ES Morning Update February 22nd 2023

Yesterdays drop doesn’t change my overall thoughts for this week, it just widens the range, that’s all. I was thinking the market would hold the low from Friday and go up today and rollover tomorrow and then back up into Friday. Since we dropped yesterday I only see one down move and one up move for the week, instead of up, down and up. It’s never easy getting the short term correct but the pattern should still be that we end this week out as a range bound one.

I do not see a breakout over 4200 and I don’t see 3800 being taken out either. Since we have the reading of the minutes from the last FOMC meeting today my thoughts are that the market will use that extra time before the meeting to bottom out and build a base where the move up starts and holds after the FOMC and carries into Friday.

The RSI got oversold on the 6hr chart yesterday and even the daily is close to oversold, so a countertrend move back up for 2-3 days is likely. We could go a little lower today but not a lot. Most likely Friday and today was some kind of wave 3 or C to end this move down.

If it was a 3 then a 4 and 5 might happen in front of the FOMC to end the pullback from the 2/2/23 high of 4208.50, which could end Extra Tiny Wave 2 on my chart from yesterday. Or we just complete some Super Extra Tiny A Wave, then a B wave up to the FP on the QQQ of 309.21 (mis-typed it yesterday), followed by the Super Extra Tiny C Wave down into OPEX to complete Extra Tiny Wave 2 (which is the pattern I’m leaning toward). If this plays out then we could see 3900 or so, but again, we should NOT take out the 3800 area low from the two weeks of chop back in December of last year.

That low is marked as Tiny Wave B on my wave count chart from yesterday. If it takes it out then I’ll have to start relabeling all the waves forward again from the Small Wave 1 low (the 3502 low in October).

Most likely I’d move Tiny Wave A from the 12/13 high up to the recent 2/2/23 high, and then call the drop to below 3800 as the Tiny Wave B down. But unless that happens the wave count is still intact and all that “possibly” changing right now is Extra Tiny 2 down, which may or may not have completed or will complete today. Since the bearishness is still strong into mid-March I tend to think it’s not going to end today and will subdivide into an ABC that will bottom into OPEX most likely. Have a blessed day.