ES Morning Update July 9th 2021

Yesterdays sell off didn’t stick as a the bulls bought it back up and are now back to the same resistance area around 4335 that they have been at all week. I suspect there are more bears onboard now with shorts after seeing such a move down happen. This is fuel for SkyNet to get past this resistance zone and run up to the major one up at 4370-4390, as tacking on another 40-60 points from here would be easy if you trigger the buy stops on the bears.

I’m sure most have stops just above the current all time high of 4353.25, and likely all the way up to 4400. It’s funny because I’d read somewhere that 90%+ of all the big moves happen afterhours or premarket in the futures. If you took the futures away and didn’t allow people to short then the market would probably be at 400 on the SPX and 3000 on the DOW. Squeezing the shorts is truly the most powerful (and primary) way they get the market to go higher. There’s very little buying up here by the retail public, as it’s all just bots in the futures running bull and bear stops.

Mainly they run bear stops as they want the market to go higher all the time. But at some point it just can’t as everyone is long. So they must kick some of them off the bull train to lighten the load. Fast and surprise drops like yesterday will do that of course, and it wakes up some bears too. But not enough to take us up to 4700+ as that’s going to require a correction, not just a pullback of 1-3% like yesterday.

We are getting really close now to reaching that major resistance area just under 4400, which when it’s hit I do think we will top out and start a nice move down that should be 10-15% at least, if not another crash. You can’t really predict crashes accurately, so I’m not even going to try. If it happens I should be short anyway and catch most of the move. I think we’ll see the top next week since that resistance area is so close now.

Just one day of squeezing the bears will be enough to reach it. That could even happen today, but I doubt it as it’s a Friday it’s likely to just go sideways all day around that 4335 area. My best guess is they do the squeeze afterhours or premarket over this weekend to gap up on Monday, or maybe Tuesday. We’ve seen this happen many times before.

They use the weekend to release some positive or negative news to cause the gap up or down the next trading day, which is usually Monday but sometimes Tuesday if they have a long holiday weekend. They could have done it this past weekend but I guess they weren’t close enough yet. However, they did move it up some from last Fridays close around 4300 as when we opened this Tuesday it was up around 4335, and that’s been the trading area all week now.

Anyway, be on the lookout for another squeeze early next week to finally hit the 4370-4390 major resistance area. It’s my opinion that zone will stop the bulls and end some final 5th wave up inside a bigger wave 3 up that started at the October low in 2020. A bigger wave 4 down should start that will be in the 10-15% correction area. If it turns into more then we’ll go from there. Have a great weekend.