ES

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The pros continue to use trendline breaks as support and resistance targets inside the trading range.  Yesterday’s reversal to the downside came at an extension of the 1069.50 break (from 8/20), and this morning we are seeing another potential VST (very short term) setup on a trendline break at 1040.50.

Pulling back to look at the big picture…

The two daily charts above show the current trend channel and trendline configurations (in my opinion).

1) The trendline chart shows price nearing the last critical support level (near 1028).  That is the line that I keep pointing out that bears will need to take out (and hold) to extend the current IT (intermediate term) bear market into something potentially more substantial.

2) The channel chart shows a range bound market (see shaded area on chart) and mixed channels suggesting a deep intermediate pullback in a long-term bull market.

As always, Stops and Targets does a great job of synthesizing the complex multiple trends into clear primary trend lines—and all three timeframes remain down, at present, below 1074.

The VST line in play early here could be 1040.50.  Initial upside counter-trend target is the line at 1053.75 mentioned yesterday–and then the descending red trendline above there.  Below 1040.50 are the bull stops resting under 1037 and then the key IT support trendline below at 1028 would be the next lower target.

…my .02

ES Update 8/30/2010

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ES has pulled back into a support band at 1058 to 1061.75, and may be working off the recent trendline break level at 1061.75 in the early part of the session.

The early advance/decline line is running slightly negative, so watching the bottom of that first minor support band at 1058 to see if VST (very short term) bulls can keep the countertrend momentum going here, or not…

The first VST bullish trendline breakout occurred at 1053.75, and so that line can be used as a reasonable initial hard deck for those who are countertrend long and looking for the next VST bullish objective higher–which is likely the stops resting just above the next descending red trendline, currently at about 1074 area.

If the hard deck support at 1053.75 were to fail, the next target lower would be the stops under the recent 1037 low.

A very important line underneath there is the intermediate term trendline support at 1028 area—and that is where bears would need to break below to potentially start significant selling.

All major trends remain down under 1077, but there is a VST countertrend rally underway from the touch of the support band and subsequent trendline retest at 1038 area and so we’ll have to wait and see how it resolves here above the 1053.75 hard deck.

…my .02

ES Update

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The red descending trendline I have mentioned all week is in play again this morning.  That is the first line that bulls would have to breach and hold to start short covering by the most nimble bears.

All trends remain down under 1078.25 and it is noteworthy that the short-term primary trend line has now slightly overtaken the long-term–and that is a requisite for a trending bear market.  The present Bear 5 multitrend configuration can be susceptible to violent bear market rallies—so best to keep an eye on the red trendline for the first clue that bears are starting to cover.

As I have mentioned in previous posts, the bears would need to break down and through the intermediate support trendline below 1026 to start a true panic sell-off—so the two major lines in play at present (in my opinion) are the red descending trendline…and the rising intermediate trendline under which is the text label ‘bull stops here’.

…my .02

ES Update

The red descending trendline I have mentioned all week looks to be in play again this morning.  That is the first line that bulls would have to breach and hold to start short covering by the most nimble bears…and it has now been tested three times.

All trends remain down under 1078.25 and it is noteworthy that the short-term primary trend line has now slightly overtaken the long-term and that is a requisite for a trending bear market.  The present Bear 5 multitrend configuration can be susceptible to violent bear market rallies—so best to keep an eye on the red trendline for the first clue that bears are starting to cover.

As I have mentioned in previous posts, the bears would need to break down and through the intermediate support trendline below 1026 to start a true panic sell-off—so the two major lines in play at present are the red descending trendline…and the rising intermediate trendline under which is the text label ‘bull stops here’.

…my .02

ES Update

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ES bounced yesterday at the support band between 1035 and 1038 (low of day was 1037) then rallied into the close.

After the close yesterday, Stops and Targets Signal Matrix showed an unusually high number of bottom spotter signals (see screen shot above).  There were also a number of counter-trend buy signals detected (a new feature in Stops and Targets 2.0).

By themselves, the spotter signals don’t mean anything until confirmed—but they can serve as an early warning for bears that something could be afoot so as to be flexible psychologically and defensive in position management.

The descending red trendline shown in the intraday chart above is the first line that bulls would need to cross to get bears to start covering.  There is an open gap at 1063 and a horizontal trendline break echo at 1061.75.  If those are crossed and held, then bulls might be able to get something going in terms of a countertrend rally, and possibly more.

The last ideal sell at 1093 is comfortably in profit here, but the spotters urge caution—just in case.  There were no index spotters yesterday, just individual equity issues—so those have to watched on a case-by-case basis.

All trends remain down under 1080, but there could be something going on under the surface here.  Next target lower is the rising IT trendline at 1026 area.  Next target higher is the LT primary trendline at 1080.  The descending red trendline should work as a good VST (very short term) bull/bear line throughout the day (VST bias is bearish below/bullish above).

…my .02
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PS
The guys at S&T have been upgrading to a new version this week that I think is brilliant (I have been using a beta version for several months).  The underlying logic engine has become dramatically more sophisticated and it now holds a trader’s hand throughout the entire process–showing high probability entries and recommending exact stop placement to maintain a minimum 3:1 gain to risk ratio for excellent risk management practices.  It also detects high probability countertrend trades (ahead of potential primary trend changes). Take a look at the NQ example above to see an example of the new countertrend detection and risk management features (if price wiggles back and forth here in the early going, you can see how it handles the transition between signals).   It also shows spotter detection/validation/invalidation in real time and lots more stuff, which I’ll let them explain in detail when the 2.0 update is complete.

Head’s Up…

For those of you with Stops and Target’s full access subscriptions…I would encourage you to have a look at the end of day Signal Matrix reports that were just posted–especially the spotters page and the new counter trend signals on the first tab.

I’ll talk about it more tomorrow, but just wanted to send out a quick ‘head’s up’ email to subscribed readers.

For those who may not be aware–there is a box on the right side of this blog where you can enter your email address to be notified automatically when a new post is up on this blog.  Just look for the all bold title ‘EMAIL NOTIFICATION’.