There was a massive multi-day selloff leading into the presidential debate, which then provided a market rally, but that rally was not sustained and we dropped even lower by the open today.
During trading hours today, the market rebounded – reaching the same resistance zone of 2152/2153 from last night. The main question now is whether it can move above resistance or whether the market will turn down yet again.
We basically retested the bottom zone of the prior triangle vertex at 2132 twice.
The drop from September 22 — overnight into Friday – and then over the Sunday weekend – that resulted in a gap down on monday — was unexpected. It went back down to retest 2132/33 twice — once just before the Presidential debates — and again right before the open today.
There’s the possibility of an A-B-C wave 2 flat — however, the squiggles on the move down from 2170 to 2131 don’t look like a typical wave 1 down. I obviously could be wrong.
Today we rallied from the lows at the open towards 2152 — I was expecting just a little higher. Whether we are in blue or pink is hard to say, but I think the longer this consolidates near prior resistance at 2153/2154, the better chance this could break up over it and reach that 2160 target.
As far as looking to the Nasdaq or Russell for further clues, Nasdaq appears on the more bullish side and Russell on the more sluggish side. So conflicting signals here, hard to say, but a little more upside would make the pattern look better for both blue or and pink counts.
The prior chart was completely wrong – as the drop was not a 4th wave drop — but instead extended all the way down to the bottom of last Wednesday’s Fed announcement on September 21 — yes, that 2132 ES region.
That’s a massive 40 point drop from 2071 that I did not expect.
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