ES Morning Update June 15th 2021

We held support again yesterday and started a late day rally that continued afterhours to make another new all time high. This morning we appear to be consolidating after reaching 4258.25 (ES) for another push higher at some point today. Everything is lining up nicely for a top after the FOMC meeting tomorrow, which again should give us a nice pullback (3-5%), correction (10-20%), or crash.

Which is unknown of course but we have to be open for all possible scenario’s as the one not many expect is usually the one that happens. When I look around online to read the thoughts and forecasts others have it seems most are looking for a correction. Basically that large wave 4 down that I’ve covered over and over.

This again is why I’m shifting more my attention toward a crash. Why? Because so few are expecting it now. If everywhere I read people were calling for crashes I’d know that we won’t likely get one. It’s when everyone is just looking for that wave 4 correction that has me worried as when they all start “buying the dip” at 4,000 (for just a pullback), then 3900, 3800, and 3700 (for a correction) is when the market should just continue lower. Only when everyone flips to become bears and starts shorting can we find a bottom.

When you look back to the first drop last year you know everyone tried to buy the 200 day moving average around 3000-3100, but it dropped through it to hit 2855 (SPX) before it bounced for the 50% retrace (a large B wave). Of course it hit a lot of stops on the bulls when it fell through that 200 DMA, and guess where the bounce stopped at? Just a hair above that average with a high on 3/4/20 of 3130 (SPX).

So you know what was happening there… everyone that got long in the 3000-3100 area was bailing out as they were back to even again. But no one shorted it as everyone was looking for it to pause there and then continue higher. The drop down to 2901 a couple days later (3/6/20) was bought again as many saw it as a double bottom.

Of course once that broke it was just panic all the way down until the bottom at 2191 on 3/23/20. This time around people will be more ready for such a big second drop (basically that entire crash was a clean ABC move). The 200 DMA today is at roughly 3800, which is why there are others looking for a correction into that area I suppose. There is also support form the 1/29/21 low of 3694 and the 3/4/21 low of 3723 (SPX) that is just below that 200 day moving average.

It (again) is why many are looking for that zone. It would make a nice clean looking large wave 4 down… wouldn’t it? Then everyone that missed the large wave 2 down bottom on 9/23/20 can go long and ride the large wave 5 up to infinity and beyond. Sounds too perfect to me. SkyNet (what I call the “algo’s” that run the market) never makes it that easy from my experience.

Anyway, that’s my bigger picture thinking. I don’t know what’s going to happen but major resistance is still the 4330-4360 area above, so it we hit it after the FOMC it’s short in my humble opinion. Have a blessed day.