$ES Got Through the September High, Now What?

Well, goodness. $ES got through that September high, but there are many things I don’t like here (for the bear case):

  1. $JNK and $HYG are essentially flat on the day both making only very slightly lower lows over yesterday. That makes no sense if we’re entering a 3rd of a 3rd of a 3rd down.
  2. $OIL made a higher low. Also would make no sense whatsoever here.
  3. We have only come to the 50-61.8% retracement of the whole last last advance. (Last discussed here.)
  4. Bitcoin should be hemorrhaging and it’s not.
  5. $RTY came only to it’s trend line and is diverging sharply (discussed here, also pictured below).
  6. $ES is diverging sharply here, too.
  7. Volume like today (and yesterday) is consistent with a low.
  8. I continue to dislike that we continue to sell so much during market hours. The market is very well hedged here because of that. Lots and lots of puts in the system. I would prefer a sizable gap down for the bearish case.
  9. The pattern we have formed off the all-time high is a broadening pattern. One of two things: it’s an ending diagonal completing the “C-Wave” of a correction, more probably a 2 now rather than the 4 discussed yesterday; or it’s a leading diagonal completing the “1st-Wave” or “A-Wave” of a much larger bearish move.

Thus: In either case, I expect a sharp rally from here. If the nature of the rally looks corrective (is it reluctant and in only three waves?) it should go to the orange box above us and fail spectacularly. If the nature of the rally looks impulsive (is it eager to move up and in five waves?) today should be a low that will not be revisited for quite some time.

ES

Here is the $RTY trend line strike:

RTY


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3 thoughts on “$ES Got Through the September High, Now What?”

  1. Hi Dereck, thanks for the usual, timely updates. Do you have any individual stock suggestions for longs? I know you are focusing on SPY now, but asking if you have anything in mind? I see so many broken charts, not sure where to start. Many thanks for your help.

  2. Hej i am waiting for the reaction at 4477. if spx reaches this price this morning, then i will go long. If he close under 4477, then I remain short.
    It it breaks today 4560 i close shorts too. 😉

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