In the past two weeks, it was the bears who were dropping the ball — not capitalizing on bearish setups several times especially in what is now the 2075-2080 region.
Note that the E-mini futures rolled over as of Thursday/Friday of this past week. That means what used to be 2085 in the E-mini June contract is now 2075 in the E-mini September contract.
You’ll notice that most of the futures charts on finviz.com (the charts we use in these posts) – have already shifted to the September E-mini contracts.
As high as the market was going — into all-time highs for the Futures (but not for SPX) — I kept saying to myself: “This market should have already broken out with a big wave by now — the fact that it didn’t gives a hint that the bulls might drop the ball.
We exited our bullish position at 2116ES (currently ~2106 in the September ES contract). We still had a bullish bias, but needed the market to prove itself, which it could not.
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Initially I was expecting the blue count — but given how deep this market has pulled back on June 10, I have to give serious consideration to the pink count above. What would happen next is shown on the daily chart.
If we go back in the 2090 region and fail to break over 2097, the potential exists that we sell off even further. Bulls would need to break this level by middle of next week to reclaim control. Otherwise, bears have the chance to gain momentum. This 2100 region has proven to be a massive wall of a resistance so it’s very possible for bears to push this back down — especially if the pink count above is in play.
We could also be finishing up an a-wave with a b-wave pop on Monday followed by a c-wave to complete a larger wave II. If wave II is already complete, then some coiling in the 2090s would have to happen without falling – and we would need to drift up higher, break the 2097 level and continue in a 3rd wave higher. Right now, I’d have to say the probabilities are with the bears in at least the blue count, if not the pink count from above.
Just a few weeks ago, the Nasdaq provided the clearest pattern with the ending diagonal that gave us guidance as to what would happen next. Nasdaq led the rally, but has faltered tremendously in the past week. Most notably was Thursday in to Friday’s selloff—significantly worse than the selloffs in the Russell and S&P
Here’s what the Nasdaq chart looks like after Friday’s selloff. It’s possible that a 3rd wave up now begins, but it’s also possible that wave 2 is not done yet and we pop up before we drop down even further.
Russell has been the leader in the past week. However it has rallied so much in the past two weeks, that one might wonder whether it’s now Russell’s turn to flip over. My guess is probably not — but we’ll have to see if this market has any strength in recovering from Thursday and Friday’s consecutive selloff.
The April 29 high could either be a 3 wave pink high — or the orange count saying the top of wave I. If pink, then we could potentially drop hard back below 1100 from here. If orange, then as long as we don’t drop aggressively down, then we might continue to consolidate and melt upwards.
I’m a bit busy this weekend but will try to find time for a video covering our 3 wins this week and the charts above. Meanwhile, here’s last week’s members-only video entitled When to Buy High and Sell Even Higher. As you know – this video was published before we sold out of our long entry at 2086 ES. We eventually sold 30 points higher at 2116ES. This video describes some of the thinking as we were placing and holding onto the trade.
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