BULL alternate #1 (ES hourly chart)
Shows us in the C leg of a flat type wave 2 correction to September's wave 1 rally. ES targets are the 1103 and 1090 areas. When wave 2 is complete it will usher in wave 3. By definition that wave 3 should be strong and relentless.
BULL alternate #2 (ES hourly chart)
Has wave 2 to September's wave 1 complete at the lows of Thursday, 9/23 with a series of waves 1 - 2's since then. Less likely alternate IMO due to the choppy nature of the action since 9/23 - if this count is correct we are in a wave 3 which should be much stronger and more definitive.
BEAR alternate (ES daily chart)
Should not be ignored. October is historically the most bearish month of the year, and the September rally could well have been the set up for a classic October crash. As has been mentioned multiple times on this blog, market volume has been and remains comparatively weak since the March '09 cycle lows. Rally momentum since the initial ramp up of early September has clearly waned and the chart looks like it's beginning to roll over.
The daily Trend/Osc is flirting with a sell signal with a close below the uptrend line on Thursday and barely above it on Friday. A close below that uptrend line accompanied by a break below 80 on the Dynamic Oscillator will generate an official sell signal on this time frame. Conversely a new high for the move up from late August will reset the uptrend line and possibly avert any potential sell signal for the time being.
The hourly Trend/Osc generated a sell signal Thursday evening with a close below the uptrend line from 9/23 (the Dyn/Osc was already tracking below 80). The long ES's from 9/24 entered @ 1135.00 were sold Friday morning at 1143.50 for a gain of 8.50 points and a short ES position was established at that 1143.50 level. Not the best of gains on the long trade, but given the whipsaw nature of last week's market I guess it wasn't all that bad. Still holding short ES but nervous about "ramp up Monday".
