I See Two Possibilities for $ES

I have been expecting $ES to move lower, possibly in a huge move down in order to complete “E” of a big “B” wave. I expect this based on the possibility that we’re replicating the dot-com bubble fractal.

I have been expecting this additional leg lower now (rather than assume it’s already in) because a variety of risk signals I watch have been clearing their throats at me (e.g., here, here and here).

On the basis of all of that, we may expect that we’ve entered the minor (green) C wave (of E of B blah blah). That will consist of 5 minute (blue) waves, and perhaps we are in the first of that. On this look, we would expect to move lower in the 3rd minuette (orange) wave to the box below us, consolidate, then make another low to complete minute (blue) 1 before a bounce.

ES

And yet, this is sort of a timid beginning to a move of the magnitude I am expecting, and so it is possible that the risk signals have been warning us merely of this corrective motion. For instance, it’s not that $OIL was crashing ahead of stocks that alerted me, but simply that it failed to rally strongly as I expected it to (and the same with Bitcoin). But perhaps oil, for instance, is only nesting ones and twos.

On this look, the big pink B is behind us, and this big rally is the beginning of the crack up boom. On this count, it is wave 1 (I’ve chosen minor [green] degree, but I don’t yet know the actual degree) and we’re in minor (green) 2 now. On this count, we need another leg lower to one of these fib levels, I would expect.

ES

I wish I could know with greater certainty which of the two paths we will be taking. If oil, junk bonds and bitcoin were puking here, I would have much greater confidence in the first count. But I am also hesitant to adopt the second count with open arms because the risk signals do remain present and if they want to deteriorate further, they may do so quickly and without much warning.


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5 thoughts on “I See Two Possibilities for $ES”

  1. Thank you! Clarifying as always.

    Market presents probabilistic view of multiple counts simultaneously. Not easy to tease out which one w/o more information.

    I wonder if bull/bear sentiment (from AAII) can help add some signal to determine 1 v/s 2. One would be expect 1 to be more likely with elevated bull sentiment.

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