ES - are we going to get a sharp pullback when all perma bears started to talk about a breakout?
If you have been following me long enough you know that I always look for an evil scenario.
That is a type of scenario which is the least expected by majority of traders.
What kind of sentiment we have now?
The majority of bears is ready to give up on their dream to get a pullback.
And ES keeps pushing higher trying to convince them it is time to cut losses. And now we start seeing charts posted by those perma bears showing target for this rally to 3,050-3,060
That target by the way does not make any sense!
If you look at the 240 min chart I marked a starting point of the strongest part of teh rally in subwave ( c ) of wave ( iii ) up.
That was the low made at 2,855 on 10-03-2019
The bare minimum target for subwave ( c ) of ( iii ) up has to be 123.6% ext of subwave ( a ) of ( iii ) = 3,122
It can run up to 176.4% ext = 3,236
or even to 223.6% ext = 3,384.
That rally in subwave ( c ) of wave ( iii ) up has to be subdivided into five micro waves.
ES - 240 min chart updated at 6-50 PM on 10-27-2019
The primary micro count on the 15 min chart below suggests that ES has completed micro waves i up, ii down, a of iii up, b of iii down.
However, that b of iii looks really flat.
There is nothing wrong with that.
But the evil scenario would suggest that here we are dealing with topping a of iii and we may get a drop in b of iii down. That drop would caught off-guard all the bears who have just covered shorts. Most likely they would open shorts again and this is when the real breakout would start!
Again that is an alternative “evil” scenario.
I personally do not recommend to make bearish bets on that scenario.
But I would keep that scenario in the back of your mind.
If we get a pullback I will be a happy buyer of SPY and QQQ calls again.
ES - 15 min chart updated at 6-50 PM on 10-27-2019
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