As you know, I have been viewing the S&P 500 as being within its “3rd of 3rd of 3rd,” which would result in us entering a knot of fours and fives sooner rather than later, but I may need to aim a bit higher, and I’ll point out a couple of reasons why.
The defense of the count I’ve been using on $ES is that we have these higher lows (green arrows) and some clear impulse waves (red arrows) and so that lets us nest ones and twos to our hearts’ delight.
However, this is not available to us in the same way on $NQ, as it made a lower low before the ripper. And furthermore, this drop tonight has the look of a beautiful zig-zag, and it looks to me like a 2. And so, if that’s the case, since minuette (orange) 2 is so big, that would incline me to think that the 3rd orange wave is going to be a real monster of a move, with minute (blue) 3 perhaps going straight to all-time highs at something as high as its 3.618 extension of its corresponding minute (blue) 1:
Now, at first glance, that may seem ridiculous, but, considering the pattern I discussed on $IWM earlier, and considering that that same pattern may lie everywhere, the potential is certainly present for a move like last October’s.
Here’s the potential move for an inverse on $ES:
And here it is for $NQ:
So, what this would mean for a count on $ES is that perhaps we’re not yet in the 3rd of 3rd of 3rd yet, but rather, still only just building the ones and twos, like this:
At any rate, a breakout of the downtrend line (orange line) and recapture of the various inverse head and shoulders’ necklines could be a very big deal and I wanted to share some of the possibilities with you.
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