce 2800 by a little (10-20 points?) to lure in some bears and shake out some bulls.

The fast squeeze up on Wednesday into the close hit the 150% Fibonacci extension level from the June 28th low of 2693, which makes the move up about 157 points so far. Next up is the 161.2% level around 2860, which might be hit on Monday? I'll say this, if we do hit that level everyone will become bullish most likely as we will be so close to the all time high that people will just assume it's a "given" that we are going straight through it. And of course it never works like that, but instead will fool everyone by going the opposite direction. I've seen this happen many times in the past when a critical level is "almost" reached.

It will come up to within a few points of it and fall back, then after the drop it rallies back up and does this again... but it finally busts through and keeps going higher. This could be the plan for next week. You can go back to the whole month of July, 2014 to see what I'm talking about. The market wanted the even number level of 2000 really bad but would go up and fall short of it several times before it finally broke-through. We could see the same thing, but on a faster pace... and I'm not expecting such a large drop to follow like back then. That one from 7/24 (where it hit 1991) to the 8/7 low of 1907 was 83 points, which could happen this time too but I'm not expecting it.

The other drop from the 9/19 high of 2019 to the 10/14 low of 1820 is certainly not expected. Remember, we are on our way up into a final blow off top in late October, so that kind of percentage drop should not happen until after this rally up ends. Only small drops of less then 100 points, with 50-70 points being the ideal range should show up from time to time. But more then likely they won't have to drop more then 20-40 points as bears will keep shorting every move higher looking for a top.

Kinda like the crazy run up into the January 26th, 2018 top. Pullbacks there were in the 20-40 points range for most of the year 2017. A few were larger of course but basically it was a non-stop rally up. We likely very close to starting that again, so this next pullback (next week) is the "do or die" moment for the bears. I'll be exiting my (underwater) shorts on this coming pullback... hopefully with a profit but I'll take a break-even if I get it. Then I'll join the bulls for the ride up into October. Again, for today I see nothing but more light volume chop. Probably a grind higher but I wouldn't expect much. Have a great weekend.

Cracks in the wall... that the BULL WALL I'm referring too. Yesterday was the first time in a very long time that we seen such a strong rally get completely reversed on the Russell and almost completely reversed on the Nasdaq and S&P500. Volume picked up on the SPY as well, which tells me someone was selling heavily into the morning rally. Signs of a top of some importance in my opinion. Maybe not "the top" for the year but a top that should produce a nice pullback for those same big boys that were selling to flip and become buyers again at much lower prices. That's one sign of a top. Another sign is the topping tail put in on the market. Also I see that the actual high was 2821, right in the middle of everyone else (and mine) forecasted zones. We know that a prior high back on March 13th was at 2814 (it's the horizontal green trendline on chart), and the Fibonacci levels were in the 2835 area. What did SkyNet do? It stopped in the middle.

I discussed this subject on yesterdays post. No need to go over it again today, but in the future when I draw trendlines and support/resistance levels I'm going to make note of the "in-between" zones. I've also discussed several times in the past week the negative divergence on the 6 hour chart. Today it has 4 smaller "humps", or quadruple negative divergence. I pointed out that the black MACD line didn't look as strong and powerful as it should when crossing over the red MACD line. Now today we see that the "pop and drop" from yesterday has caused that black MACD line to roll back over and is currently touching the red line. While it's not crossed yet it's certainly another sign of weakness in the market.

All these signs put together give me reason to believe that we have likely topped out for now. But I would expect one more rally attempt today to lure in more bulls and scare a few bears. There was an afterhours spike high around 4:15pm showing 282.00 on the SPY, which might be a FP target for today. It's hard too say if that will happen early in the day or at the close, but I'll be looking for it at some point today. Considering that today is another weekly options expiration day, and that "Max Pain" is at 280 on the SPY, which is where the most "Puts" are at.  But the most "Calls" are at 283, so I think somewhere in the middle is likely.

Now if you are bearish you don't want to see them take it down too far today and run back up into that 282 level at the close as if it drops far enough a lot of the overbought charts could get reset to neutral and allow another choppy day on Thursday and/or Friday. Instead you rather them keep going sideways to slightly up and then pin at 282 by the close in an overbought short term position (hours to days) to align with the overbought medium term position (days to weeks). Anyway, I'll be looking for a 282 Pin at the close today as that's the "possible" FP from afterhours yesterday. Then tomorrow I think we'll see some more downside happen, so I'll likely take another short at the close today should we hit 282. I'll post it in the free chatroom if I do.

One more thing.  Yesterday in the premarket session there was a "possible" FP showing a low of 280.20 at 8:38am EST.  I thought we'd get there yesterday when the market was dropping nicely, but it didn't.  So that could be a target low today or tomorrow?  Don't know which?  But those are the two "possible" FP targets to focus on should we get close to either.  Good Luck.

This week there's a lot of earnings out so it could be some wild action on stocks with earnings, and the market itself might also have some decent moves in both directions. Overall I'm mildly bullish early in the week with a possible move up on Monday/Tuesday to retest the 2818 top (lower high more likely I think). Then later in the week is where I think we'll start dropping. How far is yet to be known but I should have a better idea as the week goes. First support though is the rising light purple trendline pointing to around 2780 currently.

I don't expect to it hit today on Monday but possibly on Tuesday... which if so we could bounce off of it and come back up again on Wednesday for another lower high. Basically I'm looking for some early in the week "tight trading range" between the current high and that rising trendline. In the free chatroom I posted that I sold a put at the close on Friday to collect some money on my straight puts I've had for over a week now. It turned the trade into a put spread, which I'll look to turn back into just a straight put this week on a rally up to the current high where I can buy back the puts I sold for a cheaper price and keep the difference to help offset the decay I've lost on the straight put I bought.

I'll probably add more shorts as well when we get up to a double top level. The most bearish period should be starting by Wednesday this week and continue into the end of the month next week. This could be the last good short before a strong rally up through August, September and October. If we are going to reach the FP on the SPY of 293.90 then those 3 months is when I think we'll do it.

After that we are at risk of a crash happening. I explain why in the post I did over the weekend. Just look at the home page and you'll see it. Even if we do crash I don't think it will put us in a depression as it should be fast and furious... which should setup a long term bullish move up for many years to follow. Inflation would likely rise as well as gold and silver. But that's just too much to cover in this morning update post. Back to the short term. For today I'm expecting a float up but not a lot of action to either side. Good Luck.

Here's that post: https://reddragonleo.com/2018/07/21/high-odds-that-the-next-stock-market-crash-happens-on-this-date/

This morning we are going to look at the 6 hour chart. You can see the triple negative divergence on the MACD's clearly here, and it seems to have finally started to take effect on the market. Now whether it last or not is another story? It's hard to say if this tiny drop will cause the dip buyers to come in again and run this back up or not, but usually they do on the first dip. For now I'm just cautiously watching to see if this is the start of the pullback into the 2750 area or not.

Even if it is you know it won't be a straight line down, but instead some choppy mess of drops and bounces. I think next week has the higher odds of the drop I'm looking for so if this current dip is bought up today that would be fine with me. In fact I'd love to see a wave 1 down today and 2 back up into the close and then another wave 1 down tomorrow and again another wave 2 back up into that close. It would setup Monday for a large wave 3 of 3 down, or 3 of C... either one works well for a 50+ point drop.

So if you are bullish you'll be rooting for a drop today that sticks and bottoms around 2790-2800, which would then open the doors for another strong rally up tomorrow... and it might go up to 2840-2850 as well. But if you are bearish you want this morning drop to be bought up and reversed by the close today to setup a 1-2 wave combination, then you want to do it again on Friday for another 1-2 wave pattern (which is basically the start of the wave 3 down that commonly breaks down into 5 smaller waves). I do not know how it's going to play out today but that's the things I'll be looking at. I'll just say that "first pullbacks" are usually reversed back up from "buy the dippers" and that's what I'm rooting for to happen. Good luck.

Yesterdays update certainly was wrong as the bulls ripped the bears to pieces all day starting right at the open. At this point I can only guess that the bulls plan on running up for that 2840's zone as they cleared the 2800 level cleanly now. But I don't see much more upside today, as after suggest a strong push yesterday today should be a "pause" day where the market goes sideways or drifts lower some. I'm surprised there hasn't been a decent pullback yet as there really needs to be one from looking at the "now" triple negative divergence... and on the 6 hour chart to boot! I feel like from looking at the charts that yesterday was just a "shake out the bears" move and that there's still a move down yet to come, and it should be one to "shake out the bulls"... meaning a drop of as much as yesterdays gains, or more.

I can clearly see we've had 5 waves up at least (there's more but I think some of the waves subdivided into smaller waves), so an ABC down should happen at some point before another 5+ wave series up starts again. The overnight low at 8 pm EST on the futures of 2765 on 7/10 was never revisited during the regular session the next day, and still hasn't been tested since then. It's rare to see that happen as at some point they do go retest it. Of course that doesn't mean we can't go up to 2840's first and then on the next move down we test it, as that could happen.

But it does give me reason to believe that we will at some point drop back down that level... the "when" part is what I don't know. Anyway, for today I'm not expecting much, just some sideways action most likely as the bulls digest their gains and prepare for another move up in the coming days. But I won't be surprised if I don't wake up one more to see a nice gap down that drops all day and revisits that prior low. If it happens soon it will likely be one last bull shakeout before a strong rally up toward 3000 starts, as we are getting toward the end of the multi-month chop I believe and the next large direction should be up. I'm looking for a high in early October, (around the 10th), to end this multi-year rally.

After that we should see a large correction, which may or may not turn into a bear market. Too early to know. But for now let's just focus on today and the rest of this week. So again I'm not expecting much today to happen but I am expecting to wake up one morning with a gap down that revisits those lows on the futures. Maybe it happens this week or next? Don't know but I would not get too cozy being a bull here, as after that flush out happens it's "then" that I feel the super strong rally up to 3000 area will really begin.

Looks like the bearish alignment of the 6 hour MACD is keep downward pressure on the market this morning. The 60 minute MACD did indeed dip below the zero level as I suspected it would do. That was from both the 6 hour and 2 hour MACD's I'd guess as they both are bearishly aligned and don't appear ready to turn back up anytime soon. In fact the 2 hour MACD is also below the zero line this morning. With everyone looking for a little more on the upside to short from I have to think that even when the 60 minute and 2 hour MACD's turn back up the market won't do much more then double top (or lower high) the last high on Friday.

Mr. Market loves to trick the sheep and with everyone have similar upside targets of 2814 (the March 13th high) and the 2834-2840 area (trendline resistance) it seems like those folks might miss the boat this time around. In fact todays pattern looks similar to the mid-June top (around the 12th to the 28th) where the market just reach a high of 2796 before rolling over slowing and dropping into a 2693 low two weeks later. It was fast or scary but it was steady. Looking at the previous period closely and comparing it to today it suggests that we'll close slight red today and slight green tomorrow. From there the following days seem too be a steady drift lower with more red closing days then green. Call it a slow build up of wave 1's down and wave 2's up until it sets up a wave 3 of 3 (of 3) down.

I'd have to think that from looking at the MACD's this morning (on the shorter time frames) a turn back up tomorrow for a green close seems likely. But with that 6 hour MACD rolling down nicely I don't see any new high. It should look similar to June 14th I think if this pattern continues to play out. It's still too early to assume we are repeating that pattern but it's something to be aware of. My thoughts for awhile have been to only pullback to the falling green trendline and/or the rising light purple trendline... which are pointing to around 2750-2760. That previous pattern would suggest a drop to the 2660-2670 area for a lower low then the 6/28 low. I'm not getting all excited about that happening yet as we are too early in this move to really know much at all.

For today lets just focus on whether the market can take out the Friday high or not. That 60 minute MACD could turn up at anytime today (or tomorrow?) and that's what I'll be watching closely. When it turns up and the market turns with it that's when the bulls get their last chance to make another higher high. Failure here will certainly put a cap on the high for this week at least, as that 6 hour MACD will keep enough downward pressure to keep the bears in control. And if the daily turns to (it's close) then we could see downward pressure until the end of this month.

It doesn't mean we are dropping to that 2660-2670 area of course, but it does suggest my first downside target of 2750-2760 should be hit. In summary I'll be looking for that bounce back up today or tomorrow from the 60 minute MACD's turning back up. I'll take another short if we get it. I'm just playing the odds here as in my humble opinion the odds tell me a pullback of some degree is very likely to happen before another 50-100 point rally up happens.

I hope everyone had a great weekend. This week looks to me like it's going to put in some kind of top in the market and allow a decent pullback, which could last until the end of the month or early August. On a rising trendline (not shown here) I've drawn on another chart of the ES Futures it's pointing to the 2835-2840 area as "where" the current rally up should hit it. Of course that will be resistance when it does and could easily mark a pullback spot. But I'm not confident that it will get there this first trip back through 2800, as too many charts show negative divergences and overbought stochastic... and we've already had the "higher high" to create those conditions.

So we might not see much more then 2814, where a prior high was made back on March 13th of this year, before we rollover. Hard too say at this point but I really am not expecting that 2835-2840 area to be hit on this go-a-round. Probably today will be one of those "pause" days where it doesn't go up much or down, but fools everyone on both sides. That's about the best read I can get on it this morning. There is support at the rising blue trendline and if that breaks (I doubt it today) there's the green falling channel that is now merging with the rising light purple trendline. That is double support if it did drop there today... but again, I really doubt it. Over on the 6 hour chart the MACD's still have room to go on the upside, while this 60 minute chart is showing negative divergence.

My guess is we'll drift nowhere to slightly down in the first few hours of the day and turn back up with this 60 minute MACD. It's already at the zero line where turns are common but the 2 hour chart isn't quite there yet. I'd guess this 60 minute MACD will fall through the zero line a little while it wait on it's old brother (the 2 hour MACD) to reach zero and make a turn back up. Common times for this to happen are around the 11:30 am EST period when the European market closes. It's also lunch time in America so many traders will have finished up their position swapping and therefore the volume dries up... and the market floats up.

The point I'm trying to make is to NOT expect much today in either direction. I'm positioned short and would love a big drop but I'm not expecting it. If today does chop sideways then there could still be another move higher tomorrow to hit that prior high of 2814, and that's where I think the bulls will run out of energy. Of course there's nothing stating for sure that we are going up to that level as we might have already topped? Happy trading.

Welcome to Friday the 13th guys and gals. Stay away from people named Jason is my advice for today. Yesterday I did take a short and will add to that if we go up more into the close today. So far this morning the futures are flat. They hit a high of 2807 and have since pulled back to just under 2800... was that a stop run? Now that they've cleared 2800 it's no longer resistance, and it some support. I don't see it as good support until they run back up a second time for another higher high.

Then the 2800 level will be good support. For now though it's 50/50 support, meaning that if we open under it then it might have just been a stop run on the bears and not a true breakout. I do believe it will be taken out cleanly soon but I don't really see the current push through as the clean and stable one just yet. It's coming though, and soon. But first they need to shake out some bulls, and another nice drop to retest the Tuesday night low on the futures would do just that. Basically I still think we'll go back down one more time and find support at the falling green trendline pointing to around 2760 right now. Possibly it doesn't happen today and instead it waits until Monday or Tuesday? I'm not sure?

Wave count wise I think we completed the smaller 5th wave up now (inside larger wave 3 up) at the current 2807 afterhours/premarket highs. Next should be the larger wave 4 down, and then a larger 5th wave up... which could reach 2830-2850 area. Now that's where the trouble starts as far as predicting the next move, because the move down follow could start a series of waves that will all be part of a large C wave with a target below the 2/9 low. Or we only see a small drop before a monster rally up into October that reachs for 3000... not sure which will happen?

That's too far out to even think about right now, so let's just keep focusing on day to day moves. So, if we end up today doing a whole lot of nothing (meaning not much downside or upside) then I'd expect it to be just market makers pinning the SPY at some level that makes the most puts and calls expire worthless. That would leave Monday or Tuesday open for the pullback to happen and complete the larger wave 4 down.

After that we are going into earnings season and I suspect a lot of the reports will be bullish for the various stocks, thereby lifting the overall market up into that mid-2800's area. Then the last week of July should be the weak one where any rally made into the third week has a good chance of getting reversed back down. Again, too far away to worry about but did want to note the seasonality patterns. I think I've covered everything, I'm short and looking for a pullback into the falling green trendline today, Monday or Tuesday... then up for a couple weeks for earnings and down the last week of July. Have a great weekend and stop by the free chatroom for intraday updates.

Ok gang, this move up this morning looks to me like the smaller 5th wave inside the larger 3rd wave. Meaning that yesterdays' premarket drop was likely the smaller wave 4 down. So after this smaller wave 5 ends, which I think it will do so at some point today, we should see the larger wave 4 down happen. I suspect that... first, this smaller wave 5 up will truncate short of the recent high of 2797 that smaller wave 3 up hit, and second that larger wave 4 down take out the premarket low yesterday from smaller wave 4 by just a hair, not some huge drop.

Support is at the falling green trendline pointing to around 2760 today, and that's where I suspect we are heading to end larger wave 4 down. That leaves larger wave 5 up for Friday (again, this assumes small wave 5 up and and larger wave 4 down all happen today). So, I'm going to look to short at some point today as I think we are going to drop at some point today to retest the premarket lows from yesterday.

It could hold up all day and drop afterhours I guess but I really feel like the trickiest move is to drop sometime today and close near that falling green trendline. Then use the fuel you'll get from the bears shorting the bottom to squeeze them up tomorrow for larger wave 5... which I think will take out 2800 by a little and top out into the close on Friday. That setups up Monday for a gap down for the next drop, but I'll discuss that tomorrow.

Yesterday about an hour after the bell the futures started down hard. Apparently more talks about the trade wars came out and caused the drop. Of course we all know it was in the charts and will be labeled a smaller wave 4 down inside a larger wave 3 up that started on 7/2 at the 2702 low. The smaller wave 1 up inside the larger wave 3 up topped out from that starting point on 7/3 around 2741, then smaller wave 2 down bottomed that same day around 2712, where smaller wave 3 up inside larger wave 3 started.

Yesterday topped out that 3 of 3 wave and last night we saw the smaller wave 4 down inside larger wave 3 up happen. As you can see on the chart the sell off bottomed right into support from the falling green trendline and the rising orange trendline. As long as that area holds we should rally back up today in the smaller wave 5 up of larger wave 3, and if all goes well it should also take out the June 11th-14th resistance and head up toward the prior 2814 high back on 3/13 (I posted a daily chart showing that area on yesterdays update). Of course there no guarantee that this smaller wave 5 up will make a new high up there as it could fall short and truncate. But I find that doesn't usaully happen until the last 5th wave up... which would be the larger wave 5 up.

The way we'll know is if the market grinds up today slowly and choppy and then does the same part of tomorrow before it finally runs out of room and falls back down through the rising blue trendline of support and the rising orange trendline... which are pointing to around 2790 right now. If we grind up into that area today and tomorrow and do not take out that 2797 high yesterday for smaller wave 3 then I'd be worried about a gap down on Monday that starts larger wave 4 down as that move up into just under 2797 could be a truncated smaller wave 5 up. That's two days from now and I can foresee how the charts will be lined up at that point so I just can't know what will happen on Monday. If the charts algin bullish looking then we could gap up on Monday and continue that smaller wave 5 up of larger wave 3 up into the 2814 area and then rollover for the larger wave 4 down. The only thing that looks pretty sure right now is that we had a smaller wave 4 down last night of larger wave 3 up.

And there's also good odds that it ended as one simple wave down and isn't breaking down into some ABC pattern down. I say that based on the depth of the wave and the importance of the rising orange trendline. So that therefore suggests we are in a smaller wave 5 up right now of larger wave 3 up. This could get tricky going into Friday as I have to say that if I were SkyNet the way I'd move the market from here is exactly how I just discussed... a slow grind up into (or over slightly) the rising blue trendline for a close there on Friday. I'd keep it under the 2797 high from yesterday and just over 2790, which would leave everyone guessing about Monday.

Will it continue up to 2814 to complete the smaller 5th wave up of larger wave 3 up, or will smaller wave 5 up truncate short at Fridays close leaving Monday open for a gap down for larger wave 4 down?  I don't know the answer but I get a feeling that's what we are going to see the next three days. As for larger wave 4 down, my guess is that by Monday the green falling trendline of support and the light purple rising trendline will intersect around the 2750 area... which is where I think larger wave 4 down will bottom. It would also make a nice right shoulder with the left shoulder being the 6/19 low of 2755 and the head of course being the 2693 low on 6/28. This is all just me trying to think like SkyNet to make the market fool the most sheep. Anyway, I posted another chart in the chatroom last night when I saw the market drop unexpectedly for anyone interested. Have a wonderful day.