Let there be light …. the Donald seems to have delivered once again with China, and the market is gapping higher coming out of this weekend’s dinner date with the Chinese President. Time to take a look at the markets to see where we are versus our road map …
Here is a wave count chart for the S&P 500 Index from my November 21st posting (click here for that post).
S&P 500 Index – 195 Minute Chart #2 (November 21st)
You can see from the above chart that I am expecting the market to find resistance right above the a-pivot high (2815.15) Since the market has not opened and therefore, the S&P Index does not yet show us the indicated move, I will use the ES mini futures contract as a substitute for the S&P 500 cash index.
S&P 500 Index Futures Contract (ES_F) – 240 Minute Chart #1
The a-wave pivot high is 2818.00 on the ES futures contract … the high so far overnight is 2814.00. I am showing my timing windows on the above chart as well.
You can see that the minor-a wave high (purple) for bigger B (red) came right in at the 1.382x timing window … the minor-b wave low (purple) for bigger B (red) came in right at the 2.0x timing window. It appears that we are pushing right into my expected resistance level for the end of bigger wave-B (red) here at the 2.382x extension window which is scheduled for tomorrow in the overnight trading session (2am – 6am).
So the proof in the pudding will be shown the next couple of days … let’s look at the wave structure of the last move here into what I think will be resistance.
S&P 500 Index Futures Contract (ES_F) – 240 Minute Chart #2
You can see from the above chart that the minor-c-wave into the B-wave high is making what looks like a normal 3-wave pattern. It looks like we are near the end of the minor 3rd wave which will also mean that the B-wave is complete.
S&P 500 Index Futures Contract (ES_F) – 240 Minute Chart #3
If we do find resistance and start to move lower, I think that would be proof that we are going down to complete the bigger ABC structure. My minimum C-wave target is the 1.272x extension target which is around 2510 on the ES futures contract.
Bottom Line – most traders will be thinking that this move of the last week or so is the start of the Xmas rally and that we are headed higher to make new all-time highs. I obviously don’t believe that we are ready to do that, and we are, in fact, about to start the biggest, most viscous part of a corrective wave (the c-leg). I want to watch closely here over the next day or so to get confirmation that the B-wave is indeed complete and we are beginning the next leg lower.
Cheers … Leaf_West