Thursday’s trade started off weaker with a quick drop followed by a slow but very consistent push to the upside.  The last hour saw a much stronger push that failed thus far to reach resistance at 4202.  I have made a major labeling change on the ES.  I have discussed at least once before the potential that the ES off of the 4631 high could be showing that the low at 3807 completed Minor wave 1 of Intermediate 3.  I’ve made that adjustment to the chart, which carries some additional implications:

1. The ES is now tracing out a Minor wave 2 correction, where it appears that wave A of 2 is complete or nearly so.
2. The overall pattern for wave 2 would be an A-B-C zigzag pattern, suggesting and pointing to an additional 5 waves up in a “C” of 2 that carries the potential for reach resistance at 4220 to 4316 and the overall move would still be considered “countertrend” and corrective.
3. Once Minor wave 2 is complete it then suggests that the ES would still put in a much stronger, more destructive Minor wave 3 decline.
4. Intermediate wave 3 would still be expected to find support to complete in the sub 3700 levels.

For tomorrow, if it’s Friday it must be another weekly expiration.  Much of today’s gains are likely to attributable to tomorrow’s expiration cycle.  From the close at 4178 the ES still has room to rally up to resistance at 4202 to 4219.  The daily 50 is above at 4183 and I would suspect that level would be broken and a move towards 4202 and above would be needed to complete wave A and be the launchpad for a “B” wave smaller decline.  However, having said all of that — I won’t attempt to put any parameters around where the top may or may not come in.  A break above 4219 would clear the path for an attempt to get up to 4316.  Play the price action and use the Fibonacci resistance and moving averages as guides.

Ultimately, should a Minor wave 2 be in play here — it has the potential to reach resistance at 4316 and also as high as 4388 before a crushing Minor wave 3 decline takes over.