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... Red Dragon Leo

This sell off has been tracking the 2011 correction very closely. Back then around this same period the market made it’s final drop to make a lower low of 1074 SPX before the 4 year rally. This time around I don’t think they will repeat it. I think we are going down into this Thursday/Friday to make a higher low (1890-1920?) and then start one more powerful rally up into mid-November before topping again.

... Red Dragon Leo

ES Morning Update (with SPY target) October 5th, 2015 – http://screencast.com/t/7U6eitk9eK

... Red Dragon Leo

SPX End of Day Update October 2nd, 2015 -http://screencast.com/t/ggAjK2g0Hk

... Red Dragon Leo

Ok… from the looks of the charts right now we need the Non-Farm Payroll report (released tomorrow morning before the open at 8:30 am EST) to be view positive and cause a squeeze up to above the high this morning on the ES Futures, which was 1930.

Since this event is about the only “market mover” news (nothing the rest of Friday to move it much), it must take out 1930 to force a rally from bears shorting today. Failure to do so mean the top of the rally was the 1930 level and there’s not likely going to be any move higher to 1940-1950 anytime soon.

There is another falling trendline around 1925 ES right now, that will probably be around 1920 tomorrow morning. If it breaks that with the NFP report news then possibly the rally continues. If it doesn’t break it then again, the top of this rally was likely in today at the 1930 ES high (1927 SPX).

I’m NOT looking for any longs as the upside is limited in my opinion. I’m only looking for the right shorting spot, which could be at the open tomorrow if we don’t breakthrough the falling trendline of resistance (again, about 1925 now and should be 1920 tomorrow).

So we look to short tomorrow’s open if they can’t get a bear squeeze going and take out today’s premarket ES Futures high of 1930 (which should then push up to 1940-1950). If they get the squeeze then we look for that higher level to short. I’d just say that we are 90-95% done with the rally up and should be looking for short entries into a low that I think we’ll see next Thursday or Friday.