As I have so often said, b-waves are quite difficult to trade as they are the most variable structure within the overall corrective structures we track. And, today certainly proved that to be true yet again.
Last night and this morning, I sent out alerts which noted that as long as the ES holds the 2804ES level, then we have the potential for a more complex (b) wave, with a c-wave rally back up towards the 2830-2837ES region. Moreover, as the IWM was pulling back today, I posted that as long as we hold over the 164.50 level, we can still see a similar complex (b) wave structure take hold as well.
Today, the low for IWM was at 164.50, and the ES low was 2806.75. As long as these levels continue to hold, we can be looking higher for a c-wave rally to complete a more complex (b) wave. In fact, as long as the IWM remains over 164.83, then we can continue to look up towards the 167-167.70 region for this c-wave of (b). It would take a break down below 164.50 to invalidate this potential.
But, please do not lose track of the bigger picture while focusing on these micro moves. Our expectation remains that this rally is only going to set up a drop lower in the coming week. Thus far, we have only seen an (a) wave drop, and have seen the minimal rally to consider all of a simple (b) wave completed. So, it is still quite possible we drop at any point in time, even if we do not complete this more complex (b) wave I discussed above. Remember, the market never offers us very high probabilities during corrective structures.
Moreover, most of you would likely be best off planning your buying opportunity for when we complete a 5-wave (c) wave to the downside. Trying to trade b-waves is quite difficult, and, in a bull market, you are likely better off planning buying opportunities after a corrective structure completes rather than attempting to trade the corrective structure.
So, over the next week or so, I expect to see a (c) wave drop. And, as we complete 5 waves down, planning your buying may be a good idea.