ES Morning Update March 20th 2023

Last week went pretty good as far as what I thought would happen. The only surprise was that the drop on Friday was what I was looking for here on Monday, so it appears they flipped and had that drop early… which suggests today will be the pause day I was expect then.  Big picture though is still intact.

Next… as everyone knows the FOMC meeting is this week and I’m sure traders are placing their bets for a big move up or down with the Fed doing a pause, pivot or rate hike of 0.25 or 0.50… but I think it’s going to be a non-event. I said in last Mondays update that I thought we are going to be in a range-bound area for several weeks like the December 2022 period, and I still think that will happen.

I don’t know how long it’s going to last but all of this week seems like a “given” and probably part of next week. I suspect we won’t see an breakout over 4000 (SPX) until the first week of April (or possibly the last few days of March?).

On the ES Futures that’s 4030-4035 as the new contract for June has put a wide spread between them now. Previously I used too just speak of the levels interchangeably between the SPX Cash and ES Futures, as they were about the same, but now I have to point out which one I’m talking about. So, on the SPX I think we’ll be in a range of 3900-4000 all week and on the ES Futures that would be 3930-4030 roughly… but the futures could extend beyond those levels in the afterhours and premarket sessions.

For today I do not see a lot of action either direction, nor on Tuesday as the market waits on the FOMC. Of course the meeting is near the close for Wednesday so any wild swing should happen after 2pm EST, but again… I don’t think we’ll see any big breakout to the upside or downside into the close Wednesday.

I believe this week and next week will likely build the base for a strong rally up the first week of April where 4100 will be challenged again. It will be the squeeze wave on the bears that should only last about a week before topping out as it will run out of fuel afterwards. It will mark the end for my Tiny Wave 2 (T2) and likely get everyone super bullish again.

Here’s that chart again from last Monday…

How high it goes I don’t know but it should NOT take out the high on 2/2/23 as that’s the end of Small Wave 2 (S2). On the ES Futures that’s 4208.50 and on the SPX Cash it’s 4195.44… but it might take out the 3/6/23 high as there’s stops above that level that I’m sure SkyNet (the algo’s) will want to hit. That’s 4082.50 on the ES and 4078.49 on the SPX, which suggests a move of some amount over 4100 is likely.

I think we’ve been in an A wave up inside Tiny Wave 2 for the last week and it should end this week I suspect.  It would be a 5 wave move for the A part, 3 waves for the B, and 5 for the C most likely.  They would be labeled as Extra Tiny Waves.

So next week could be the week where the market goes back down closer to the recent low of 3808.06 on the SPX (3839.25 ES) on 3/13/23.  That low should NOT break as this is only going to be a pullback that makes a higher lower.  It’s too early to know when that’s going to happen but my guess is midweek some time, like the 28th,29th, or 30th.

From that low the last big squeeze up into early-mid April should start for Extra Tiny Wave C, and it will likely have everyone calling for the lows to be “in” and some 4300, 4400, and above forecasts will be made.  I will disagree of course as my model has been on track now very tightly for the last several weeks, and I think it will continue.

It was off last month as I didn’t have the correct wave count top for certain waves but since that change it’s doing extremely well.  Calling the prices levels are not something I can do  but getting the points in time where a swing low or high is made is all that is needed for me to make a successful trade.

There’s nothing more to add here so I’ll just wish everyone a blessed day. Oh, one more thing. Bond markets will close early on Thursday, April 6 to commemorate Maundy Thursday. The stock and bond markets will both close for Good Friday on April 7. I point this out because  I’ve noticed in the past 10+ years of trading that “turns” commonly happen around holidays. If this repeats then I’d expect to see the market rollover after this one, which will start Tiny Wave 3 down, Inside Small Wave 3, inside Medium Wave C. We shall see.