ES Morning Update May 9th 2023

A whole lot of nothing yesterday. The market went sideways and made a bull flag but the question is… will it play out or fail? I don’t know the answer but a sideways move for awhile would qualify as a B wave pullback… that’s “if” we have that last push higher?

I was really looking for a pullback on Monday to exit my short, and even take a small long. This morning it looks like I’m finally get it.  Next should be the move up for what I labeled as a C wave on my Monday update.

What are the odds it does the move up you ask? I’m not sure? It’s certainly looking bullish for the short term, so it probably does the move up. But it might drag out in time just to frustrate everyone.  Tomorrow has plenty of “events” that could cause it to happen but if it doesn’t then it could drag out into next week.

It will be OPEX and we all know how the market loves to go to sleep around that time to make all the options decay in value and expire worthless.  How that plays out I’m unsure?  Possibly we grind up to the FPY on the SPY and hang there for 3-5 days to tease all the bulls looking for a breakout over 4200?  But then it never comes and we drop either into OPEX with too many calls and very few puts, or we drop the week after.

The current move up from last Friday has all those bears trapped, but that fuel will only propel the market up for so long, and I really don’t think it’s enough to go through 4200 and run the stops above there too.  If they did that we’d see 4300, and I just don’t see it happening right now.

I have to think “what would trick the most traders”, and the answer is:  Chop.  Keeping the market in a range and NOT breaking up hard again (like Friday) to run for 4200, or breaking down hard, will hurt the most I think.

So, tomorrow could be the move up but I don’t see the top of the megaphone pattern I drew on Monday, which is about 4220-4230 on the ES, if you hit it Wednesday.  The FP on the SPY is at 416.29, which converted to the SPX is 4173.58 roughly.  The ES is running about 14-15 points higher now, which is about 4187-4188 when the FP is hit.

Now… keep in mind that most FP’s are pierced, so it should go a little higher.  But the point I’m making here is that everyone is looking for the breakout to hit the top of the megaphone and I just feel that’s too obvious.  We all know that once the masses see a pattern it will fail to work.  So I’m looking for a weak move up, likely tomorrow, to hit the FP on the SPY and that’s all she wrote for the bulls.

As for today, I lean toward this pullback ending around this current zone of 4135 ES, but could go to 4120.  It’s basically the pullback zone from midday on Friday that is the support, and it should hold.

Have a blessed day.