ES Morning Update September 16th 2021

Yesterday I talked about a possible Flash Crash if that support was broken from the rising green trendline and the 50 DMA, but it held (scary for awhile) and bounced hard late in the day. This tells me the A wave down from the all time high is complete now and we are in the B wave up currently.

It’s already reached the 38.2% level and went through it some yesterday. Today the next upside resistance is the 50% level at 4487, then 61.8% at 450… which I’d love to see hit so I can short it but I don’t give it high odds. What I suspect will happen is that the 4487 level stops the rally and ends the B wave up.

Then we start the C wave down, which should last all of next week and possibly a day or so more into the last week of September. My best guess is that we start the first wave 1 down of this C leg early next week in front of the FOMC meeting and do the wave 2 back up into that meeting. That means today and tomorrow should wrap up this B wave bounce.

It’s Quad Witching Friday so it could be full of wild swings to shake bulls and bears both out. But I’ll just ignore all that noise and look to see where we close out at, which hopefully is at one of those resistance levels.  This B wave bounce will certainly subdivide in an effort to trap both bulls and bears on the wrong side before the C down starts next week.

For today I don’t see much.  We are pulling back some here before the open but I think it will reverse and go back up into later today and/or tomorrow.  Since we started up late yesterday we’ll need to give the charts time to reset from oversold to overbought, and my best guess is that it will take all of today and tomorrow to do that.

Possibly some of Sunday night futures and into Monday as well.  But I’d look for the upside resistance levels starting late Friday before I’d even think about a short.  If we see 4487 or 4503 into the close tomorrow I’d certainly think it’s a good shorting spot as enough time should have passed to reset charts.  However, if we see it hit today I’d do nothing as not enough time will have passed and with a hit of either level so early I’d have to think they will go even higher on Friday.

As you can see it’s not just about price… it’s about “time” too, and there has too be enough of it passed to reset the charts.  That will be by the close Friday at the earliest and Monday by the latest… roughly guessing of course.  Things can change but that’s what I see currently.

Have a blessed day.