NOTE:  I'm unable to write my notes on the chart this morning as for some strange reason Jing keeps crashing and that's the software I use to make the screenshot with text boxes.  But I was able to get a screenshot using my pen tablet software called EpicPen but unfortunately there's no way to type text in boxes with it.  It's just a hand writing software that requires the pen to write with.  Naturally I'm not going to even try to hand write all my notes on the screen.  This will be the new "norm" until I can figure out how to get Jing back working or some other software that allows text boxes.

On to this mornings' update..

Looks like we are gaping up this morning as the market likes the tariff news between the US and China... at least that's the most likely thing to blame it on. In reality it was really more based on short term charts being more toward oversold levels versus overbought. Overall the charts are mixed when looking at all time frames, but getting more toward overbought medium term (days to weeks). Longer term (weeks to months) we are coming down from very overbought to neutral so it could dip into oversold this summer if we have a drop to the 2500's or so.

For today though I'm looking for this move up to exhaust itself by the close, which could (should) lead to a pullback starting as early as Tuesday. It might be choppy during the week though as the pullback does it's dance up and down to shake out the weak hands (in Elliottwave it would be the multiple waves 1 and 2 until a 3 of C down starts). The move since the high on 5/14 looks like an A wave down to 2700 on the 15th and we are now in a choppy B wave up of some degree.

This suggests a lower high today then the 2740 start of the A wave down. If it completes today by the close then I'd expect a 5 wave move down to make the C wave, with a downside target around 2655-2675... basically somewhere where the falling orange trendline hits to the rising blue trendline and horizontal green trendline. The alternate EW count would be that we make a higher high (preferred really as I think that will increase the odds on the down move). If so, then the 2740 to 2700 move was some kind of wave 4 down and the move up would be the 5th wave to end the pattern.

Not sure on the smaller wave counts inside that 5th wave but they commonly breakdown into 5 waves. So hopefully we can count them cleanly if we rally up all day to 2750 or more? This wave count would be preferred by me as it would make the drop larger as the downside targets will still be the same no matter what wave count happens. Therefore, today is an important day for the bears with either wave count.

Odds favor a down move starting tomorrow with either count but the "higher high" is the one with the best odds. As far as the down move... it could all happen this week by Friday? Hard too say for sure but it's possible. Going into the end of the month is usually where you'll see this weakness happen... at least for the month of May. So possibly this gets dragged out into next week, but that's the overall plan that I will happen.

Charts are looking pretty bearish this morning on the short term, which is bullish for the medium term... as in next week. If you're a bear you want to see some exhaustion move up today and Monday to short at, and if you are a bull you'll want to see exactly what's happening right now and yesterday... which is weakness or consolidation. The sideways to slightly down move yesterday is bullish as it basically resets the charts that are currently overbought back to neutral so the bulls can make another run up. You can see how the bulls are holding above the falling blue trendline of support the last few days. Today they might lose it but it will still end up being bullish for early next week. Why? Because the futures already made what is likely an A wave down earlier this week from the 2740 high to the 2700 low, then we've been in the B up since then.

Any move down today that takes out that low will be a C wave and will end the ABC pattern down setting up the bulls for another move up to follow. Now I'm not an expert on Elliottwave but simply looking at the 4/2 low of 2552 and start counting from there I see a wave 1 up into 2718 on 4/18, then a wave 2 down into 2591 on 5/3... which puts us in a wave 3 up currently. The recent top on 5/14 at 2741 is likely just the smaller wave 1 up inside that 3 up. I say that because wave 3's commonly divide into smaller 5 wave patterns. So do wave C's, therefore even if it's only an ABC pattern up from the 4/2 low then we still could be in a 5 wave series up.

That would just make the 5/14 high the wave 1 up of C up, instead of wave 1 up of 3 up. Either way the sideways to slightly down move we are currently in could be a wave 2 down inside either a wave 3 up or C wave up. This is my bullish reading of the current setup via Elliottwave, and it's a scary one if you are a bear because what's next is a super strong wave 3 up inside a C up (or 3 up) and that should be a face ripper! Again, this is all just a wave count using Elliottwave and I can't confirm anything with it as technicals paint a different picture.

They show an overbought daily chart (on the SPX) with Stochastic's up in the high 80's that are rolling over, histogram bars with lower peaks (negative divergence), and the price level up at the top range of the bollinger bands. Usually that means a pullback to the middle is coming to normalize the price zone. The MACD's however are only around positive 10, which isn't too high as many prior peaks were up between 20 and 30. Anyway, from a bears point of view you'll want more overbought charts on more time frames and for that we'll need an up day today and Monday to get it overbought enough in my opinion for a nice drop to follow.

A rally up to hit the rising pink/red trendline pointing to just under 2750 right now would be ideal. Doesn't have too hit that level but you don't want 2700 taken out today if you are a bear as that implies we are in an ABC down from that 2740 recent high and that ABC will likely end up being a wave 2 down of a C up... leaving a very strong 3 of 3 (or 3 of C) up to follow.

Instead you'd rather see a move up today to suggest a different wave pattern that would then lean toward the 2740 to 2700 move down being a wave 4 of some degree and the move up from there being a wave 5... which would end the pattern and allow for a decent drop to follow. I'm not sure what that wave pattern would work out to be but usually there's an ABC move down after a 5 wave move up.

Bears today need to see a rally that makes this move up from the 2700 low end up being labeled a 5th wave. Bulls want to see a drop below that 2700 level so the pattern will be an ABC down to likely be labeled a wave 2 of a larger C up (or wave 3 up). That's a lot to digest this Friday morning so I'll end there and wish you happy trading and a great weekend.

Looking at the charts this morning I think we had a wave 4 down on Tuesday, then started the wave 5 up yesterday. Wave 5's are usually 5 wave patterns inside them, or just a straight single wave. Breaking it down into those smaller waves I think we had the wave 1 up and 2 down on Tuesday, then the 3 up yesterday, leaving the 4 down happening right now. If they can turn this back up at some point today and rally up into the close then that should be the smaller wave 5 up to complete the 5th pattern.

It would be great to see them close that 2750-2755 gap zone with the 5th wave but that's yet to be known. Possibly they chop all day on this smaller wave 4 down inside 5 up and push out the 5 of 5 up until Friday? From a tricky point of view that would certainly be one as then they could gap it down over the weekend for the open on Monday with everyone stuck long.

It's unknown how they are going to play this out but my gut tells me they won't fill that gap on this current rally up from the 2592 low but instead sell off and delay the filling of the gap until the next trip back up, which that time I suspect it will go through it and keep going. But who knows when that "next time" will be?

For now I'm just looking for a move up today to complete the smaller wave 5 of the 5th wave, and a green close on the market up near that high. Give me those two thing.... say +5 points SPX or more at the close, and I'll be a bear into Friday. Otherwise I'll be just watching as I need the proper setup to happen to increase the odds enough for me to take the trade. Without it I'd just be gambling and I've done plenty of that already with little success.

Looks like a flat open here this morning. I added a new falling trendline in orange and that's where the overnight move up stopped at. Now it's stuck between that falling resistance and the falling support from the blue trendline. It's looking a lot like all the other peaks and drops do from the last month or so, whereas the first move down (yesterday) is followed by some sideways action then another drop followed by a fake out move up that's lower then the previous days' high. Then the next day produces the larger drop of the whole move. If this pattern continues we should have another drop today or tomorrow that is followed by a quick rebound that goes up a hair lower then todays high.

After that we should see the bigger drop, which might be this Friday or next Monday. Either way it's looking likely that we'll get a drop in the next few days. My focus today will be to see if the falling orange trendline holds back the bulls or if they bust it and do that "lower high" move up today instead of tomorrow or the next day. Possibly we chop today into the Apex of the falling orange and blue trendlines and then gap up tomorrow out of them for that lower high... and then start the bigger drop? Either way odds favor the bears here for the next several days. Lets see what they can do.

Yesterday was a boring day overall as not much action happened in the market. With summer time around the corner we could see several more months of this... at least until late summer where large corrections or crashes start. But for today it's looking like another slow day could be upon us. Yesterdays' move down to the rising pink/red trendline was about all I really expected for a Monday, but today we could see a little more. While it's hard too see on this 2 hour chart we had an ABC move down yesterday, which I think isn't done as it's really too small. I'm thinking we'll have another move down today to the falling blue trendline pointing to around 2700 to finish this ABC pattern down.

I'm not sure how it will look when done as it's a sloppy looking wave pattern right now. Regardless of what it ends up looking like (or morphing into) I think we have a little more down coming today before another move back up. The question then will be... will the move back up make another higher high or lower high? That's a hard one to call so we'll just have to wait and see I guess. For now though we do have some clues for the low. I see FP on IWM from 5/11 showing a low of 157.69 and we are already over halfway down there this premaket morning.

My guess is that will be the bottom of this down move on not only IWM but the SPY and of course the ES/SPX as well. Strangely it could easily line up with around 2700 on the ES as well. So, there you have it. A likely target to end a move down and go long at. Of course it's common for them to pierce through FP's so that should be expected too. And if by the time the market opens it's already at the FP then the signal may not mean anything more then that it was an "opening target" and NOT necessarily a bottom. I've seen times where it will open at a FP and keep going in whatever direction without turning the other way.

Still though, I'm more inclined to think that we will turn back up at the falling blue trendline of support which is around 2700 right now. Right below it is a horizontal range of trading from 5/9 to early 5/10 where the market bounced between 2695 and 2700, so a pierce of 2700 could easily happen. It's common for SkyNet to pierce trendlines these days before reversing as it knows we sheep have access now to charting that we didn't prior, so the more people that draw that same trendline and put stops there the more likely it will be pierced.

I hope everyone had a great weekend and enjoyed time with your mother for "Mothers Day". I don't expect much action this week in the market, at least not early on. It's pretty clear the futures want to fill that gap up around 2755 but with charts being so overbought short term there's likely to be several attempts made to reach it. Today looks more likely to pullback some to a lower support level, which for today might only be the rising light pink (red?) trendline that just a few points below where we are currently at right now. The horizontal chop zone is a hair below it around 2720 or so, which would be a pierce of that trendline and another likely target today.

But we might need two days of a slight pullback to consolidate before moving higher again, and the lower target would be the 2700 level... which is where the blue falling trendline is pointing to today (but will be a little lower tomorrow). My guess is that we'll see some kind of ABC move down into that area and then back up later in the week to fill that 2755 gap. Then the tricky moves should start as everyone see's the gap and will short it when it gets filled. So I expect something tricky around that period. Maybe a strong pierce through it to 2770 area, or possibly just hit it once, then pullback a day and go back up and hit it again? Hard too know for sure but we'll guess at it again when we get closer to that period. Not much more I can think of to add for this mornings' update so I'll leave it at that.

Yesterday the bulls did indeed make it up to that 2720 area and of course pushed through the many trendlines intersecting that area. But they died out shortly there after as either the bears placed their stops lower and the bulls ran them all, or the stops are place over 2720 and the bulls couldn't over come them. Either way the rally died out and that's that. This morning we have negative divergence on the 60 minute chart with a lower MACD high on this move up, so unless they go for triple divergence the bulls should take a breather today. Of course that doesn't mean we are going to drop hard, it only means that odds favor sideways all day today or down some.

The falling blue trendline will act as support now and it's pointing to 2710 or so, and then there's the even number level of 2700 that will be good support below that. I don't see that taken out but view it as possible for being hit. Above we see that gap fill area around 2755 that every bull and bear know well. Will it get filled next week and rollover, or will there be a "close but no cigar" move up to it where it rolls over without the bears getting short or the bulls exiting their longs?

Only time will tell. The bulls still have the advantage today and can squeeze higher if they want, but odds favor a "pause" day or slight pullback. If we see that pullback today there will be bears that flip to bulls and go long expecting that gap fill area next week... which is what is needed for the next move up to "top out" the bulls and allow another move down. Or a continued move up today into that area would also work as bears would keep shorting today and getting squeezed as it moves on up to that gap fill. Of course when it gets close the bears will stop shorting and just wait for the gap to fill first where they will try shorting again.

It's a fine line I'm sure but basically all traders see the same thing and usually react in masses to go short or long based on what they see. SkyNet knows this and uses that data to move the market into areas that fool the masses. I say this as I've noticed over time that many of the trendlines I draw are pierced before reversing the opposite direction. It means that SkyNet also see's those trendlines and all the buy or sell orders there. So, it pierces and takes them all out and then reverses without those traders in a winning position.

What this means with that gap fill area is that everyone see's it and therefore SkyNet has two options... ONE, pierce up through it and hit all the stops the bears placed just slightly above it and then reverse back down. Or TWO, fall short of it and not allow the bears to get short. Then drop back for the next nice move down and make the bears chase it as the bulls keep buying the dip expecting it to rally back up one more time to fill that gap.

It's become a very, very tricky market to trade successfully. You have to rethink everything you think is right. Trendlines you draw get pierced, so adjust for that, level you expect for a reversal fall short, so again... adjust for that. Kinda sounds like we need to "see what SkyNet see's"... right? Wouldn't you love to have that secret? Well, I have it and I'm selling it. Just wire me $1,000,000 to the bank of the Bahamas and I'll give it to you. LOL. Have a great weekend and good luck gambling today.

The market keeps on grinding up this morning in what should be a 5th wave. And unless some news comes out to scare it I don't see any reason for it to sell off today. It's still in the rising blue channel of support but coming up into a tough resistance zone overhead. I don't see it getting through it on the first hit, so an ABC move down seems likely to start as early as tomorrow but might be pushed out until Monday.

Everything looks pretty good for the bulls right now, and even on the pullback to retrace maybe 50% of the move up from 2590 it would just be more bullish as it would make the right shoulder of an inverted head and shoulders pattern. The rising purple trendline points to around 2635 or so, and has a light purple falling trendline pointing to the same area. A move down into that zone next week would set the bulls up nicely.

But I'm getting ahead of myself as we haven't finished the up move yet. We can see a rising light red trendline and a falling blue trendline both pointing to around 2710, as well as the lower rising trendline in the blue channel. Plus that happens to be a double top area from 4/18, so I doubt if we get through it today. I really don't see the bulls taking it out at all on this attempt.

They are on wave 5 up and many trendlines of resistance intersecting there, so odds are low for them getting past it. However, if enough bears where to short that area and placed enough stop orders say at 2720 and above then if the bulls could just hit that first stop they could squeeze on up through it. I give it very low odds but nothing surprises me anymore in this market but the constant impossible moves... LOL. Anyway, that all I see for today... more grind until the channel breaks and started the pullback.

This mornings' move up certainly looks like a 5th wave to me, so at some point today I'd think this rally up will end and we'll start back down tomorrow. Obviously we need to break the lower rising trendline in the blue channel but we might not do that today? As for picking the ending top of this wave 5 up... that's hard too say. Some will look to 2700 or so, and it could get there, but I tend to think that if everyone see's the same level it will either fall short of it or go past it. In this case I think we'll fall short of it.

I will add that it's common for the regular trading session market to revisit the highs made in the premarket, so keep that in mind if we open and start dropping right away as odds favor a bounce back up at some point in the day. My thoughts are that we'll drop some early in the day and ride that lower blue trendline of the rising channel back up later in the day. That's probably the move that will fool the most as early bears short the open and throw in the towel on the late rally back up. Bulls will be long into tomorrow and that's the perfect time to breakdown and start move lower tomorrow. That's all I see for today gang. Basically I see a reversal coming today or tomorrow.

Ok, yesterday looks to have ended the wave 3 up and this mornings' low could be the wave 4 down... leaving wave 5 up for sometime today, which should end this move up. Looking at the ES 60 minute chart the MACD's look ready to turn back up. But on the SPX 60 minute chart it's looking overbought. So we could have a weak 5th wave up as these charts try to align up together in one direction or the other. I think most traders are expecting more upside, to possibly 2700 where the rising red trendline of resistance is pointing to today, but I'm not sure about that happening today.

With mixed charts we might not go much of anywhere, up or down. I get the feeling we are about to end the up move and start another move down soon. I think today will be the last day before it starts this move. The unknown part is how high the 5th wave goes up today? Does it make a higher high then yesterday or truncate short? We seem to be in a rising channel now (as shown in blue), so we could drift down a little more early today to hit the lower rising trendline of that channel around where it intercepts with the green horizontal trendline and the falling light purple trendline... which is all around 2655 or so.

Of course if that support breaks then the move down is likely starting. But if it can bounce off of it then the next move up should be the 5th wave. It's a tough spot to call the top of this move as no one knows for sure if it's going to be a normal wave 5 up that takes out the high of the wave 3 or if it falls short. But if 2680 or is taking out with momentum then I'd look for 2700 next. If not, then I'd be thinking the 5th wave failed and truncated short. Other then that I don't see much else to add to today's update. Good luck.

Another strong move up on Friday that surprised most I'm sure. For today I'd expect a continuation of that move up into the 2681-2700 area, which could be a wave 5 up if you count the small pullback into the close Friday as a wave 4 down? If this is a 5 wave pattern it might be suggesting that we are close to a breakout point to the upside and the current low is in for awhile. And if the 5 wave pattern is just some larger wave 1 up for example then an ABC pattern wave 2 down is likely to start as early as Tuesday.

How low could it go? Great question. I'd say that it could go all the way down to just a few points above the start of the move up, which is about 2591 or so. A likely target (should it really drop that hard?) would be the falling aqua blue trendline pointing to around 2600, which is also an even number target. It would then make a nice "inverted head and shoulders" pattern with that low being the right shoulder and the 2591 level being the head. The left shoulder would be the 4/5 low of 2611. That would be a nice move down to follow a nice move up last week. We also have that 5/1 low of 2623 as a possible left shoulder to?

Either way it suggests an IH&S pattern is coming with another drop in the market midweek. After that... who knows? The pattern would suggests a breakout to the upside with a target of at least that gap fill area in the 2750-2755 zone. And that move up would be a wave 3 of some degree, which should also breakdown into 5 smaller waves like the recent move up from the 2591 low has done. All in all we should have another exciting 5 days of trading this week. We just need a small wave 4 down today and then a rip higher into the close to end the 5 waves up.

If we don't get that move down and up then that would suggest we aren't ready to breakout to the upside just yet as the move up from the 2591 low would then just be a 3 wave pattern (ABC) and that's usually just a corrective bounce pattern, not the start of a new up trend. There's no way to know until after the pattern ends. It is May after-all and the market might just not be ready yet for that super strong rally? Maybe we stay range-bound for another month and breakout (or breakdown?) in June. I don't know but that's too far out to predict. For now I'll just be looking for that high target area today or tomorrow for a short.

Well, yesterday sure did trick me. The fast up move and then the tank into the close was not expected. Everyone is bearish now looking for this to fall off a cliff and take out the 2532 lows, and I can't blame them as the charts look like crap... not at all bullish by any means. I'm just going to take a neutral stance as I'm clearly not in-sync with the market right now. This market could go either way at this point and just a little lower it will break an important rising support level and could trigger the big boys to hit the sell button hard.

It's the one that starts at 1808 SPX from 02/09/2016 and points to about 2625 today. If the bulls lose it on a weekly close next week should be very nasty looking. I wish I knew the answer on that beforehand but I don't. I've been bullish recently looking for a strong move up to start but I'm just going to take no side at this point as we are at a level where it could bounce hard or tank hard. I hate it when you get a call wrong and this is spot where I'd just be guessing on the direction. So I'll just "not guess" and watch to see what happens. Best of luck to you.

Yesterday the bears were still in control the first two thirds of the day but later one the bulls finally broke out and started a push up. They hit some resistance from the green horizontal trendline after-hours as well as a black falling trendline. But after a pullback they have managed to turn back up and get through that falling black trendline and are trying hard to get through the green horizontal trendline. If they make it the next resistance is a green falling trendline pointing to about 2665 or so for today. I suspect that's where most trades will look to re-short and/or exit longs they took. But I'm just neutral at that level as this move up could fool people and last longer then everyone thinks... meaning it might stop at that resistance but instead of dropping hard again we might only see a small pullback of consolidation before pushing through it Friday or even Monday.

The large drop Tuesday took a lot of people by surprise and now that they are awake and ready for another big drop I think the odds are much lower for it to happen so soon. Yeah, it could still happen but more time needs to pass for people to forget about the most recent one. And people need to get bullish again, which I don't think they currently are. This is a game SkyNet plays with the sheep's emotions and right now everyone is in fear mode of another larger drop. Once enough time has past and the market has rallied up high enough then that's when we should start preparing for another hard and fast drop.

By no means am I saying that it's not coming as I do think we'll see another large move down, but it needs to come from higher levels then right now and further out in time. For the downside support we have the falling black trendline pointing to around 2635 today and then the red falling trendline pointing to 2610. I don't see that red one getting hit but the black is possible if the bulls can't get through the green horizontal trendline today. If they do get past it then again they should pause at the falling green trendline and likely pullback to the green horizontal one they busted through. It will become support then as well as the black rising trendline intersecting it around 2652 or so.

Quite a drop we had yesterday. It was exactly what I was looking for but went deeper then I expected. In the end though it found support at the falling red trendline and is trying to bounce this morning. When you look back at similar drops you'll notice that the next day it commonly struggled to get going, but after a second on third day there was a strong move back up. We might experience the same thing again... but I'm not thinking this is the move that takes us up to all time highs.

From the January top to the first low that is likely some large A wave down, and since that low the market has been in a 3 month long B wave up. So, the bulls aren't out of the woods just yet as the C wave down could take out that first low of 2532 and scare the hell out of them. It doesn't have too of course as it could "truncate" short but I wouldn't bet the farm on it. For now it's just a day by day market, go long... get out, go short... get out, just don't take a side yet as the market is trendless right now.

Ok, so if today we carve out a small wave 1 up and 2 down then later today or tomorrow we might see the wave 3 up (then 4 down and 5 up) into resistance, which at this point is first the falling black trendline pointing to around 2640 today and then the falling green trendline pointing to about 2670. Getting past that is the tough part for the bulls but if they do then I'd look for the 2720 prior high to stop them or the falling blue trendline pointing to 2730... and after that is the gap fill at 2755-2760. It way too earlier to even look at those level as the bears are still strong and very awake right now.

Yesterdays' move down did NOT produce that high of volume so I wouldn't go out on a limb and say that the bulls got "flushed out" in a panic, as there really wasn't any panic... and that's the worry for the bulls. For a real low to be put in I feel there needs to be a high volume day where capitulation happens, and we didn't see it yesterday. That implies there's still some risk of a surprise drop below the 2532 low still in the cards. Yesterday was a test (almost) of the 200 day moving average on the SPX chart and that's kinda the "line in the sand" for the bulls.

If it breaks (currently at 2607.93) then the big boys will hit the sell button and that's when you'll see large volume come into the market. Triple bottoms are rare when the third hit takes place under the 200dma, so I wouldn't expect that 2532 prior low to hold either. I'm short term bull here but after this week ends (or I see exhaustion on the bulls into one of those resistance levels), I'll go back to neutral with a finger on the sell button.

It won't be easy to figure out when the bulls take the market back up into a middle ground zone as then we'll likely see mixed charts. Some will look bullish leading you to think the low is in and it's off to the races for a new all time highs... and some will look bearish forecasting the opposite. But until that happens I'll just trade what I see and currently I'm looking for a 5 wave move up (or 3 waves?) off the lows yesterday.

This morning the futures have broken out of the falling black trendline that makes a triangle with the horizontal green trendline. Many now think that we are off to some strong rally but I think we have one more down move coming to wipe-out the longs that bought the double bottom low yesterday. So we could open up and just rollover immediately or hold this rally all day and then rollover tomorrow.

I'm not sure which but I'm not interested in a long here as I think there's one more down move yet to come. It should be a back-test of this falling black trendline and I think it should also go lower then yesterdays' low to possibly the rising black trendline pointing to around 2642 or so right now. If that breaks I'll look for support at the falling red trendline pointing to around 2620 or so, but I'm not really thinking it will go that low. It could, and that would be fine with me, but just not expecting it.

However, if it rolls over today and starts the move down it should continue in the close I believe and ideally we'll see the low of the day right around the close. To me that will be the spot to go long as it will have lured in bears and shaken out bulls that were long yesterday. The futures already look "toppy" too me so it may rollover today versus waiting until tomorrow.

Usually there is a move down at the open anyway and then right back up again, which in this case might be the last move up before hitting strong horizontal resistance... which is around 2690-2700. If 2700 gets broken then this forecast is wrong, but I give it low odds of doing so... especially doing so and HOLDING! Anyway, that's what I see for today. Good luck.