In that update I will not show you any bullish scenarios. Let me explain why:
Note those three (a) up, (b) down, (c) up structures look almost identical! That clean (a)-(b)-(c) structure with elongated (c) up is the main hallmark of a corrective structure. Each of them started from a fresh lower low but made a lower high at the point of completion of subwave (c) up. That is the second main hallmark of a corrective structure.
If I could show you only one chart this weekend I would show you that one above! Because every time we complete a corrective (a)-(b)-(c) up structure making a higher low we should expect another push down to a new lower low.
(1) Straightforward Bearish Scenario “3-3-5”:
The Straightforward “3-3-5” Bearish scenario considers the move down off the all time high made in Jan’22 as a simle (A)-(B)-(C) down corrective structure where wave (C) is supposed to have an impulsive five wave down internal structure:
Let’s zoom in to 60 min chart:
Off the pre FOMC high made at 3.925 we should get a wave 5 down that shoudl bestructured as A down, B up (may be a shallow overlapping (a) up, (b) down, 9c) up zig-zag) and, finally, C down.
The micro count considers whipsaw on the last Friday as a corrective wave (iv) up of A of 5. The week ended with a bounce that could be counted as subwave (b) up if wave (v) down leaving a short setup for a drop in subwave (c) of wave (v) down that has to make a lower low.
That upcoming drop could find support at 3,650 (see the green horizontal line on 30 min chart shown above).
This is from where we should get another crazy whipsaw in (a) up, (b) down, (c) up micro structure of subwave B up of wave 5 down.
We have two major catalysts scheduled this coming week:
(i) Midterm Election night on Tuesday Nov 8th. We will start getting first exit polls at 8-00 PM EST and it the final results may be clear the Wednesday morning, and
(2) Consumer Price Index scheduled at 8-30 AM EST on Thursday.
So that crazy (a) up, (b) down, (c) up zig zag off the 3,650 support may be painted during the election night and CPI on Thursday may trigger that second leg down in subwave C o wave 5 down.
Part 2: The Very Bearish Scenario “Upcoming Crash like in 2008”.
This scenario is a variation of the Scenario 1.
It follows the same fractal but assumes that ES has just completed a bearish 1 down, 2 up starting setup for a strong plunge in wave 3 down:
This is how that wave count looks like:
Essentially that is a very similar scenario to the bearish one from 2007-2008:
They look very similar indeed:
Some folks say it has been following exactly this route. Check this out:
But according to that analysis ES may start an accelerated part of the decline only in late December 2022:
Scenario 3. A COMPLEX “3-3-3” STRUCTURE OFF THE TOP IN JAN 2022:
That “3-3-3” wave count argues that this decline is wave (i) down that can find support at the previously made bottom 3,570 – 3,500.
On that chart you can see two Macro Targets:
Those targets are defined by extensions of the first leg down off the Jan’22 top into the low made by the first A-B-C down move that bottomed in May 2022.
The micro for Scenario 3 looks identical for the micro of the scenario 1 (see above).
First a drop that may find support on Monday and then a crazy -a- up, -b- down, -c- up consolidation on Tuesday and the following night when the midterm election results will be announced.
At this point its fairly impossible to predict how deep wave (iii) down may go.
It may stop at 138.2% extension = 3,350sh or it may extend down to 176.4% extension = 3,220. But in any case we need first to complete that (i) down, (ii) up (or (a) down, (b) up structure) because its extension will define targets for subsequent move down.