Ok, yesterday did the triangle move leaving us guessing about today. Now that it’s here we see it decided to continue lower and appears like it wants to test the prior low of 2100 from the 9/9 drop. On the DOW it’s already at its’ 9/9 prior low, which is that “all important” even number of 18,000. The Russell (via IWM) hasn’t yet reached its’ 9/9 low, neither has the QQQ’s or the SPY.
So where does this leave us for today? Odds are that all of the main ETF’s will test their 9/9 lows since the DOW has already done so (and pierced it). It’s looking like they plan to pierce through the 2100 area on the ES Futures to lure in all the bears (maybe 2080 or 2090?) and then turn it back up into next week for the usual bullish “monthly” options expiration manipulation.
Now, The QQQ’s seem too far away to hit and pierce their 9/9 lows so they might just make a higher low. But the SPY looks ripe to hit and pierce, just like the ES Futures. The Russell (IWM) might only make a double bottom on it and not pierce it. The DOW is currently leading the fall as it’s first to pierce.
How to play this? Personally I wouldn’t touch it today until I first see some kind of bottom, bounce back up (like the A wave up) then backtest to make a higher low (the B wave down), and if that happen by the close today then a long could be taken into Friday.
But understand that this entire move down from the 2163 high on the 10th is very likely just some “Wave 1″ or “A wave” down… meaning the rally up should be either a wave 2 or B wave. And inside that wave (which should last into early next week) will be smaller waves… like an ABC pattern). This sets up the week after next week (the 4th week of October) for the larger C wave or Wave 3 down to start. That wave could go to 2000 or more on the SPX/ES and it’s right into the election. The only way to stop it is some massive squeeze next week that takes out the recent 2163 high.
Anyway, keep your eyes on the DOW to see if they recapture 18,000 by the close (I think they will). It should start the move back up first and the others should follow. If it starts here soon then the others may NOT reach their double bottoms from 9/9 and instead push that out for another day. Things are turning bearish so I’d be fast in and fast out on any longs as a day or so would be all I can see for them right now. This rips of 10 straight days up look done for now. We’ll see…