So where is the market heading? Some people think it is headed lower, some think it has to rip higher into the Xmas rally. I have a bias that we are not finished the corrective pattern off of the all-time highs, but the exact day-to-day correction will unfold however it plans to unfold. I just watch the wave action and react as they are painted on my charts. Here are the current charts …
S&P 500 Futures Contract (ES) – 30 Minute Chart
The S&P 500 Index futures contract (ES) looks like it made a 3-wave move down right into the lower support level on my broadening price pattern. That could mean that this portion of the bigger current wave structure down is complete.
NASDQ 100 Futures Contract (NQ) – 240 Minute Chart
If the ES contract has made a low, it would make sense that the NASDQ has also made a low or is close to making a low … the above 240 min chart could be bottoming right in this 1.382x timing window.
If I am right about a bigger more complex corrective pattern, then possibly we go up with the S&P 500 into resistance before pushing lower into a final bigger Wave-C low. If that is the future path for price, then the ES is likely to carve out the following pattern.
S&P 500 Futures Contract (ES) – 240 Minute Chart
Both of these C-wave support levels could be reached right around the end of 2018.
McClellan Summation Index – 65 Minute Chart
The McClellan Summation Index has flipped bearish and needs to get back above the 20EMA and the ATR resistance levels to flip the market underpinnings back to the bullish side of the ledger.
Bottom Line … maybe we are going to bounce from here. I posted some FANG charts on Stock Twits and Twitter earlier today and you could argue that the charts look more likely to bounce than they do to continue collapsing. Any bounce happens from the smaller time frame before they expand to the bigger time frames – its pretty simple to watch for that bounce therefore.
Cheers … Leaf_West