Monday’s trade added support to the minute wave 3 decline being in force. The count itself suggests that we are now dropping in a “3 of 3” move. In tonight’s update I spoke about some interesting factors outside of the equity markets that added sell pressure to the equity indexes. First up was an announcement from Barclay’s of the discontinuation of two ETN’s – one being the VXX – the VXX options saw a huge jump in volatility to over 230% with the VXX being up over $4.45 during the session. The other news was what is happening over in HYG, the iShares High Yield ETF, where it appears that the fund is collapsing trading down over a full point during today’s session. In the ES the market did rally for the first hour and a half as the minute wave 3 decline continued. The internal count shows the completion of subminute waves 1 and 2 with subminute wave 3 possibly complete at today’s 4155 low. As discussed on last night’s update the market did begin to accelerate to the downside and broke below the 50 and 20 MA’s and support at 3 different levels. The ES has yet to break below 4138, which is where minute wave 1 completed. If the small internal count is correct expectations from here would be for a small 4th wave bounce to hold below 4187 before again picking up the downside via a subminute 5th wave down. The 4154 level should be broken cleanly with support then dropping to 4138, 4129, and then 4107 to 4100. While the market may bounce there I would expect a continuation to again drop the ES to next support at 4047, and then zone at 3981 to 3874. Ultimately, I believe that the ES will drop into the zone at 3854 to 3661 before minute wave 3 is complete.
March 14, 2022