ES Morning Update May 10th 2024

The market failed to due the pullback for small wave 4 yesterday that I was expecting, so it suggests that I’m wrong about the subdividing waves inside of Large Wave B up. I posted an updated chart yesterday in the chatroom and on twitter. I’ve just taken out the Tiny Waves basically, which should put us in Small Wave 5 up now inside Medium Wave C of Large Wave B.

It speeds things up basically and suggests we top faster, like today possibly. Then the first move down next week should be part of the Large Wave C, and any bounces back up should not make higher highs but a lower high. It’s went a lot higher then I thought it would as I thought it would stop at the 61.8% retracement level but we are at the 78.2% level now. Will it stop here? I just don’t know? I only can say that we are overbought fully now on the 2hr and 6hr charts and a turn down can come at any time now. Here’s yesterdays updated chart…

I didn’t put Large Wave B on the chart but it’s where Medium Wave C and Small Wave 5 are at. We are there now, and into strong resistance from the 4/5 to 4/10 chop zone. Will it get through that zone? I don’t know? It’s possible that they us the CPI number next Wednesday morning (or PPI on Tuesday morning) to “run the stops” above that level, and then drop. It would be a double top basically as running the stops above there would get us to 5300+ I’m sure. We’ve seen the CPI cause big turns in the past, so this could happen again. In fact it’s been awhile since we seen it used like this, so we are due for it to happen again. If that is the plan then I’d only look for a small pullback on Monday and Tuesday, which must stay above the prior 5200 level of support. It would be a subdividing Small Wave 5 I think, and the chart below explains it.

As you can see I’ve labeled the move up as either completing Tiny Wave 1 up or Tiny Wave 1, 2 and 3 up. Hard to say which but if we go with the market being in Tiny Wave 3 then we should have a little more upside today and likely do an ABC down for Tiny Wave 4 into Wednesday morning. Then the CPI can “run the stops” for Tiny Wave 5 up, which will complete Small Wave 5 inside Medium Wave C of Large Wave B.

If not, then we could be topping today as the Small Wave 5 won’t subdivide into next Wednesday and will end today or possibly Monday. It could subdivide, as it’s likely that the low on 5/9 before the open at 5195 would be Tiny Wave 2 down, meaning Small Wave 4 ended before the open on 5/8 at 5188… which is what I think is accurate.

I guess I could say that the 5195 low was a “truncated” wave C in an ABC down for Small Wave 4 with the wave A being lower at 5188, and that could be accurate? That would then have the current rally up from the 5195 low being just Tiny Wave 1 inside Small Wave 5 up. That is possibly but it looks more like a wave 3 and not a wave 1, but in the end it’s not important if the CPI number is going to be used to put in the last high.

I can go back and figure it out after the fact, so I’m not too worried about it. My goal here is to just let today, Monday and Tuesday play out, as even if we top today and drop into early next week the CPI number will still (very likely) be used to produce a stop run above. Maybe it’s only back up to the current high and point lower? If so then we will have a Small Wave 2 up inside Large Wave C down as the pullback in front of it would be Small Wave 1 down from some top today. Either way it looks like next Tuesday by the close or Wednesday morning after the CPI will be the ideal short. That’s all the possibilities that I see.

Have a great weekend.