ES Morning Update March 31st 2023

The early breakout continue yesterday as the market held the gains all day with just a small pullback and then back up. Since it started on Wednesday it’s looked and acted like a wave 3 up of some degree, so I’m going to see if I can break it down on a smaller scale using the one hour timeframe for reference but filtering out the noise by showing it on the daily chart.

I’m also going to go with my Alternative Wave Count chart that I did this Monday as I’m leaning toward it being the correct one and not the previously one where Small Wave 2 up end at the 2/2/23 high of 4208 on the ES. The reasons are listed on that post of course. I’ll add another reason that I failed to mention on Monday, and that is the position of the MACD’s on the Daily Chart and Weekly Chart.

Both suggest to me that more time is needed before these rally up from the October low ends, and that mean Small Wave 2 up is still in play and just subdividing as I covered on my Alternative Wave Count.

Here’s the shorter term wave count, which again I’m going to use the daily chart for the labels as all the intraday wild swings are too hard to figure out and pointless for me anyway, as I’m not a day trader.

From the 3/13 low of 3839 on the ES we rallied up for the first wave 1 of 5 to make Extra Tiny Wave 3 up, which again I think ends either a little above or below the 2/2 high of 4208. It should end above it as it’s a wave 3 and that top was a wave 1 (ET1), but sometimes they can fall shy some of the wave 1 up.

Remember that Extra Tiny Wave 1 up started at the 12/22 low of 3788 and topped at the 2/2 high of 4208, which is 420 points in total. Therefore we’d like to see this Extra Tiny Wave 3 up also go up 420 (at least) to equal it’s counter part. Since it started on 3/13 at 3839 a rally of 420 points would be 4259, which is a slightly higher high then the 2/2 high. That’s all perfect… “if” it plays out that way?

Anyway, lets get back to the shorter term again. Where was I? Oh yeah, I was going to label all of the waves so far from the 3/13 of 3839 where Extra Tiny Wave 3 started. Ok, I believe we had the first wave up, which will be called Super Extra Tiny Wave 1, or “set 1″ for short, from that low to the high on 3/22 of 4073, then “set 2″ down into the 3/24 low of 3937.

That puts us inside “set 3″ right now, and if it equals “set 1″ in points (4073-3839=234) then it should end at 4171… which is where “set 4″ would pullback to lure in the bears and then we’d see “set 5″ up reach 4259 to end Extra Tiny Wave 3 up. You can see that this could easily drag out into mid-April.

From there we’d pullback for Extra Tiny Wave 4 down and then back up into May/June for Extra Tiny Wave 5 to finish Tiny Wave C up and Small Wave 2 up. If this plays out I’d look for some nasty drop in June for Small Wave 1 down inside Medium Wave C down, but I would not be surprised if the Small Wave 2 bounce back up is a powerful squeeze that retraces 78.6% (or more) of that first drop.

It will lure everyone into thinking everything is fine, but if this plays out the drop afterwards will be Small Wave 3 down inside Medium Wave C, and that’s a crash like wave. I would fully expect it to reach the October low from last year, and likely take it out before Small Wave 4 happens. By how much I don’t know but it could cut through it like a knife on hot butter if there’s some outside “event” to blame it on too.

Meaning that it could hit 3000-3200 before that bounce… who knows? But the final low might not happen until 2700, not sure? Trying to predict the price is hard, so don’t get married to the price levels. The important things to follow are “time”, “pattern”, “technicals”, and lastly “the probable wave count”.

P.S.  I posted this chart in the chatroom yesterday.  It’s funny how the wave counts I just discussed above lay out nicely over top of the lines I’ve drawn on it.

Have a great weekend!