ES Morning Update May 8th 2023

NOTE: I noticed I got the date wrong on several posts last week… sorry about that, I guess I’m getting forgetful or something. I type up the posts each day in notepad and have the title already typed out.

I just change the date part each day and copy and paste it all into wordpress, then add the images. Clearly I missed a day and posted May 3rd twice, which then made May 5th to be posted as May 4th. Anyway, I’m sure everyone figured it out.

Moving on…

The rally up on Friday was what I have been looking for, but I was off a day or so on when I thought it would start. It went right through the lower FP of 210.16 on the SPY, which is to be expected really as the higher on May 1st at 416.26 is really my upside target for this move up.

What I think we saw Friday was just the A wave up (or wave 1?), of a 3 or 5 wave move. I think it ended Friday and today and possibly Tuesday we see a pullback for the B wave (or 2?). Then Wednesday through Friday we get the C wave, or 3, 4 and 5. I’m unsure if this is a 3 wave move up or a 5 wave move.

If the high on May 1st was the top for the rally up from the March low then we should make a slightly lower high on this current rally up, and that would be a B wave with the A wave down completing at the low last Thursday.

Once that B is done we’ll get a C down into mid-late May with 4000 possible on the SPX. The A wave down from May 1st to the low last Thursday has 5 waves inside it, which is normal for both A waves and C waves. And most B waves have only 3 waves as they are counter trend wave. The move up on Friday has 5 waves inside it, so odds are that completed the A up inside the B wave.

Then today and possibly into Tuesday we should do the B down inside B up. From there we should do 5 waves for the C wave inside B up. That could end this Friday and it might make a slightly higher high then last Monday. Elliottwave calls that an “overthrow”, which is due to the changes made when the futures market was created where “stops” could be put in, and therefore they were commonly hit before the move reversed.

Prior to the introduction of the futures market the B waves almost never went higher then the prior high where the A down started. That’s just what I’ve learned over the years from reading Tony Cardaro’s blog, who was a master Elliottwave expert. This leaves the door open for a fast, and short lived, stop run above the high on May 1st to complete the B up. Then the C down will follow into mid-late May.

Here’s a chart of what I’m talking about…

As you can see we are inside a megaphone pattern now, which is bullish as it’s similar to a bull flag.  We are in a bullish intermediate trend up right now anyway, and it should top out in the summer somewhere above 4300 I think.

From there I don’t know if get just a deep pullback to the 3800-3900 area or if we have a surprise crash from something happening again… like a false flag event.  It’s hard to predict those things so I’ll just keep to the technicals as it shows up in them anyway beforehand.  Any “event” that happens will just extend the depth of the move down or move up.

For the short term…

For today and into tomorrow (possibly) I’m looking for a pullback to 4100-4120 on the ES, which would make a nice right shoulder with last Tuesdays low of 4105.50 being the left shoulder and the 4062.25 low last Thursday as the head.

That inverted head and shoulders pattern will of course add to and support the Elliottwave count that projects a move up to test the high last Monday.  The FP on the SPY also adds to that forecast and line of thinking that we’ll pullback some and rally up later this week.

Have a blessed day.