Wednesday’s trade was volatile in both directions from the opening to right into the bell. Then it appears that Facebook aka Metaverse detonated an atomic bomb under the stock after reporting earnings. FB dropped from 323 to 243 before attempting to pull itself up out of the gutter. The ES dropped not as quickly from the close at 4573, but it did reach an after hours low at 4540. Nothing like kicking the wind out of the bulls sails! The ES though may not be in imminent danger as many likely believe. Yesterday, I adjusted the Elliott count and labeling to show the completion of the Intermediate wave 1 and laid out the path for the Intermediate wave 2 correction. Thus far it appears that the ES has completed Minor waves ‘a’ and ‘b’ of Intermediate wave 2. Which then suggests that the ES remains in the process of tracing out Minor wave ‘c’ of Intermediate wave 2. That is likely what the ES remains currently tracing out. Thus far it appears that waves 1 thru 3 of ‘c’ are complete which then suggests the decline in progress is a 4th wave. So what can we expect — 4th waves can be sharp or a zigzag structure or more of a “flat” structure where the internal waves produce a tighter range. A zigzag pattern would fit after today’s FB earnings report. For tomorrow then I suspect we will continue to see downside, but it may be less severe than the NQ. Next support comes in within the zone at 4535, with a break there dropping support ato 4515 to 4496. A break below 4496 drops support to 4480, (30 min 200 MA), to 4474, (price support.) Again, a break below the hourly 200 MA at 4469 it would/should ignite additional acceleration to the downside and should that occur support comes in at 4446 to 4427. A move below these levels would begin to signal that the Intermediate wave 2 correction is complete.
February 2, 2022