This past week saw the Election on Tuesday night followed by a Fed announcement on Thursday @2pm (not the usual Wednesday – probably because it’s the day after elections?).
So the market rallied after certainty about the election results came in by early Wednesday morning. That rallied continued for all of Wednesday and reached a high around 8:30pm that Wednesdady night.
It stayed near the highs going into Fed Thursday.
The Fed was expected to raise interest rates and people were hoping that they would acknowledge the drop in the markets — and by acknowledging it, maybe they would slow their rate hike?
But the Fed did not mention it at all. Instead, it maintained a hawkish stance and ruthless plan to continue raising rates repeatedly.
The stock market went up — usually the market doesn’t respond rationally at first. Usually when it rallies irrationally, then the overnight action will reverse it — and that’s what happened.
Right 11:45pm just before midnight after the Fed announcement, the market reached up to spike up in a wave 2 spike — and then from there moved lower in an orderly fashion.
By the time the market opened at 9:30am — the market would attempt another small wave 2 spike before entering wave 3 down for most of the day until the last hour when there was a massive short covering rally.
I suspect this rally to be a wave 4 spike because 15 minutes before the close, the market started to reverse a large portion of that spike – leading me to be believe we could get a wave v down – followed by some spike up action into Monday morning.
Next Monday is Veteran’s day – and it seems the stock market is open.
We found resistance right at 2820 ES — near the same area as the prior high. But note that while the S&P matched this level, the Dow went way higher while the Nasdaq and Russell were lower, indicating they were weaker than the S&P and Dow on this recent rally.
So far I count an a-b-1-2-3-4 off that high at 2820ES. So still missing a 5, which I suspect could get to 2760 ES region.
I mislabeled the Fed timing — that occurred on Thursday shortly after the market peaked, not Wednesday.
In terms of the pullback of the B-wave in the A-B-C as labeled in pink below, that B was a bit too quick and short. I expected it to last a little longer and ideally test that gap opening in the 2665 ES region, but it didn’t make it there. Eventually, I expect this gap to get filled.
The Nasdaq reached into 7220 NQ, not quite as high as the 7350 NQ previous top area — so Nasdaq is weaker than S&P.
Zooming in from the top –actually the 8:15pm after Fed — should be BEFORE the Fed on Thursday. The market seemed to have topped at Wednesday 8:15pm — with the Fed announcement happening the next day with some messy sideways to lower action. The real drop began just before midnight on Thursday night into Friday morning. By Friday morning at 9:30am gap open it spiked up slightly and then resumed down. Like the S&P, I’m epecting a wave v down, followed by a bounce back up.
My prediction is illustrated below.
My prediction is simply based off of this diagram here.
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