For the past 2 weeks, 2030 and 2040 have acted as critical support with the market constantly testing it multiple times. It finally broke 2030 support no May 19 — but the market has rallied quickly from it. While it wasn’t what I expected, it could still be counted as a 4th wave rally within a 5-wave diagonal parallel channel pattern down.
The diagonal the finished on May 6 as an A-wave also had a big wave 4 rally (see May 5) before a choppy 5th wave down to create a new low. The question is now whether we turn back down or we resume the uptrend back to new all-time highs. I’m leaning towards a 5th back down. Though if the market decides to cross that 2057 line, I would have to say the bears dropped the ball once again.
If we do get a 5th back down, I would imagine it would conclude either Tuesday or Wednesday. Recall that the February lows happened the Wednesday before the 3 day President’s Day weekend. We have another 3 day weekend coming up — Memorial Day Weekend. Is it possible for a similar set up to happen — for us to bottom a few days before the 3-day weekend?
Bears ideally wouldn’t want the ES to pop over over 2057 — and ideally stay below 2053 for Sunday night into Monday.