Morning Update: What's Next?

I would anticipate our retrace up start today. This retrace will either be a minor wave 4 or a b-wave. If we get above 3972 then it's likely this is a b wave retracement and not a 4th wave in an impulsive wave 1 of c. Incidentally we're now in the target box for purple b.

Micro chart below:
www.tradingview.com/...Z2-ES-Micro-1-19-23/
I think we're extending in wave 3 still. So I anticipate a wave 4 retrace and OML if we are to remain impulsive....or we retrace in a b wave higher without a wave 4 consolidation as per the micro chart above. We have the .50% Fib Retracement Support at 3912...as well as the .618% at 3882.75. I expect a reaction off of one those if we get down that far today.

Nonetheless, the most important thing I am watching today is the structure of this wave down, and the anticipated retrace. This will tell me if we're eventually going to sub 3788 or not.

Best to all,

Chris

For those who are interested:
I want to take a brief moment to explain the trade I did last night as I have gotten many DM's inquiring about it. This post is not the place to give a lesson in futures options. I hope to do that in the future as futures options are my main source of profit. When you trade an option, a contract between the buyer and seller is already organized within the option. I NEVER BUY OPTIONS...NEVER-EVER. I only sell. I do so, because I believe sellers have the statistical edge over buyers by an insurmountable percentage. Last night I sold 25 put contracts at the 3880 strike for $4.35 each. In doing do so, the buyer deposited in my account $5367. The trader who bought those options from me obviously thinks the ES will be below 3880 before those contracts expire which is tomorrow at 5pm EST. SO I'm selling a specific price, and at a specific time. Hypothetically, the ES could go to 3879 today but if it's above 3880 at precisely 5pm EST the buyer loses his entire investment to me. I sold those options last night when the ES was at 3939. Since last night the ES has gone against me by 20 points. But because time is ticking those options are only worth $3.50. So if I bought them back from him now I would pay $4,445.50. I would keep $921.50. Those options above 3880 have NO INSTRINSC VALUE. The buyer is gambling in my casino, and I am the house. Now, if the ES goes below 3880 between now and Friday at 5pm EST, these could become very expensive for me to buy back and therefore could lose a lot of money very quickly.

Comment:

The very Micro pattern down is overlapping on positive divergence. This move down should be coming to an end shortly.

Comment:

As of 8:49am EST with the ES down 25 points since I sold the 3880 puts...the puts are now at $4.35...so breakeven. Selling Premium done the right way is one of the best trades a trader can deploy for profits. However, your analysis and the strikes you choose better be accurate.

Trade closed manually:

In an abundance of caution I closed my short put trade from last night at $1.45 for $1742. Keeping $3,625 in premium. I want to thank you the original buyer for some beer money:)