Yesterday we talked about how the Fed told everyone to jump in. The wave patterns were already set up for a potential 3rd wave, but the Fed announcement is what triggered that strong push.
Today is March 30, 2016 – which means tomorrow is March 31 – the last day of Q1 2016..
Anyone looking strictly at quarterly reports will think nothing happened. But in actuality, there was crazy movement – swings of over 250 points down and 250 points back up.
What else is important for month-end? Well, a lot of fund managers will want to send reports to investors showing that they are actually long the money. Otherwise investors will threaten to take away their money if they know their fund manager is short the market during this entire rip rally. So fund managers will likely do some window dressing to cover any shorts they may have — hence the squeeze yesterday into today, and perhaps also overnight. We’ll see.
As we predicted, we got the move over 2050 — in fact all the way to 2064. We exited our bullish trade from 2030.75 ES at 2062.5 — for a gain of over 20 ES points. Since each ES point is $50, calculation is $50 * 30 = $1,500 — so we had close to $1,600 in profits from this trade.
Around 1pm, we tested the 4th wave support at 2052 and held. Since 4th wave support held, we expect a 5th wave up.
I could potentially see a completed 5 wave pattern into 2064ES. However, since Yellen gave some bullish statements and we have month-end tomorrow, I wouldn’t expect significant downside from here unless I see a pattern start to form.