ES Morning Update January 16th 2024

Last Friday got really close to making a new high but failed again with another lower one. This is a very subtle change when compared with the move up from the October 27th rally, as every move back then was higher highs. It’s a change of trend that’s happening as if the market wanted to go make a new higher high it certainly could have done so last Thursday or Friday, but it stopped shy each time instead.

This is done on purpose I’m sure, and it happens over and over, both at the important bottoms and tops. It’s a sign to me that the market is super close to a complete reversal of the rally up over the last couple of months. How fast it unfolds is anyone’s guess but it does tend to unravel faster when the move up was slow, which it certainly was slow in the middle around the 4550-4600 zone where it spent 3 weeks chopping in a tight range.

If we do drop this week it could be finished in 2 weeks instead of 2 months like the rally took, but I might be too aggressive? As for that 4550-4600 zone that was support, I don’t think it’s going to hold when this market hits it on the way down.  It will either get pierced by a 100 points or so and rally back up like shown on the SPX chart below…

Or it is more aggressive and reaching the 4250-4350 zone as my target, which I’m showing on the next chart of the ES below. It just needs to start today or we’ll run out of time for it to happen, which would then open the door up for another large rally to 5000+… that’s “if” the bulls can hold this zone between the current high and the recent low of 4702 for the next two weeks.

I really doubt that’s going to happen but nothing can be ruled out here. Once 4702 is lost it’s “lights out” for the bulls in my opinion.  How fast the drop happens is the hard part to figure out.  Both charts I’ve posted here suggest that it will take more time, even though I’ve suggested it will be faster on the chart of the ES.  That could be “wishful dreaming” as the technicals tell me otherwise.

Looking at them the drop into the end of the month (or sooner?) might only pierce the 4550-4600 (ES) support zone, like 4450-4500 possibly?  Then a fast rally back up to backtest the 4702 recent low from last Thursday.

After that we’d take the second leg down into the 4250-4350 zone, which might take until mid-February?  I’m trying to be more conservative here as while I want the faster drop the market does not listen to me, and if it did then it would laugh at me and steal my money by doing something else I’m sure.

Have a blessed day.