$ES Bull/Bear Alternate Counts

I’ve never been a big fan of always posting alt counts. By always saying, “we could go up, or we could go down,” one is tempted to say, when we go down, “you were warned.” What I rather do is make a call and be right more often than wrong.

Now, that said, I feel I should post an alt here because we have yet to see a really big, impulsive rally that will help me to confirm my bullish bias here. The overnight weakness on $ES is very deep if we want to believe the lows are in and if we want to call it a two. So, let’s review the options. If we’re bullish, this little coil we’re forming would likely have to be just that: a series of ones and twos (red and purple here as I have it labeled). If this count is right, we need to move up swiftly and take out the prior two highs very soon.

ES

That said, they are very deep for twos, and unlike the last time around the 13th of September, where the triangle that formed was one I only saw in hindsight, this is a triangle that I can see while we’re in the midst of it (that also makes me very suspicious). It is possible that we are creating a larger version of the first segment of the correction. I would really be surprised if we were doing this, frankly. In my polls, 80% of people believe we remain in the correction, and I would tend to think that there’s at least an 80% chance that 80% of people are wrong.

But, strange as that may be, if we do not take out the recent prior two highs to our left, this is what we may be looking at:

ES

One explanation for the poll could be this: perhaps though 80% of people believe we’re still in the correction, they aren’t betting on that, in other words, perhaps not enough people are actually short. Perhaps the market needs another big washout to get more people invested.

The flip side of this is that if everyone is waiting for lower prices to go long, it would make perfect sense that we rapidly advance, making them chase long into higher prices, denying them the entry they had wanted.


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