ES is boosted by the news that China will boost its economy in the first quarter, and there is progress in the Russia/Ukraine peace talk, it reached morning high around 4239, then slow pullback until Fed announce the 0.25% rate increase just as expected, following by the dot plot confirming there would be 7 rate increases this year. Market then took a quick dump toward 4242, but found bottom almost the same time as Powell started press conference, then market rallied 125 points and close at high. Let's go over the potential bullish and bearish count first.
Bullish count:
The 4100 range low achieved late Feb is the bottom and we hit A wave of the next wave up on March 3, the 4130 range low achieved on early morning Mar 15 is the B wave of the next wave up, and by today's close we already finished or about to finish the wave 1 of C.
Bearish count:
The 4100 range low achieved late Feb is only (3) of (C) and Mar 3 high is (4) of (C), where (5) of (C) would be in (a)-(b)-(c) type, today's close is the (b), and we will do a quick dump next few days.
There is no doubt that today's action is bullish, and we may already have a potential bottom. I know many would doubt if there is another low in immediate future, well that probably include myself. The reason I haven't given up this idea is based on a few factors:
1) The high of today can be viewed as the completion of a gartley pattern, which is very common in corrective structure, if we can continue higher tonight and get above 4385, the likelihood of this would be greatly reduced.
2) With Fed decision cleared, Ukraine crisis remain to be the key focus of market participants. I think most are over optimistic on the peace talk, while I think Putin is not the person to surrender so easily, and this war would continue until one side suffers major military loss. So there is possible we would get some bad news next few days.
3) This is most important, this coming Friday is quad witching day, which is the third Friday of the third month of each quarter. For whatever reason, if you check the two days before each quad witching day (that Friday included), you will notice in the past two years, the only case that is flat/positive is Dec 2020, all other case came with strong bearish bias.
Therefore, I still think we may see some bearish surprise next few days, starting as early as tonight, whether this push us to a new low below 4100 or only a corrective pullback that can hold 4200~4250, I really don't know, but I will adjust my position tonight/tomorrow morning to respect the strong bearish bias next two days, then I will make further decisions on Friday afternoon.
Bullish count:
The 4100 range low achieved late Feb is the bottom and we hit A wave of the next wave up on March 3, the 4130 range low achieved on early morning Mar 15 is the B wave of the next wave up, and by today's close we already finished or about to finish the wave 1 of C.
Bearish count:
The 4100 range low achieved late Feb is only (3) of (C) and Mar 3 high is (4) of (C), where (5) of (C) would be in (a)-(b)-(c) type, today's close is the (b), and we will do a quick dump next few days.
There is no doubt that today's action is bullish, and we may already have a potential bottom. I know many would doubt if there is another low in immediate future, well that probably include myself. The reason I haven't given up this idea is based on a few factors:
1) The high of today can be viewed as the completion of a gartley pattern, which is very common in corrective structure, if we can continue higher tonight and get above 4385, the likelihood of this would be greatly reduced.
2) With Fed decision cleared, Ukraine crisis remain to be the key focus of market participants. I think most are over optimistic on the peace talk, while I think Putin is not the person to surrender so easily, and this war would continue until one side suffers major military loss. So there is possible we would get some bad news next few days.
3) This is most important, this coming Friday is quad witching day, which is the third Friday of the third month of each quarter. For whatever reason, if you check the two days before each quad witching day (that Friday included), you will notice in the past two years, the only case that is flat/positive is Dec 2020, all other case came with strong bearish bias.
Therefore, I still think we may see some bearish surprise next few days, starting as early as tonight, whether this push us to a new low below 4100 or only a corrective pullback that can hold 4200~4250, I really don't know, but I will adjust my position tonight/tomorrow morning to respect the strong bearish bias next two days, then I will make further decisions on Friday afternoon.