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(click image to enlarge chart)
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The tentative countertrend bear stop line I drew in yesterday is working, so far. So long as ES continues to work lower under that line, the most aggressive bears have some hope.
ES would need to trade below the S&T (Stops and Targets) short-term support line at 1120.75 to trigger the first short-term countertrend sell signal and the bulls would likely only start selling under 1117 as trailing stops begin to activate.
To the upside, the next S&T target lines up with the long-term resistance trendline at 1160 area. Above that is a band of very heavy resistance (shown by shaded red rectangle) that might eventually need to be gapped through to circumvent, if the ultimate plan is to break out higher.
As I mentioned previously, the last significant VST (very short term) resistance was at 1138.50 — so this recent action has the feel of a quarter-end squeeze as price has levitated in a zone with few upside targets between here and 1160 area—but it could also be an effort to work towards challenging the upside resistance band.
The ideal VST trade (in my opinion) remains long from 1035 with trailing stops set at 1120.25 short-term primary trend support. There is a (unconfirmed) spotter signal in place at 1149.75 and so caution remains in effect for existing long trades as the pros continue to wear out impatient countertrend traders above the squeeze line at the 1120 area.
The ferocious 9/24 squeeze took out a full slate of confirmed index top spotters before they reached their first downside objectives. That is a fairly-rare occurrence, in my experience, and so I watch now with great interest to see what comes next. It was all set up to fall there and came within .25 of a technical sell trigger at 1117.
As quarter end approaches, the two closest trendlines on the chart above are the immediate focus. A breakout above the tentative trident channel top rail (red descending trendline) could lead to a shot at the LT resistance trendline and S&T upside target at 1160. A breakout and hold below the (light gray) rising VST support trendline would be the first possible bearish confirmation for the as-yet unconfirmed spotter.
All major trends remain up > 1114.50
…my .02