ES Morning Update January 8th 2024

I talked last week about a wave 2 bounce, which I wasn’t sure if it happened on the Thursday move up or not? Sure enough it turns out that the move up that day wasn’t the wave 2 as it occurred on Friday instead.

It was indeed intraday only, which keeps me on the bearish path as when a trend changes from Bullish to Bearish the wave 2′s and 4′s are short lived (like I mentioned last week). It’s likely that wave 2 is finished and we are about to start a nasty wave 3 down today, which could be the big drop (it should feel like a flash crash) that I still think is coming.

I’ve been off on the timing of it as I first thought it would happen into the end of December, but I was wrong as the market needed that last higher high it seemed. But now that we have started down, and appear to have topped, the door is wide open for a large drop this week. However, it MUST start today as that wave 2 is very likely finish. So wave 3 down is next and it can’t be drug out any longer.

If you think it can’t happen then I want you to look at the chart above for a comparison.  Now while I do not think we will repeat the prior up pattern that I’m comparing it to I do think it shows how a typical 5 wave move unfolds and the points possible in each of the waves.

I don’t expect to see 1.618% for the wave 3 down.  I think we’ll see a lot more, like 2.5% at least… if not more?  All of this, and other things I’m following, still tell me a drop into my target range should still happen this week.

Have a blessed day.