ES Morning Update April 21st 2023

Well, we got some pullback yesterday but really only about a third of what I was expecting. And then the pullback failed to hold into the close as we saw a big reversal back up the last half hour of the day or so. I exited all my shorts for about a 50% loss.

I’m still super happy though as I’m way up on my overall profit since starting a new trading style about a month ago. I’ll have to set down and look at the actual numbers but I think I had 7-8 winners in a row and just this current short trade as a loser.

Now I’m in 100% cash as I can’t go long here and the window of time for the bears to take it down is quickly disappearing. What I’m now thinking is that this Tiny Wave 2 pullback is going to be a sideways one and not an ABC that I was hoping to see. Here’s that chart again from April 7th showing the wave count.

The Tiny Wave 1 top was likely on 4/18 and this Tiny Wave 2 might just chop sideways another week… not sure? I mean that the last 2 weeks were Extra Tiny Wave 5 (ET5… not on that chart) from the high on 4/4 for ET3, and low on 4/6 for ET4 down.

I’m thinking here that they might just chop around all of next week to make the Tiny Wave 2 pullback, which might not go below 4050-4060 on the ES… basically just enough to take out the stops on the bulls that are long from the 4100 low zone where the 2 week long base has been built on. Or maybe it doesn’t take out those stops at all and just bounces off of 4100 for another week? Here’s a chart of what I mean.

That chart doesn’t have it breaking but it really should run those stops prior to some wave 3 up starting, which in this case would be Tiny Wave 3 up. Possibly we chop for another week or two for the A and B for the Extra Tiny Waves inside Tiny Wave 2 down and then after the May 3rd FOMC we pullback to the 4000-4050 zone for Extra Tiny Wave C down?

Then we complete Tiny Wave 2 down and start Tiny Wave 3 up into June… which should be a strong rally up. I’m leaning toward this scenario because I just think that the daily chart will need to get nice and oversold before it starts some powerful wave 3 up, and right now it’s way to close to overbought.

That means we need 3-4 weeks for that to happen, and that would align up with a mid-late May pullback… which again could be Extra Tiny Wave C that takes us to the 4000 zone? Ok, that’s all for now. I live to fight another day as yesterday wounded me but I’ll recover. I have no opinion about today as we are stuck in different overbought and oversold zones oon different time frames, which means chop basically. Only when they all align up will we get a powerful move. Have a great weekend.