The wave structure indicates the current pullback is sub-wave 4, which is a correction wave. After this sub-wave 4 completes, there still need to be one more push up — wave 5. But that wave will have a short duration and short length. We may see ES form a double top pattern or extend a little bit high above its Nov. 9’s high area to end the rally from Aug’s low.
Yesterday was Veteran’s Day, and we saw very light volume as we predicted in our trading plan yesterday. Today is the first QE2 POMO day. We expect ES may go down first to form a bottom before noon, and later move back up for a high closing. Next week is option expiration week. Thursday or Friday the week before the expiration often looks weak. But the low of those days will often be the lowest level for the next week.
ESZ0 Daily chart
ESZ0 Intraday – 60-minute bars
