$ES $SPX $VIX #corrective a-b-c up pullback
The US stock market will be closed on Thursday. This week has been the textbook pre-holiday calm week.
On Monday ES-mini hit the first target/resistance = 4,561.
Today ES-mini produced a very shallow pullback off that resistance down to the first support at the breakout level = 4,542.
As long as bulls hold ES over 4,542 they can push ES higher again.
In majority of cases, the subwave -c- of wave -iii- up extends up to 123.6% or 138.2% ext of the subwave -a- of wave -iii- up (see the lower red box).
At the same time you should understand that this calm will most likely be followed by a storm.
Look at the VIX chart below:
The VIX Index is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500 call and put options. On a global basis, it is one of the most recognized measures of volatility.
When S&P grinds higher the crowd gets more bullish and does not buy puts to protect against sudden declines. The more bullish gets the crowd, the less they buy puts and the lower the price of puts. This is when VIX drops like a rock. But on the chart above you can see that VIX actually hit the Green Box. It looks ready to produce a corrective pullback in a wave 4 up. That means S&P may produce a corrective move down.
Therefore we can conclude that here risks of a pullback in a wave -iv- down outweigh potential gain from potential one more push higher.
To confirm the bearish scenario bears need to push ES-mini under 4,400.