ES Morning Update September 23rd 2022

The rising trendline from the March 2020 low and June 2022 low was lost yesterday on the SPY/ES/SPX. If the bears are going to confirm it then they need to close below it again today as well. Then they will have the best shot to drop back down to the June low and test it again.

I posted a lot of scenario’s in the chatroom yesterday with many charts, but I’ll simplify it here in this post. I have an upside FP and a downside FP that suggests we will retest the current low at some point but we should rally up first to hit the upside FP, and that rally needs really soon, like today ideally, but no later then Monday/Tuesday.  That rising trendline must be recaptured as soon as possible… otherwise we could go straight to 3639 again without any trip north to the upside FP, and that would not make sense for many reasons, which I’ll explain in the future if needed, but one this…

There’s this chart of the DOW and a very important rising trendline that was almost hit yesterday (it’s hitting it this morning), which I don’t think is going to be broken right now… pierced for a day or so, sure, but not taken out completely.  It should be a big support area and cause a strong bounce.  Then maybe after a rally and another trip south it is lost, but not now on this hit of it as it’s only the second hit after the 2018 low that was used for creating it.  The third hit is where I could see it broken, but not the first or second.

Between today and next Monday/Tuesday we should see a short term bottom above 3639, and then we should rally up from there for about 2-3 weeks, and then down again for about the same amount of time to make a triple bottom.

Meaning, this thing could drag out into the midterms if they want to go that far, and that could be a bottom or a top (but should be a bottom). The Seasonality Chart shows that we start up strongly after the first week of October, so just as I posted yesterday we could carve out some smaller degree wave 1′s up and 2′s down into that first week of next month, and then squeeze for the bigger move into the upside FP by mid-late October where the next pullback is likely.

Or keep going into the midterms and do the big drop afterwards into the middle of November per the Seasonality Chart.

I tend to think we’ll put in a bottom into or around the election and then when the RED wave blows the demoncrats straight to hell a mega rally will start that will squeeze the bears into oblivion.

The mid-October high appears to be around the third week on the Seasonality Chart, and that matches up with OPEX on the 21st… a common period to top out (or bottom) as then put options all expire worthless and the Market Makers (common sellers) get to keep all the money.  Those “puts” are one’s being sold today I’m sure, so you shouldn’t be surprised when this rally happens as it’s really a common practice.

Doesn’t have to go all the way into the 21st of course as it could top out early that week, then do the smaller degree wave 1′s down and wave 2′s up to set up the multi-wave 3′s down after OPEX and into the end of the month.  That coming low should be the triple bottom test and the end of the 10 month long correction I think.  Then the real rally starts.

Most people won’t see or believe the third drop to make that triple bottom as after the rally up into mid-October everyone will say the low is “in” as it’s going to be super strong… a very big squeeze.  But after this current double bottom ends in a day or so, and the rally ends in mid-October, there will be a third test of the current low, you can count on it.  The FP I have to the downside will be hit then, not now.

As for today I don’t have much to add.  We are still trying to bottom and may or may not  bottom today?  We are still in the bearish period until the end of this month, and at best the Seasonality Chart shows a bottom by roughly the 26th/27th and then a small bounce into the first of October, then another pullback into about the 4th/5th I’d say.  From there it should be a strong rally for 2 weeks or so.

Between now and then it’s likely to be choppy, but with an upside bias.  That’s basically the series of wave 1′s up and 2′s down forming to setup the strong wave 3 after the 4th/5th I’d say.

Have a great weekend.