New Primary $ES Count

My primary count has been the “bear count,” a.k.a., “the expanded flat.” On that count, we would be topping any moment in a “B-wave”, then retesting the October lows in a coming “C-wave.” I feel that count has a lowered probability now because the extension we’re seeing here is too much for a good B-wave. It would have been better had we turned in the neighborhood of 4620-4640.

Now, there is also the bullish count (noted here), but there are too many signs of topping behavior here for me to take that too seriously at the moment (I noted some of those here).

The alternative is a count I’ll show below. It allows us a good selloff as before, but allows us to go up here to where we have gone, and it’s also not super bearish (i.e., not calling for a top of all tops—yet). For this count, I’m borrowing the triangle from $RSP and $DIA (discussed here) which frees me from the irresponsibility of having to count the initial moves off the October low as an impulse. The difficulty of having to do that is what caused me to accept the bear count in the first place (noted here), and this count below isn’t all that much different in practice from the flat, at least in the near-term.

ES

So, on this count, we topped in intermediate (orange) 3, had a correction—quite possibly a triangle—for intermediate (orange) 4, and are rallying now towards primary (pink) 3. There are tons of reasons to like this count. A big one is that it’s not a “the top” count. I have plenty of calls on individual names that are not yet complete. Primary (pink) 5 can give us a lot more time to finish many of those. But most especially, the structure of this move is almost certainly an ending of some kind and not a beginning.

The structure of this gamma squeeze bears the resemblance of a cubic function (remember these from your school days). We have several examples of these and they don’t start things off, they finish things.

Here are some examples:

The largest one, leading to Volmageddon:

There’s no reason to think we’re in something that big, but I wanted you to see the shape. That’s when, I believe, options began to take over the market. Next one we see is the August 2020 zipper:

ES

Next one is the short squeeze that followed it. I had believed we were in a structure similar to this, but we’re getting a bit too high for that.

ES

And here’s us now.

ES

Now I wish I could tell you the precise moment it is going to top out and reverse, but all I can say is that it shouldn’t be too much longer. One final note on the overall count I’m favoring here now is that it lines up well with the Russell. If we’re approaching primary (pink) 3, the Russell may be completing it’s actual 5th wave. I noted that here (on that chart, I’m using intermediate degrees for the largest structures, but you can substitute primaries for it just as well). And it’s what we would expect: the Russell tends to top first, quite often, and that may be just what we’re seeing here.


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