Today ES showed us what kind of whipsaw can be expected in a B wave: overnight market was holding pretty well, but slightly higher than expected CPI report spooked the market and ES dropped 70 points within an hour. It then spent a little bit more than an hour and reclaimed almost all the loss. RTY even made higher high. Followed by a seemingly routine pullback, Fed's Bullard's comment that favors a 0.50% rate increase in March and 1% increase before July spooked the market again, and market followed a trend down almost rest of the day, until a small short covering rally happened shortly before the market close. Although the whole route seems to be controlled by random news events, the same beat of CPI did not provide such drop in most of the past occurrences, which is why I said B wave played a more important role today. Also keep in mind during CPI day, only direction made after 11 AM or even 12PM ET can be trusted, there are usually lots of whipsaw before that, even roundtrip like today.
So now CPI report is past, what's next? Since today's drop stopped right at the trendline support connecting Feb 4 and Feb 8 low, and it retraced 76.4% of the rally since Feb 4 till yesterday, technically, this could be it, and we could be forming a higher low tomorrow and go higher from that. But given the wave structure, it would be better to see us continue lower tonight/tomorrow morning into the support range of 4390~4450 to finish the (c) of (B), before going higher again, and this would be my primary route for now. No matter what, I am still looking for a bottom most likely tonight/tomorrow morning before a run toward 4640~4680 sometime next week (most likely will be after Wed when Fed minutes is released). Please be prepared for more whipsaw as we are in a B wave, and B wave is totally a beeech...
And even if it's not what I expected, if we somehow break 4350 directly from here, then this whole drop is probably over and we should expect a retest of Jan low. Until then, my expectation is we would see 4640~4680, and potentially 4700 first, before revisiting Jan low either at end of Feb or early March.
So now CPI report is past, what's next? Since today's drop stopped right at the trendline support connecting Feb 4 and Feb 8 low, and it retraced 76.4% of the rally since Feb 4 till yesterday, technically, this could be it, and we could be forming a higher low tomorrow and go higher from that. But given the wave structure, it would be better to see us continue lower tonight/tomorrow morning into the support range of 4390~4450 to finish the (c) of (B), before going higher again, and this would be my primary route for now. No matter what, I am still looking for a bottom most likely tonight/tomorrow morning before a run toward 4640~4680 sometime next week (most likely will be after Wed when Fed minutes is released). Please be prepared for more whipsaw as we are in a B wave, and B wave is totally a beeech...
And even if it's not what I expected, if we somehow break 4350 directly from here, then this whole drop is probably over and we should expect a retest of Jan low. Until then, my expectation is we would see 4640~4680, and potentially 4700 first, before revisiting Jan low either at end of Feb or early March.
Comment:
As long as we stay below 4530 tonight, good for a run to 4390~4450, otherwise, bottom could be found already.
Comment:
So far ES only reached 4454.5. But it's low level consolidation overnight, if we can stay below 4510, still pointing down, above 4520, and especially 4530, bottom may be in.