ES Journal - 2019/2020

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Even on a micro level, seeing the bullish wave patterns. We have met the minimum target for wave 5 so could be getting close to exhaustion in short-term. If you look at my prior chart, this is breaking that entire wave 5 that began this morning into its subwaves. But again, still with Buy1Sell2 that this may be coming off a significant low last week.

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So just to look at all options, the way I read this, either last week's lows were just a pause in the bull or the top from early September is significant and last week's lows were just the first leg down. Seems like we could have just exhausted this leg up so either we get a subwave 2 pullback which will be a huge buying opportunity or we're going to test and likely exceed last week's lows. Trying to keep an open mind here.
 
Cessna06P said:
What just happened? That was quite a move down.
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It's just the way market move sometimes, moves like that aren't super uncommon particularly in this environment. I am sure tons of people were short covering and new buyers are coming in, the bus just gets over loaded to one side and the imbalance will be corrected. I mean NQ went up 350+ with very minor pull backs and even that move down was only 20% of the up move.


Or put another way big moves like this make larger charts more active, so when the sell or peak comes, the counter reaction is going to be larger. This move down wasn't even a full candle on a larger chart.


Of course you can pull up and look for news to justify the move down, but really what good does that do? It was nearly if not impossible to react to that move fast enough based on news, so it's really irrelevant.
 
Cessna06P said:
What just happened? That was quite a move down.
More...

Pull up a 2 minute chart or even really any chart, Look at the velocity of the up move just prior to the drop. That move was virtually straight up, pretty fast and no pull back. Moves like that tend to get retraced at least 70-80% of the move.

So, whenever you see that just need to be more aware that at some point that move will very likely be retraced.

You can apply the same logic to a larger chart. Of course it helps to have some type of consistent and objective measurement to determine which moves will be retraced, but this is a concept that helps me be less surprised by down moves.
 
Barron's said this:
"Stocks Give Up Most of Their Gains After Stimulus Talks Stall Again
By Barbara Kollmeyer, Teresa Rivas and Carleton English
Updated Sept. 30, 2020 2:51 pm ET "
 
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