Ok gang, this week we have a half day trading on Tuesday and no trading on Wednesday as it's the 4th of July holiday. I don't expect a whole lot this week as the very light volume "should" prevent any serious drops from happening and allow a light float up. So this mornings weakness should be contained above that 2690 area (if it even drops that far?), but on the flip side the light volume should keep the bulls from busting through overhead resistance as well... at least until traders come back and add more volume.

This move down this morning is also making a nice "inverted head and shoulders" pattern which could push prices up to the rising blue trendline and/or the falling green trendline... both pointing to around 2770 currently. This move could start today or tomorrow but I don't see the 2740 zone broken until after the 4th of July when we see a little more volume, like this Thursday or Friday. Today the Fed's are their reverse QT, where they are selling like 18 Billion into the market starting around 1pm EST I believe.

I could be wrong on the number but the bottom line is that this selling could keep any bounces to a minimum in the market until it's finished. That's why I'm leaning more toward tomorrow starting the move up instead of today. As for tomorrow I may or may not do a post? Not sure yet? I'll just play it by ear so to speak and if I think there needs to be another update I'll do one. But if we find a bottom today and put in some positive divergence then that sets up tomorrow to start a move up. So just look for that to happen on the 60 minute chart and you'll have your answer on what to expect next. Naturally they'll be no post on Wednesday.

WOW! What a reversal yesterday... from a strong move up to another flush back down. Crazy markets! I have to say that it caught me off guard as I wasn't expecting it. Now this morning we are down a little more, so possibly this is the bottom forming here before another rally back up? I'm just going to sit today out and not make a forecast as I'm currently lost on the wave count and direction the market is going. But I will add that after the close today they are releasing the releasing the results of the banks stress test. The market is expecting them to pass just fine. If they do then maybe we bottom and see a rally? If they fail then possibly we flush out one more time hard and then rebound just a hard? That's all I have for today... sorry, I'm just out of sync with the market right now.

Yesterday we saw a bounce up from the low that could have be a wave 4 up of a C wave down. But this morning in the premarket action we see the market dropped again to 2705 for a higher low then Mondays low and has since recovered almost back to even as I write up this mornings update. I'd now call yesterdays rally up a A wave of some degree and the drop this morning a B wave, which leaves the sharp move back up to be a C wave.

So it now looks like Monday's noon time bounce was more then likely the wave 4 up of C down and then the rest of that day was the wave 5 down of C down. Meaning (or suggesting, as again I'm not an Elliottwave expert) that the June 13th high down to Monday's low was an ABC that likely ended on Monday. If this is correct then we are in for a multi-day rally that could even take us into all of next week?

It's too early to know for sure but when I look back at all the times we've had sharp drops (like on Monday) that surprised everyone (meaning very few were short the move) the market would go up from that low for quite a long time as every bear was then awake and needed to be put back to sleep before they could drop it hard again. When I look back at similar moves the April 25th low and rally into the 30th could be what we see happen here again this time? A similar move could take us up to the rising blue trendline just under 2760 right now.

It's probably not going to be some super strong rally but more of a slow grind as traders slowly start leaving early for the coming Fourth of July holiday next week (which should also be a super light volume period). So in my humble opinion the low is in for this week and possibly all of next week. Another move down still could happen but with the holidays coming up soon we might not see it until after that's over with? It really depends on how fast they move this market up I think as if they do it too fast the chart will get overbought and then I'd worry about another surprise drop around the holiday when everyone is gone.

It's possible that they pull another fast one on us sheep and drop it hard the day before or after July 4th, but again it's too early to speculate on that now. I'll only say that today looks bullish to me and tomorrow could be same. I don't see the current low from Monday being hit again this week and at least some of next week (if not all of it?).

Surprise, surprise! That nasty drop out of nowhere happened yesterday. And I totally missed it. It now looks to me like it was a wave 3 down inside a wave C... a powerful wave indeed. From that low yesterday we bounced back up some to start the wave 4 up of the C down, and at some point today I suspect we'll end that 4 up and start the 5 down to end the C wave, which ends the ABC down from the recent top on 6/13. Typically we've been seeing wave 5's that truncate short so that's possible here again too.

But that usually happens in a strong uptrend and since we've been in a trading range since January I'd neither call this market in a strong up trend or down trend, but instead call it neutral. Of course the opposite is true on 5th wave too... meaning in a strong down trend the wave 5's that go up are commonly truncated and the ones that go down likely extend. Anyway, for today I think we'll carve out that wave 4 up, which could take all day long. We all know that the large drop yesterday woke up the bears, so everyone is looking for that easy short now.

But SkyNet never makes it easy and always makes it hard. So it's likely to be a chop-fest today as bulls and bears battle it out while SkyNet takes money from both sides. Possibly tomorrow we'll see that 5th wave down happen? Not sure yet but I don't expect it today as that's too easy and SkyNet doesn't do "easy". Another scenario is that the wave 4 up happened yesterday after the early low and was really weak and small. You'll have to look at your shorter time frame charts between around 11 am and 12 pm yesterday (EST) to see that bounce.

If that turns out to be the wave 4 up then the wave 5 down is finished already and we are now in some kind of ABC up or a 5 wave pattern up... not sure which? I'm unsure if that's the case or not but if we don't see that lower low by the close tomorrow for that 5th wave then it's likely already happened. I've found over the years that it's a common thing for SkyNet to trick us sheep with really short and fast wave 2's and/or 4's to make us miss the trade.

Anyway, for today I don't expect a lot. Just some sloppy and tricky moves in both directions most likely... and they shouldn't be anywhere near the size of yesterdays moves. I'll be looking for positive divergence to setup on this 60 minute chart before even thinking about a long, which might not show up until tomorrow? But if so I'd certainly want to play it as we get closer to the 4th of July next week, as volume should get light again as traders go on vacation, which generally leads to a float up in the market. But we'll save that for another day.

Last week the market failed to bounce in the beginning and drop through the upper trendline of the falling channel but later in the day rallied back up in what I thought might be a wave 3 of some kind. But that's clearly wrong as we've dropped again this morning to a lower low. It looks like an ABC move down but I can't be sure at this point? We could also be in the early stages of a wave C or 3 down of some degree. While I think Elliottwave has its' benefits many times it's just a guessing game on the wave counts.

Looking at the MACD's on this 2 hour it's trying to turn back up, and we are at horizontal support in the 2740 area, so a low and bounce might be coming soon... possibly when we hit the lower falling trendline of the channel? On the SPX daily chart the MACD's have rolled over nicely as well as the Histogram bars and Full Stochastic, but it could take all day today and possibly tomorrow before it gets deep enough to bottom. But on the 60 minute chart of the SPX we might have a bounce show up soon as its' MACD's are getting close to the zero line where turns are commonly made. But I don't see the bottom yet as the daily chart suggests there's more room on the down side yet to come.

My best guess is that we do a fake out rally that either puts in a lower high then rolls over for a bigger drop then the current move down from the most recent high around 2790 or we pierce through that area briefly to run some stops and then rollover again. Basically I see a bounce coming soon but I don't know how far it can get with a daily chart that appears peaked on it's upward momentum as MACD's and Stochastic are dropping now. Plus we have a weekly chart of the SPX that is also now overbought and acting like it's ready to roll over soon.

Let's not forget that we are going into the summer months now where the market historically has sell offs happen. I don't know the "when" part but I'm thinking this market is not ready yet to make another all time high but will instead dance around the current 2800 level (+/- 50 points) for a few more weeks at best and then I think we'll see a drop to 2700 or lower.

For today I think we'll do some choppy around but I think there's a bounce coming soon... as in some point today or tomorrow morning. But again we could drift a little lower first before that happens. Not much else to do today but wait and watch for a solid bottom if you want to take a long. And if you want the big short hang in there as I do think it's coming soon.

I spoke about a possibly "inverted head and shoulders" pattern setting up yesterday and that the premarket pullback to the upper trendline of the falling channel was likely some kind of wave 2 down, whereas the wave 1 up started at Tuesdays' low. Well, that wave 2 down didn't stop at that upper falling trendline of support and reverse into a wave 3 up but instead busted through it yesterday and keep falling until near the close of the day. Today we see it back up off that low to almost about the same level as the open was at when the down move of the wave 2 continued yesterday.

However I'm started to question my wave count as at this point it's still not feeling like a wave 3 up. Maybe that's because I feel the wave 2 down yesterday was deeper then I expected? I don't know, but if this is a wave 3 up it should continue grinding higher today and not give back very much. On the flip side if it reverses back down then the bulls could be in for a nasty shakeout as I'd likely have gotten the wave count wrong at that point as the move up from the 6/19 low of 2735 might not be a wave 1 up at all but a B wave up... meaning the top on 6/20 of 2783 was the start of a C wave down, which yesterday would have then put in the low of the wave 1 down of that C down and today's' move up would be the wave 2 of that C down.

That leaves a nasty wave 3 down (and 4 up and 5 down) yet to come to complete that C down. This is a very possible outcome if we don't see this morning rally continue to go up all day and take out that 2783 high to suggest that we are in a wave 3 up as the first wave count I've discussed suggests. That scenario two (my second wave count I've spoke of) is the scary one for the bulls and I just don't know which scenario is accurate? However, considering today is a Friday I don't think they will roll it over and drop it hard into that second scenario today.

Odds are good that we'll hold these gains to close out this week... meaning I don't see that sharp drop happening today or the run up to take out the 2783 high as scenario one suggests. I think it's going to be left as "unknown" as this week closes out and we'll have to re-evaluate next Monday where we are at. Overall though I still feel like we need that final "stop run" on the bears over the 2800 level by a few points before heading south hard.

So that leans me more bullish into early next week then bearish, with the thoughts that at some point we'll make that move over 2800 to run those stops. I don't know how high of course? I've been suggesting 2820-2840 but honestly that's just a "best guess", as it will really just be determined by how many stops are overhead of that level that SkyNet decides to run. Maybe it only hits 2810... don't know? We'll cross that bridge when we get there I guess. Have a great weekend.

Yesterday (I didn't do a post so don't think you missed it) the market mostly chopped around and held it's small gains until the close. This morning we see it continued up afterhours and then dropped during the premarket. It looks like a wave 1 up and wave 2 down to me, which backtested the top trendline of the falling channel and bounced back up some from it. It also makes a nice and clean looking "Inverted Head and Shoulders" pattern with that backtest being the right shoulder and the low on Tuesday being the Head.

So if this pattern plays out we should see that 2800+ level hit... the "when" part though is tough to figure out. But I'd say it should be soon. If the wave count is correct the next move up would be a wave 3 of some degree. I've looked at others who do wave counting better then me and most seem to think this is a wave 5 up as I've discussed in prior morning updates. Just to recap that, this wave 5 up starts at the 6/19 low of 2735 where the wave 4 down ended... and it started at the 2796 high on 6/13. I'm not going to go over all those bigger picture waves now as you can look back at prior posts to read them as they haven't changed.

I'll just say that this wave 5 up should be the last wave (which again we had the wave 1 up inside it end last night, the wave 2 down this morning and appear to be starting the wave 3 up as I write this update) to end the very large B wave up from the February 9th low. The A down was of course from the January 26th high to that low and it was about 350 points in total. So after this final wave up ends (possibly in the 2820-2840 area?) we should be starting that very large C wave down.

How far could it go is anyone's guess but if it just equaled the A down that would be another 350 points, but many times the C down is some multiple of the A, like 1.618% or even as high as 2.618%... and that's some scary numbers! If it's just the lower percent then that's about 566 points down from a likely top in the 2820 or so area. The higher number is super scary as it would certainly put us in a bear market for sure. It would be about a 916 point drop! Yeah, that's crazy! Imagine dropping back down to below the 2000 level briefly, which we finally broke up through it in 2016 after a long time of consolidation.

Hopefully that doesn't happen but anything is possible. For now though we'll just play it day by day as that's too far out into the future to worry about now. The futures have reversed back down again as I've been writing this morning update so possibly that wave 2 down isn't done yet or needs to retest the top falling trendline of the channel before turning back up? In any case I do think we still have more up yet to come... but likely more then a week or so from the looks of the daily charts on the SPX as it's getting very toppy looking.

Looks like the futures finally broke down after a series of wave 1's down and wave 2's up. Odds are that the last series of 1's and 2's were inside a C wave down and that's what we are in right now premarket. The bounce back up from a low of 2735.75 is probably the wave 4 inside that C down. So at some point today we should see a wave 5 down of C down to finish this move. It will probably just do a double bottom test but it can break lower then the current low as many wave 5's do. That would be the point where I'd expect a rally back up to start.

However, the first move back up should be a wave 1 up of a new series of 5 waves and a wave 2 down could be a deep one as trapped longs use that first move up to exit in fear. Meaning... today could be a crazy day with wild swings up and down to complete wave patterns and shake out both longs and shorts. I'm 50/50 on whether the wave 5 down ends early in the morning session or takes until the close. But I would not go long until I see that retest of the current low for that wave 5 down to end this C wave.

And lets not forget that the daily chart of the SPX is quite overbought so this move up that should come after the 5th wave down of C down ends might be a short lived one. Meaning there's no guarantee that it will get back up to the 2790's again where horizontal resistance stopped the bulls all of last week. My thinking is that it will hit that brick wall and back off some, then hit it again and back off again... and finally it will pick one day to pop through it and run all the bears' stops.

Target would still be the 2820-2840 area and we could see that by this Friday or early next week. It should be the last wave up from the April 2nd low which started the 5 wave series. I believe the wave one ended on April 18th, which started the ABC down to make the wave 2. That ended on May 3rd which started the 5 wave series up for a wave 3... and that ended around June 13th with the 2795 high. From there we should be in a wave 4 down. I broke all this down in yesterday's post as well but wanted to repeat it today. This wave 4 down seems to have divided into an ABC pattern (some extra waves in there but that's as close as I can guess?), and the big drop after-hours is the wave 3 down inside the C down of that wave 4 down.

Gets confusing which is why I don't focus too much on Elliottwave but it does have it's plus's and works well when you get the wave count correct... LOL! Anyway, just look for one more wave down today to end this series of waves down from the recent 2795 high. Then a rally up should follow the rest of the week. I suspect it will be choppy as there's strong resistance at the 2800 level. But I do think they will bust through it late this week or early next. It's not about how overbought we'll be (and currently are), it's about running the stops on the bears before they drop it hard again.

So don't get mad when you see it pop up to 2820-2840 as that's part of it. Just be ready to start shorting that zone... especially if the wave counts all point to that particular wave being some final 5th wave up. Anyway, that's what I see for today and the next week or so. Put simply, expect this premarkets' low to be retested and then a series of complex wave up into the 2800 resistance zone the rest of this week. The one day this week or early next expect it to bust through and run the stops.

Looks like the series of wave 1's down and wave 2's up has finally broken-down and produced a drop to the bottom of the sideways trading zone from the past few days. If it breaks it then I'd call it a wave 3 or C wave down. But I have to say that odds of a scary 100 point drop are low now. There's been too much time gone by in my opinion, which worked off a lot of the overbought condition with various time frame charts. There's not really any negative divergence yet on them either.

I'm starting to think that the best the bears will see is a move down toward that 2740-2750 area of support... which we could see today or on Monday by the close. And since the short term charts are back to neutral now they could be oversold by then, and that should result in another rally up. It's starting to look like this pullback is some kind of wave 4 down with a wave 5 up yet to come. Wave 5's can breakdown into 5 smaller waves or just be one short wave... no way to really know for sure?

My guess is that the wave 5 up will reach a double top (probably shy of it a few points) and then we'll see a nice ABC move down. But I don't think at this point that we are going to see some 100 point scary drop happen, at least not all in one day. Maybe the ABC down produces 100 points in total but it should take a week or more to happen. That's out in July sometime most likely so let's not even go there until it's closer. For now I think we'll drift down into Monday for a low before a strong rally back up starts. Have a great weekend.

The action yesterday after the FOMC meeting was kinda muted if you ask me. But then again we haven't seen any wild swing days in a long time, so I guess that was to be expected. The 2790 area seems to be holding the bulls back for now but I don't know how long this can continue? If the bulls were smart they would allow 3-4 days in a row of red closes to get the charts back to neutral or oversold (depends on how deep the pullbacks are?) where they could make another run up higher with strength.

They look tired to me right now as the volume is very weak. They need bears to squeeze and I have to say that it's not looking like there's very many bears out there with short positions on... otherwise the bulls could have squeezed through 2790 hard and fast. My guess is that bears are waiting at 2800 to short or have already done so with just a few points over that area as their stops. That does help the bulls as if they can get past the 2790 they can't reach those stops to run them.

There was a small move down into the close yesterday, which continued into afterhours, but this premarket it has reversed back up again. If the market can carve out a series of these wave 1's down and wave 2's up and not breakthrough that 2790 cleanly (a pierce would be OK but it shouldn't be high enough to run those stops just a little over 2800), then at some point we should see a breakdown for a wave 3 of some degree. It doesn't look like it's going to happen today so I'm still neutral at this point. Like I said, a slow drift down into that 2740-2750 for 3-4 days could reset the charts back to neutral and the bulls could make another run up higher. But we'd need to close red for those 3-4 days too as that skews the odds that the next day will close green.

Closing red one day, green the next, back to red and green again would just be neutral as it would be considered chop. However, if those days setup a nice series of 1 and 2 wave (again, without taking out 2790 by more then a pierce) then we might see a large wave 3 down appear. It could also be a wave C, it will depend on whether the market takes a 5 wave series down or 3 wave series? I can't know that until afterwards. Regardless of which it's common for the wave 3 or C to subdivide into 5 waves and I'll be looking to catch the 3 of that wave.

Anyway, that's what I'm looking for to setup over the next few days. Maybe it happens by tomorrow or maybe Monday but a breakout or breakdown is coming soon. Which I don't know but I'm leaning bearish versus bullish but I won't hesitate to go long if that's the setup we get in the next few days. A move down into that 2740-2750 area would support a wave count suggesting the move up from the 2676 low on 5/29 to the high yesterday was a wave 3 up and the drop into 2740 area would then be a wave 4 down. That leaves a wave 5 up to end the wave series before a nice pullback can happen.

But I'm thinking that move up from 2676 was a wave 5 that ended the whole series and is now allowing for a nice pullback to setup. Whether it's an ABC down or 5 wave series isn't important. I just want to do my best to catch the wave 3 down inside the C down (or 3 down?). That's the goal! It could turn out to be a 100 point move in total (or more?) if this is the correct wave count? Don't know as I'm not an expert at Elliottwave but I'm patient and will just take whatever the market gives me.

We are finally seeing some weakness this morning with yesterdays pullback continuing into this morning, breaking the rising brown trendline of support. It's rallying back up this morning trying to backtest the breakdown point from the looks of it. It's looking like a clean ABC wave 4 down from the high yesterday. So if you start at the 5/29 low of 2676 you have a wave 1 up into the 5/30 high of 2729, then an ABC down for wave 2 to bottom at 2704 on 5/31, and the the long ride up for the wave 3 into yesterdays high of 2779. It's a very clean wave pattern so far, which suggests the rally up today is the start of the wave 5 up to end the whole 5 wave move.

No one can really predict how long or far a wave 5 can go as some end really fast and short, falling shy of the wave 3 high. Those are the truncated wave 5's. Then there are the wave 5's that subdivide into 5 more smaller waves and match the length of the wave 3 in points, or even go beyond that distance. With wave 3 starting at 2704 and ending at 2779 we have a total of 75 points. So if wave 5 does the same it will reach 75 points higher then the wave 4 low, which right now could be the premarket bottom of 2751? Too early to know for sure the the wave 4 down is complete as we could retest that level today and break it. But if that is the low then 75 points higher puts us at 2826 on the ES Futures.

The clue today to help us figure out whether it's going to be a long wave up or a truncated short one should be where they stop it at by the close today. If it's up today and appears just a few points below the high yesterday then the backtest of the rising brown trendline is likely all they will get and at that point I'd think it's a truncated wave 5. Therefore we should drop on Monday. But if we go down today toward retesting that premarket low, then we close in the red as well, then I'd lean toward the 5th wave up as not started yet and look for that wave 4 down to find a bottom by the close today or even Monday. Maybe the bulls want to take it higher but need more bears to squeeze?

If so they should retest the 2740 area of great prior resistance but now it's support. That should get enough bears on board for another squeeze up on Tuesday to end the wave 5 at least at a double top from yesterday, but probably more. If 2740 becomes the low of this wave 4 down then 75 points up on that would be 2815, just slightly higher then the current wave 3 up top of 2779, and the same length of that wave 3. That could be the plan as well? So, to summarize... down today with a red close leans toward the wave 4 down as "still in play", which might continue into Monday before the wave 5 up squeeze all day Tuesday to end the whole five wave pattern up from the 5/29 low.

Then we should drop on Wednesday of next week to start a new series of waves down. But if the bulls don't back off today and rally up into the close where we end up green for the day and near the high yesterday then I'll lean toward that being a completed wave 5 up and look for a drop to start on Monday. My plan is to short the close if we go up and truncate this wave 5, or to wait until next Tuesday for the wave 5 up to end if we drop all day and close red. I may even go long at the low on Monday for the wave 5 up squeeze? Too early to know for sure but that's my plan of action. Have a great weekend and good luck.

P.S. There's an FOMC meeting next week on the 12th/13th, which if this wave 5 up extends into Tuesday/Wednesday it could end just before the meeting? Possibly that's the top and some surprise event by them will be blamed on the coming drop... like another interest rate hike?

Yesterdays' slow grind higher tacked on over 20 points... not bad, not bad at all. But I seriously doubt if the bulls can do that again today. In fact odds are skewed more for a flat day or even down some. But I'll be rooting for the bulls to close it green again today and tomorrow so I can get a great short entry for Monday. I don't know if we'll be so lucky as the bulls seem to know exactly when they need to take a break and close red to avoid getting too overbought, thereby killing the perfect bear setup. But maybe this time will be different... who knows?

I'm also keeping my eyes on the VIX as it's getting closer to that old FP of 10.91 that's still showing up on my Think or Swim chart. It could be the signal to say the top is in for the market? Let's see if they can hit it by the close tomorrow. That's about all I can add for today as I covered everything yesterday. My best guess is down small in the morning then back up in the afternoon.

The rising brown trendline is support as shown on this 6 hour chart. A move into it today should produce another rally, but we might not see that until tomorrow from the looks of how far away it is right now, or even afterhours on Friday? But if that support line breaks it should be over the weekend from simple counting of how many 6 hour bars are left to get close enough to hit that rising brown trendline. Tomorrow at the close could be the perfect bear setup... but let's see a green close today and tomorrow to exhaust the bulls first.

Looks like the bulls finally filled that gap from March 19th, but I'm still not bearish here. Like I said yesterday this slow grind higher each day can last longer then you think. It's the bulls way of keeping the market from getting too overbought and exhausted. This slow moves give really short term charts (under 60 minutes) time to reset, but short term charts (60 minutes, 2, 4 and 6 hours) will get overbought at some point, so this process of doing the slow grind can only last for so long. It simply extends the bulls a little more time in days, not weeks. When I look at the weekly chart of the SPX I still it coming up from -25 on the Histogram bars to zero currently. The MACD's fell from a high of about +90 to around +20 now, and they put in the bearish cross around +70 on that move down. Currently they are touching and trying to make a bullish cross back up. This can fool people as it looks bullish, but it's also a spot where another quick drop out of nowhere can happen to shake out the new bulls.

And considering the slow grind up we are in right now, which should be much stronger if you look at the extremely low volume the SPY is having the last few days, that has to tell you that odds of a strong squeeze higher (on normal or big volume) from this current level is low. The big picture is the weekly chart is bullish but the small picture is that the bulls are out of energy at this current time. They needs some bears to squeeze and it's quite obvious that there's not many shorting currently. The Daily chart of the SPX looks overbought to me, but they can continue this slow grind I'm sure for awhile longer.

My current feelings are that they will keep doing this grind until the end of the week. Then next week they shock the market with some news event to cause a fast and deep drop. It could happen on Monday, which would be perfect if they keep everyone long over the weekend then gap it down and trap them. Naturally I'm not 100% sure it will happen on that day... as I said this should be a surprise, so trying to predict it from the charts will be extremely hard.

But "if" it happens I do think it's a huge buying opportunity as I can see the DOW going up to 27,000 or so into the summer months this year. And this scary drop has very high odds of being the one that turns everyone bearish enough to squeeze the market up into that 27,000 area or more. The choppy range-bound trading that we've had since the January 26th top should go away on this next rally from the scary drop low.

Think of it like the August 24th, 2015 flash crash low that the next day started a super strong rally back up. Granted that it took a little bit of wild swings afterwards for the month of September but then it got going back up quickly into a low high in early November. I'm expecting a higher high though on this move, so maybe a better comparison would be the limit down drop in the futures on November 6th, 2016 when Trump won the election. That was quickly reversed and produced a new all time high in early December. Something in between those two examples I guess would be what we should expect if we get that scary drop next week. A new all time high is expected but possibly it doesn't go straight up without a break but does it in stair steps where you see a strong move, then sideways awhile, and strong again, etc...

The bottom line here guys is the short term picture is looking bearish as the bulls keep grinding up small day after day. So a fast drop out of nowhere still has high odds of happening. My best guess would be next Monday as bulls would be trapped if some negative news hit the media over the weekend. But again, that's just a guess. Regardless, the big picture (months) is bullish into this summer where I'm expecting a higher high. As for the ES Futures today... more slow grind it looks to me. Best to take the day off.

Not too much to add today as the futures are just a few points away now from closing that gap back on March 19th. The market is general is looking super tired as the SPY only did 45 million in volume yesterday, yet the market was barely up much at all. Light volume favors the bulls and if all they can muster up is about 12 points with that low of volume one has to think they are exhausted up here. We are at a double top on the QQQ's now, so that's tough resistance for it now, and some of those stocks are in the SPY too... meaning we should be close to a short term top of some kind.

The problem for the bears is that while there's probably not much more on the upside left it doesn't mean that we are ready to fall off a cliff yet either. We all know that's there's usually a series of small waves down and up, down and up, before a large wave down happens. And with the light volume the bulls could continue to grind up a few point each day until the bears throw in the towel. I've been looking for a couple of days of a strong rally up to possibly that 2770-2780 area, or even 2800 would be fine. But it needs to be fast and a lot of points in one or two days.

This slow grind up just isn't what I'm looking for to end a long rally where I can safely short it. So for now I'd rather see the market prove itself with a few up and down days first before I'm going to jump in front of this slow moving steam roller. The market has been here before where it just went up slowly for like 12 days in a row! Yeah, anyone that tried to short it got ran over slowly by that steam roller.... a very painful way to die. I know I said there was a high odds short if we closed green yesterday and today but I just don't see it with this slow grind.

So I'll not be jumping in front of that steam roller today if it's a green close. At this point I'm just going to sit on my hand and watch until I see a safer setup. I'm also going to keep my eye's on that old 10.91 FP on the VIX as if we have another 12 days of hell from the bulls inching up one day at a time then I could see the VIX (at 12.64 currently) dropping slowing into that area. It might be a clue that is telling us where the market is going too? I wish I knew but I don't? What could happen is that the NASDAQ (the QQQ's) dance around that double top level for awhile until the SPX (the SPY) catches up (and the DOW too)? One thing seems certain... it's not going to be easy to spot the next big pullback. My guess is that it will come out of nowhere and surprise everyone... possibly this week? If so, I'll be buying the low for a super strong rally to start thereafter.

Finally we are breaking out of the 2740 topping zone this morning. I was beginning to wonder if the bulls were ever going to get it through. Since it taken so long to do so I fully expect them to go up past that gap fill area of 2755 as it's been there too long now and too many traders see it. So logic tells me the bulls will go up to it and let the shorts pile on, then rip it higher to squeeze them out.

How high is anyone's guess but if it's hit today then I'd expect tomorrow to rally up higher as well. My best guess is that if we rally today and tomorrow we'll top out by the close Tuesday and start back down on Wednesday. I don't see this as being over yet for the bears as they have yet to have a super scary drop that shakes out all the bulls. There's a lot of bulls that have been buying all these dips and for the market to rally up to new all time highs again (which I think is coming at some point), those bulls need to become bears or at least go to cash.

That's why I think the market is still at risk of another scary drop before any long lasting rally can take us up to new highs and beyond. Give me a green close today (preferably with that gap filled) and a green close tomorrow (closing near the highs by 4pm Tuesday) and I think we have a great short setup. The higher the better in my opinion... even as high as that 2800 level, but I don't know if it's got that much in it or not?

Whatever the level is I'm fine with shorting it as long as it exhausts the bulls and squeezes the last bear out... which it should do with a nice "all day long" squeeze up on Tuesday (and part of today, but I tend to think we'll pullback small at some point today). That's it for this mornings' update... short and sweet. If we don't get the green closes and instead get one or two red closes then I'm back to waiting on another setup I guess... as well as being back in the trading zone (I'd assume we would be with two down days).

Yesterday the market did indeed fall to the red trendline but it fell through it and then came back up above it by the close. Now we it's making a triangle pattern, which I've added a rising brown trendline and falling light purple trendline to display it. My best guess for today is that the market will stay in that triangle all day and will leave us guessing about the direction on Monday. From one point of view I can see a bullish move as there's an Inverted Head and Shoulders pattern formed with yesterdays' low being the right shoulder, the head was on 5/29 at 2676 and the left shoulder is 2704 on 5/23.

For the bearish view I see a daily chart of the SPX Cash Index that has already rolled over on its' MACD's and its' Histogram bars have fallen negative from a positive peak of around 10 or so. Plus I see the Full Stochastic still pointing down and around the half way mark (about 50), and they were up around 90 just a week or two ago. Sure, they could turn back up, and so can the MACD's and the Histogram bars. But right now they are all pointing down and that's bearish. It's really hard to know which will play out?

The market just keeps going up a little and down a little every other day and refuses to get too overbought or too oversold, which if it did then that event would likely create a powerful move the following day in the opposite direction. Meaning that if we could see a 50-80 point down move to flush out the bulls and lure in the bears we'd have a perfect setup for a 100 point or more up move to start the next day. The same thing on the upside too... we just need multiple days in a row of an up move to get the bulls super overbought and then we could see a 100 point or move down move afterwards. We were on track with the 5/25 and 5/29 down moves but it stopped too shallow and reversed it all back the very next day.

This morning we see the bulls running it up so if they keep it green by the close, then go up again on Monday and Tuesday (closing green on both) then we'll have 3 up days in a row for the bulls and that will likely get them super overbought and thereby allow the big drop to follow afterwards. But if we close green today and red on Monday then we are back to ping pong again with neither side gaining an edge. I really don't care which side wins I just want to catch the next 100 point move.

I don't like this range-bound crap as it's too hard to trade successfully. Give me a trend up or down and I'll be happy. On the bull side we'd need to close down today and on Monday to get oversold enough for the 100 point move that would follow to belong to the bulls. Naturally I'd expect to see at least 2650 after those 3 days of red but prefer to see 2620-2630 for the best bullish setup to follow. Have a great weekend and don't overwork yourself doing yard work as it's very hot outside.