$ES #ES #Macro
The extremely violent and rare early November rally hit the Supply zone 4,400-4,415 and stalled:
Note that this same band 4,400-4,415 stopped several major up and down swings in 2023.
I maintain a bearish macro view:
(i) the rally in 2023 was a corrective wave (B) up and it topped in July 2023, and
(ii) off the July 2023 top I expect a large decline in a wave (C) down that should undercut the Oct’22 lows, and
(iii) that wave (C) down will most likely be shaped as the Double Three structure, a combination of two (a)-(b)-(c) structures, and
(iv) ES finished the first (a)-(b)-(c) down in Oct’23. We can lable that move down as either wave (i) down or wave (w) down, and
(v) off the early Oct’23 low ES has been consolidating in a corrective (a) up, (b) down, (c) up structure that is shaped as either the very bearish Running Flat (less likely) or, very tricky Expanding Flat (more likely),
(vi) the most probable and more painful Expanded Flat argues for this rally to extend up to 4,450 – 4,460, and
(vii) upon completion of that rally we should get a sharp bearish reversal with the first target 4,240.
Three paths are shown on the chart:
The purple path: Bulls can push ES up to 4,450 – 4,460 violate the previous high made in early Oct’23 (4,430) and trigger forced short covering that would propel ES by 20-30 points higher. A pop over 4,430 followed by a brutal reversal and drop under 4,430 would trigger a macro short failed breakout setup.
The black path: 4,240 is a meaningful support. This is where bulls will bet heavily on potential bullish Inverse Head and Shoulders setup and allow bulls to produce one more leg up to 4,450 – 4,600.
The Red Path is the simplest scenario. It argues that corrective rally has topped and bears are starting a new large leg down right from 4,400. That is the least possible probable scenario because under the Running Flat structure the final wave (c) up was supposed to top at 4,316. This is why the purple Expanded Flat structure is probably the most likely scenario at this point.