ES Morning Update April 24th 2023

A whole lot of nothing last week, and this week is likely going to be the same. I lean toward some strength early in the week and weakness into the end of it. That’s based on looking at the RSI and MACD on the 6 hour chart as they look like they want to turn back up soon.

However, the daily MACD is still aligned bearishly with the RSI as well, so the two charts will fit each other most likely. Short term we should see a move up but it’s not likely to hold as the daily is drifting lower. I don’t think it’s putting a lot of downward pressure but instead it’s just not offering any strength.

I think the market is going to need about a month of time to allow the MACD to go back down to neutral to negative so it can reset and then turn back up into June with some strength.

The RSI needs the same on the daily chart, but neither should get really oversold because the intermediate term is still bullish from the October 2022 low. There’s a rising light blue trendline connecting the October low to the March low last month, which I think will be support into late May where the next period of weakness is at from a Seasonality and Cycle point of view.

It’s around 4000 in late May and I suspect the 200 day simple moving average (light blue as well) will rise up to that level by that time period… meaning there will be double support there.

Here’s a chart:

As everyone knows there is an FOMC meeting on Wednesday May the 3rd, so it’s likely that we see a small late week pullback this week that holds into the meeting next week as traders wait to hear what is said. I don’t think anything will change or that we’ll see something new said.

The Fed will likely continue with the rate hikes as scheduled, so the market is going to be disappointed again. I guess there could be some wild swings up and down shortly after the meeting but by the end of the day everything should calm down and the market will likely go nowhere. I said this before but it’s worth repeating. Over the past many recent years the moves after any FOMC have been a total “dud”, a “nothing burger”, a really waste of time waiting on.

And the following two days to end the week out don’t do a lot either. Any move up or down seem to start the following week, so don’t get to excited next week thinking we are going to breakout of this range (up or down) as history doesn’t support that (at least not the past several years).

However, the mid-late May period is weak, as I already pointed out, so the following 2-3 weeks after the FOMC is when we should see that pullback happen anyway… regardless of the Fed. I don’t expect a lot but that rising light blue trendline, that will be around 4000 then, is the likely target I think.

Lets revisit the wave count now… The Bearish Count From April 7th, 2023

The Bullish Count From April 24th, 2023

Short term though I think we go up early this week and down some late in the week. The range should remain tight, like 4100-4200 basically. It’s not a period to buy anything, neither shorts nor longs.

Here’s a chart:

For me it’s a period to be a seller of longs in spreads to collect the premium as time decay over a range-bound period will work in your favor. That’s my plan over the next month as when we bottom in mid-late May I’ll be a bull again looking for a strong move up to 4300 or so. Have a blessed day.