ES Morning Update December 5th 2024

The grind higher continued yesterday with no signs of a turn yet.  The window for a top and turn has passed in my opinion and at this point I only see a small pullback into next week before we grind back up again for either another new higher high or a double top.  It will push this out into late December from the looks of things but it will depend on how much of a pullback we get and how long it takes.  I have some like targets for it, which are below…

That FP on the SPY wouldn’t be much of a pullback but it’s roughly 40 points down on the ES/SPX from the current high (4 SPY points).  I suspect that will be an A wave down in an ABC pullback as we know that trapped bears will sell on the first pullback and bulls that missed the long will buy it.  Naturally the market never makes it that easy so another drop should follow after a bounce back up for a lower higher for the B wave.  That second low will likely be the FP I see on the QQQ on the chart below…

Since it’s right around the opening price on Friday 11/29 on the QQQ it should be close to that same zone on the SPY, which in the 599.50-600.00 range.  That’s roughly 8 SPY points down from the current all time high, which is about 80 ES/SPX points lower.  I don’t see anything else so that’s likely all the market is going to give us for a pullback in the coming days.

But I would not look for another strong rally up as everyone is going to get long and it will be a slow grinding move back up.  It will be some final 5th wave with the pullback being the 4th wave, and I don’t know the target level for it.  I will just wait to see when the technicals suggest the top is in.  It might be just a hair higher (a double top?) or an extra 100 points higher… I don’t know?  Here’s the daily chart below…

Notice how close the RSI is to reaching overbought but it’s really struggling to get there.  Again, I don’t know the time frame but it’s got to be just days-weeks away, not weeks-months.  It will NOT be an obvious high as all the tops in the past never had blow off tops either, so there’s no reason to expect it to happen this time around either.

It will be a subtle high that won’t be noticed by the masses, and it should come on light volume.  It could be right into the Christmas period as everyone will be looking for the Santa Rally to happen right afterwards.  So we could see that high happen the week prior to the 25th as then no one will pay attention to any small pullbacks that start happening as we go into the holiday and the end of the year.

It’s not going to be easy to catch it but I do think we will see it this month, not in January.  This assumes a small pullback in the coming days and not some 200-300 point one.  Keep it small and that will cause the top to come sooner, and the FP’s I have suggest only about 80 points down for this pullback.

In closing, don’t get sucked into thinking we have topped now if the pullback comes here in the next day or so as the FP will be the target low where we will bottom and then go back up again.

Have a blessed day.