ES Morning Update February 12th 2024

The grind higher continued Friday as market appears to want to reach the rising resistance around 5080-5100, then I’d think we get a pullback.  How much I don’t know but I’m going to cover both my First Bullish Wave Count and the Alternative Bullish Wave Count again, just like I did last Monday, which will of course project different outcomes.

I bounce back and forth between the two wave counts as last week I was leaning toward the First Bullish Wave Count, but this week I lean toward the Alternative Bullish Wave Count.  Let’s go over them now…

First Bullish Wave Count

Now I’ve moved some waves around some on this chart but the end result for the future is the same.  One of the things I did was just subdivide Large Wave 1 up into a 3 wave pattern, and not a 5 wave pattern.  I did that on all the charts as there’s just no way to make it a clean looking 5 wave structure.

So I have it now as 3 Medium Waves up whereas MA had 5 small waves inside it, then MB down did an ABC, and finally MC up subdivided into the normal 5 wave pattern, which completed Large Wave 1 up.

Then L2 down subdivided into 3 Medium Waves with MC further dividing in 5 Small Waves.  From there we start Large Wave 3 up, and I have it subdividing into 5 waves of course as al waves 3′s do.  The first wave up is Medium Wave 1 and that’s what the market is currently trying to finish up now I believe.  My target is 5080-5090 on the ES and if it’s this early this week then we should finish all 5 of the Small Wave’s up.

If correct it would suggest a pullback of “up to” (but not likely) 50% of the entire rally up for Medium Wave 1, and that’s rough targeting 4600 (at 50%).  More then likely though it will be 23.6% or 38.2% because we are in a Large Wave 3 up and pullbacks will be on the smaller size.  At 23.6% it would be about 4875 and at 38/2% it would hit 4710 or so.

Second Bullish Wave Count

This wave count is the most bearish of the all, and I put low odds on it playing out.  The biggest difference is that I forced Large Wave 1 up to have 5 Medium Waves inside it instead of 3 (and ABC) like I show on the First Bullish Wave Count and the Alternative Bullish Wave Count.

The thing I don’t like about it is that if we reach 5082 (example) Medium Wave 5 will be longer then Medium Wave 3 up.  This is allowed in Elliottwave but it just doesn’t feel right to me.  I can’t put my finger on it exactly but the market just doesn’t look ready for such a large pullback.  I mean… if this count is correct then Large Wave 2 down could retrace 50% of the entire rally up from the October 2022 low, which would be down to 4200 possibly?

I know that I was calling for such a drop a month or two ago but since then I’ve done way too much research of charts, patterns, MACD’s, RSI’s, SMA’s and turn windows… and NONE of it support such a drop right now.  But I did the chart anyway as I have to be open to allow all the possible outcomes and just ride it out once I see which one we are in.

Alternative Bullish Wave Count

Now my favorite… the Alternative Bullish Wave count.  In this one you can see that I moved the end of Large Wave 1 up back to the July 31st, 2023 high of 4619 just like in my First Bullish Wave Count.  I have just accepted that L1 is probably a 3 wave pattern and not a 5 wave on as covered in my Second Bullish Wave Count.

In this count it’s EXACTLY the same as the First Bullish Wave Count… except that I’ve put the pullback for Medium Wave 2 down equal to roughly 23.6% of M1 up, which would be 4875 (thereabouts).  We’ll call it a range between 4875-4900 as the expected low for M2 into the 25th/26th of this month.

If we get the rally up first to 5080-5090 tomorrow or Wednesday then I think we finish Small Wave A down into this Friday or possibly next Monday.  Then a nasty squeeze into Tuesday the 20th for SB to complete.  Finally we drop to the 4875-4900 zone by the 26th to finish SC inside M2 down.

The Seasonality Chart is bullish into the first week of March, so I’m thinking we could rally until around March the 8th roughly for Small Wave 1 inside Medium Wave 3 up.  I think it will make a higher high then what we make this week, so maybe 5125 or so?  Then a small pullback into the mid-March period where it’s weak.  After that we start S3 up inside M3 up, inside L3 up, which should last into mid-late April, and that could be up and over 5300 by then… who knows?

Most of my analysis here is based on the past, which we now look a lot like the 2021 period.  The biggest difference is that back then the month chart showed the MACD rallying up strongly with nothing in the recent past to compare it against.  Now the same MACD is rallying up again but will make a lower high when this market finally tops out this summer, and that will create a large negative divergence on it.  If means we’ll start a recession most likely afterwards with a crash at some point likely.

This FP on the SPY showed up afterhours on Friday.  It will likely be hit today I think.

Have a blessed day.