Friday’s expiration took the markets on a more extended move lower. The ES was at times more difficult to trade with plenty of sudden bursts of trading without follow through. In any case, the ES did manage to drop $68 before all was said and done.
The move itself does not leave me with much to add to the current picture. I do include some thoughts on the potential for another record-breaking expiration coming up on June 17th. I’ve not heard anything solid as to perceived direction, but I have presented both an upside view which includes a run back above 4202 and on up to above 4300. Currently if we are still within a Minor wave 2 bounce – the market can be best counted as having completed wave A of 2 at 4202 from Thursday’s Globex opening. Wave “B” then is likely still in process and allows for a move to the 4090 area to complete and set the stage for a “C” wave bounce back at least to 4202 and potential for a continued move up to 4220 to 4320.
Conversely, should the ES break below 4085 with strength it raises the possibility that the downside view is kicking in — and that would be in the context of a Minor 3rd wave being in process. This suggests that ultimately the NQ breaks below 3807 with a possible drop into the 3700 handle.