ES

The equity markets experienced hard downside price action. Range on the ES was 25 handles, while volume was very heavy and expanding.

Volume has continued to expand during this sell off, suggesting that distribution has been taking place.

This is what structure looks like intraday. This is the same chart posted in eChat, except I have added the fib relationships.

It is unclear what that mess is in the middle with the question mark. I believe it is probably a triangle and looks much better when not scrunched up. This suggests a B or 4th wave.

The question is what degree - if a 4th. It is possible that it is sub-minuette degree, which means that we are finishing up wave v, and thus minuette (iii). I don't really care for the fib relationship, but it is what it is. We should know shortly.

It is very possible that the degree's should be moved up a notch.

The weekly chart shows the nice rejection price had with the upper channel line. In fact, there were several lines of interest in the same vicinity, though not all are shown.

Notice the action in RSI. It has broken its uptrend line from the March lows. There is also negative divergence in place.

MACD has a cross-over that occurred several weeks back. Notice that it has tried to retake the average, but has failed, resulting in a bearish hook. The histogram has been divergent for months.

The channel off the March lows has been violated. Should price close below this channel, this would be confirming evidence that, at minimum, an intermediate degree correction is at hand - and possibly the end of the bear rally.

Cash has broken and closed below the uptrend channel off the March lows. This is a big deal folks.

I believe this is telling us that this intermediate degree ABC (or WXY) has completed. This means that we are in the process of tracing a (1) down, if that also completed a primary degree [2] wave, thus ending the bear rally.

Should primary [2] need additional work, then we would be tracing an (X) wave instead.

In each case, it portends much lower price. I have placed prices of the pivots that may provide support on the chart.

In my update on October 18th, I stated that I felt a man-sized correction was very near and that it wouldn't surprise me if it was 100 handles or better. Any intermediate degree decline should easily achieve that.

The next major KoolsTools cycle low comes from the 9/23 and 10/21 dates. This should arrive in 16 more trading days. There is also a peak scheduled in 4 trading days.

Edit: I failed to mention what bullish alternatives could possibly be in play. The only viable option that I can see, is that the 1099 H finished a 1st wave of an ending diagonal.

I believe that this is low probability. Any trade through the 1012 (1015 pit session) level invalidates this option. In my opinion, the best bullish case is that we are tracing an (X) wave. Sorry bulltards - now assume the position!