ES Morning Update June 19th 2019

Yesterdays strong rally up was just the bears needed to shake out the weak shorts and convert them into bulls. By the end of this week I fully expect the euphoria to wear off and exhaust the bulls, which then means the smart bears will attack and drop this pig when no one is expecting it. The closer we get to the all time high the better as any move down will be bought by the bulls and that just means it will keep going lower. How low is anyone’s guess but if the double top rolls over like I think it will then 2800 SPX is a no brainier… probably a lot deeper.

I don’t want to call out levels yet as this big sell setup hasn’t happened yet. But one of the things needed was that squeeze rally yesterday, and today we just need mostly sideways with a little more up preferred for another green close. Tomorrow and Friday is where I’m hoping we’ll see some teasing by SkyNet to lure in more bulls thinking we are going to bust out to a new all high and shoot for 3000+, which is what’s needed to drop the market back down again next week. Basically we need to see some kind of wave 1 down and wave 2 up, or several sets of them over the next few days.

If we blast up to a new all time high and hold it into the close then this short setup will be delayed. For it to happen we just needed the strong squeeze up yesterday and then several days of consolidation where not much more gains are made, and green close preferably. What we don’t want to see is a reversal back down that resets the short term overbought charts and appears to be a wave 4 of some kind, whereas a wave 5 up would follow. It’s more about holding the line here and not letting trapped bears out.

We could still do a 4 down and 5 up but they need to be small, and then the 1′s down and 2′s up can follow. I’m guessing this sell will setup by this Friday or next Monday, but it can be delayed of course. These tiny wave patterns and mostly sideways action for several more days are needed for the last bear to capitulate and then and only then can a big sell occur. Moves down that close red are the bulls way of resetting the overbought charts.

Maybe we could get away with one red close over the next several days, but the last day must be green. It’s like today could be slightly red for maybe that tiny 4 down and then tomorrow up for the 5th wave. Then some 1′s down and 2′s up for a few more days that close green each time. That should do it. I’ll keep you up to date of course. Have a nice day.