(click image to enlarge chart)
Today’s OpEx selling broke the fledgling VST uptrend channel (ascending blue trendline on chart above)
The ES bounced yet again at the old high mark of 1128.50 (bold magenta line on chart above)—which is important, since movement back under that line would start to unlock some bears who have been trapped in losing short positions since the January 4 range breakout (shown by green arrow on chart above).
My read on the price action on ES since January 4th is a sideways consolidation and hold above that breakout line at 1128.50, which has been bought aggressively on several occasions.
(The sideways consolidation zone is illustrated by yellow rectangle in chart above)
The VST bears have a potential short trade working here under the ascending blue trendline break (formerly the bottom rail of the purple channel). The next goal for those VST bears would be a break and hold below the dashed black trendline, which continues to line up very favorably with Stops and Targets’ short-term primary trend support, which is presently at 1125.75.
The rising blue trendline also serves as a potential place to try a back kiss play if it is sold after a rally—but VST bears should probably let that trade go if it breaks back above that back-kiss trendline.
All trends in the higher timeframes (LT, IT, and ST) remain bullish above the Stops and Targets ST primary trend support. Bulls would like to see the bottom of the consolidation zone (yellow rectangle in the chart above) hold in coming sessions–and the initial target for an upside move is the descending red trendline with an eventual breakout to new highs (to run bear stops above the most recent high).
At the Friday close, there are no new index top spotters in place (beside the existing NQ and COMPX) and so long as the ES remains above ST support (dashed black line on chart above), all major trends remain up.
The key line to watch continues to be the ST primary trend support—which is often the pullback target in a powerfully trending market. The NQ signaled a ST primary trend support buy signal today, so that initial target has been achieved from the spotter setup.
I would expect to see Top Spotter signals in place across all the major indexes when a swing top is in place and that is not the case here. That would suggest to me an eventual move to new highs (one of the prerequisites for a spotter setup) before a tradable swing reversal potentially sets up. The market doesn’t always do what we expect, though—so, best practice is to respect the primary trend support by time frames to lock in profits and to serve as a place to potentially reverse bias when violated.
Hope everyone has a great weekend—and be sure to check out the new video at:
I think they did a good job with that and it is a great way to quickly show folks what S&T is and does in less than 2 minutes.