ES Morning Update October 22nd 2026

The market has failed to unfold like I had hoped it would. I was looking for the hitting of the FP inside the range of the 20th-22nd, but that looks very unlikely now. This market is just refusing to drop hard or rally that last time in the blow off top to take out the shorts. Some people love to day trade but for me it’s just too hard to time, so I’ve been patiently waiting for the upside FP to get hit, or the downside FP’s, but it’s just not going to happen.

I mention that because we could go down into the election without hitting the upside FP, and save it for the end of the year… who knows for sure? I only know that “for me” there’s no safe trade while in-between the upside and downside FP’s. I’m looking for a trend move and until we see the market at one end or the other there’s just nothing to do but watch and wait (or gamble small on a short). This up and down daily crap is just noise that I want to avoid.  I posted a chart on X yesterday of a possible wave count, and this is it…

Now… could the cycle window for the high get pushed out in time? Sure, as they are just windows of time that align up with prior periods in the past where turns happened at. They can come early or arrive late and with the Republicans wanting to hold the market up until after the election I can certainly understand why the the market is stuck in this choppy zone going no where.

However, many cycles point to a low around the election, and I just can’t wrap my head around there being some kind of large drop afterwards, whereby we go into it with a high of some degree. Maybe that happens, maybe not?  Odds do not favor it.  Prior cycles suggest a low around the 28th and another low around the 3rd-6th window.

What do I think?

I think we have been in a large B wave bounce since the low on the 16th, which was right into the cycle date.  When the B finishes the larger C down should follow and that will breakdown into a 5 wave move.  Most likely the wave 3 of C will bottom into the 28th, and we’ll bounce for the wave 4 into the election, and then the wave 5 ends a few days later with a slightly lower low.  That will end the wave C and the entire correction from the all time high.

Then we start up into the first week of January where once again the FP on the SPY of 787.13 will be the target high.  There’s a cycle high prior to that around December 13th (+/- a few days) and a cycle low around the 19th… which that’s where the Santa rally should start and take the market up into around January 6th, 2027.

Where is the short term low into the election you ask?

Probably around the 7400 area as that’s where the July 29th bottom fell to (7324 to be exact).  I don’t think that low will be taken out, but we should get close to it to lure in some bears.  If it’s hit into the 28th then the rally up into the election and pullback for a couple of days after could be a higher low… like a wave 1 up into the 3rd, and 2 down in the 5th/6th, and the week after starts the wave 3 up into around December 13th or so.

That would be the ideal setup I think as everyone is looking for a low into the election to go long at, but cycles suggest it bottoms around the 28th of October, bounces up in the election, and dips one last time afterwards.  That would fool everyone waiting for the long as it will come early.  Then after the election the small pullback afterwards will shake out the bulls.  The following week everything will calm down and the market will rally hard.

Now I could be wrong on it being a higher low for a wave 2 pullback, as if the low on the 28th is say in the 7500 zone then we’ll likely still see the 7400 area, which would then suggest it will be the few days after the election.  Then again, the next week the big rally should start.

Now, this decline into the 28th and/or the 5th/6th is likely going to be very controlled so the sheep don’t panic.  I think it’s going to decline in a stair step manor inside a falling channel.  The larger B wave up only has today to reach whatever high it plans on reaching as by Friday we should be in the wave 1 down inside the C wave.

It’s been a tough market and I don’t think it’s going to get any easier.  The 787.13 FP on the SPY has really caused me some pain as I never shorted the triple top but this C wave down is an opportunity for a small gamble short I think as this market should be in the 7400-7500 zone by the 28th, and that’s a good risk/reward with trading I think.

Have a great weekend.

Source: https://reddragonleo.com/2026/10/22/es-morning-update-october-22nd-2026/