ES Morning Update January 26th 2023

Yesterday the market pullback more then I thought it would but in the end it was just a bear trap as the 80 points down was fully reversed by the close. That’s a very bullish sign for the short term at least. With trapped bears wanting out odds are good we will go higher to keep the pressure on them, but big resistance around the 4100 zone is just overhead, so bulls should be cautious here.

Meaning they will want to build a sideways base under 4100 and not try to go through it on this run higher. As if they do it will be short lived and only a pierce. Charts need to cool off for 3-5 days I think before attempting to get through the 4100 zone. Some sideways chop above the 4000 zone should be the plan for the bulls.

Do it for week if needed, but build that base and then when you go through the 4100 zone it will stick and you can go up and over 4200… which at that point the bears will give up and say the bottom is in and the bear market is over with. And if (a big “if”) they make it all the way up to 4300 in the coming weeks you know for sure the bears will give up.

Possible Wave Count… but note that prices are a guess and could be higher.

Yes, they will short the double top from the August 16th 2022 prior high, but most will think it’s just a pullback that won’t make a lower low then last October. Will they be right? I don’t know for certain but my wave count won’t be busted as long as the prior high isn’t taken out.

It will open the door for that final big drop to 3000-3300 that everyone is looking for, and shorting now in hopes of catching it. We’ll worry about that after we top out, but for now lets focus on the short term. Today I don’t expect a lot (if any) on the downside. Bears are trapped from yesterday and SkyNet won’t likely let them out.

We should grind higher or sideways and the big resistance overhead starts around 4080 and goes up to 4100 roughly, which should stop the rally today for sure. But again, I don’t think we’ll see any big drop from that zone with the bears still trapped. Odds are we go into a choppy range for 3-5 days to build a base (bull flag) where a push through that hold happens later into early February. Have a blessed day.