ES Morning Update December 13th 2024

We got a pullback yesterday but it was for a higher low, not the C wave down for a lower low that I wanted. But the market rarely gives you want you want. The volume is just too light for any big drop to happen it seems, but that won’t last forever. It’s the holidays and traders are gone early as we go into Christmas. I posted a chart on Twitter yesterday, and below is that chart.

As you can see the market is setting up for a wave 3 up inside a wave 5 (most likely) and it should take us to new all time highs. The market always has the option to chop sideways to work off short term overbought charts instead of doing a deep pullback, and that’s pretty much what it’s been doing now since the all time high a week ago. Assume the low from 12/10 holds, and I think it will, we should start a wave 3 up that could finish by mid-late next week.

On the chart I drew the wave ending next week and a small pullback for the wave 4 into Christmas with the Santa rally afterwards being the wave 5 to another new all time high. But it doesn’t have to play out like that. We could see the wave 3,4, and 5 complete next week to put in the final high. Then the small pullback into Christmas and the Santa rally will carve out a wave 1 down and 2 up of a bigger A wave down.

That wave 2 up would then make a lower high into the end of the year, which might look like a double top. It will setup January for a wave 3 down inside an A down of an ABC move that will unfold in the first quarter 2025. The entire ABC of course will be the bear market that everyone is looking for and putting out crazy predictions of 60% or more down. I don’t know how low it will go and that’s pointless to try and figure out anyway. I can hardly figure out the next week or two, let alone the entire year. Anyway, if we reach 6150+ into next week we could be finished on the upside.

But shorting that first high probably won’t offer much on the downside as again, the first move down will just be a wave 1 inside an A wave and I think a better short will be the first of January after we see the wave 2 back up for the lower high. If it turns out to be a higher high then so be it. It will then complete the wave 5 up in the chart and from there we’ll start the wave 1 down inside A down. What we might see is that the SPX cash makes a lower high into the end of the year and the ES futures makes a slightly higher one. I say that because after next week is over with the ES will be on the March contract, which will be 50-60 points higher then SPX cash, and currently the December contract of the ES is just about 10 points higher, so they are quite close.

Anyway, as for today I don’t have anything to add. The short term technials are working off their overbought conditions and getting short term oversold, so a powerful move up should start soon and last into next week.

Have a great weekend.