ES weekend 03/12: leaning toward bearish, but no confirmation

2022년 3월 13일

Please noted the ES levels mentioned in this idea is all regarding to ES march contract, even if some traders/brokers already switched to June contract.

ES reached a higher high above 4325 early Friday morning, but it's triggered by a news "RUSSIA'S PUTIN SAYS THERE ARE CERTAIN POSITIVE SHIFTS IN TALKS WITH UKRAINE" without any detail. Market then did the gap and crap pattern and trend down all the day and close at low. The overall structure is still not clear and there is no confirmation on bullish (needs sustained break of 4325) or bearish path (needs minimally close below 4200) yet. I will go over the possible bullish and bearish interpretations next. Please be noted, there are quite a few possibilities and I won't be able to plot all of them on the chart:

Count 1: The higher high can be viewed as completed a 5 wave LD up from 4138 low, which could be bullish, if so, we should bounce right from future open Sunday night, holding 4138 next two trading days, but only start the strong rally after Fed meeting. I do have some concerns with this count:
1) This bullish count involves a (i)-(ii)-(1)-(2) setup, which is very unreliable.
2) 4138 low is already a very deep retracement from 4418 range, take it as the the wave (ii) is already not very convincing.
3) The potential wave (1) up (from 4138 to 4335) is an LD, which is again very unreliable structure
This is why I would take this count with the lowest probability, so unless I do see this happens next 2~3 trading days, I will not trade this.

Count 2: That rally from 4138 to 4335 is simply the wave a of (b) there, and the Friday drop is b of (b) here, we will then grind up next 2.5 trading days into Fed meeting, and start the (c) wave drop after Fed, minimal target of this count would be 4000 range, could be much lower. This count is possible if I can see a bounce above 4250 Sunday night, otherwise, I still take it as low probability.

Count 3: We already completed the wave (iv) of (5) of (C) with Friday morning spike up, and we will drop directly from Sunday future open, finding bottom Sunday/Monday as wave (v) of (C) in 4050~4100 range. We then start the next wave 1-2 up before Fed and rally after Fed.

Count 4: We already completed the bounce as (b) of (5) of (C) with Friday morning spike up, next target is 4000 range, and we will reach there before Fed meeting.

My primary route are count 3 or 4, which is based on my short term bias before Fed meeting, the main difference between count 3 and 4 and the different target ranges, and since count 4 got lower range, it's quite possible it will take longer time and may only find bottom on Tuesday, also we may see low level consolidation Sunday night, not the direct follow through to the downside. Generally speaking, I am leaning downside first next two trading days, but if we drop deep enough, I will be looking for potential bottoming structure before Fed (we may not get the usual 150~200 setup before Fed, but there should be a clear 1-2 setup before that).

2022년 3월 13일

노트

Another interesting thing worth watching is the movement of VX, which basically did not buy the Friday pullback at all, until about 1.5 hours before RTH close, when it suddenly realized how ugly this could be. So if VX starts to be crushed again Sunday/Monday, then the the possibility of count 1 and 2 will be gaining, while count 3 and 4 will need VX continue its journey in the last 90 minutes of RTH and start the panic sell no later than Monday noon.