ES Update

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VST (very short term) bull/bear line is at 1338. That is the line bears would need to cross beneath to escape from the FOMC breakout squeeze.

The present small pullback is likely being caused by profit-taking at a touch of the center of the ST trend channel (shown as light green dotted line) near 1356. I have drawn in a dotted red trendline that shows the protective stop placement for counter-trend bears. If that line is crossed and held to the upside, it could become a VST momentum buy signal targeting 1368-1374 area.

We are now in an area where spotter signals could form–but it is very important to be careful with those after a trending breakout–and if they do form, to wait for confirmation (and/or a countertrend sell signal).

S&T’s user guide does a great job explaining how spotters work and I highly recommend reading their explanations (and the whole guide) at:

http://www.stopsandtargets.com/members/help.html#44

and

http://www.stopsandtargets.com/members/help.html#64

All S&T primary trends are up > 1321.50 (which lines up presently with the bottom of the ST trend channel)

…my .02

FOMC Day

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Yesterday, ES broke out from the old trading range above 1338 and bear stops are being run above the old pivot and gap fill.

ES 1338 is now the bull/bear line for VST traders.  Day traders will be biased long above and short below.

I have also included daily bar trend line and channel charts for ES.

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Today we get the FOMC announcement at 12:30 pm…

I have included weekly futures charts of the three major indexes (ES, NQ, YM) along with the dollar (DX), gold (YG) and oil (QM). The vertical lines represent the beginning of the current US political administration and the start of ARRA. The correlation of results should be self-explanatory.

…my .02

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ES 1338


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Stops and Target’s trending level near ES 1329 has been holding on the small pullbacks over the past few days with buyers stepping in each time, I think, in anticipation of a breakout above 1338 perhaps coinciding with tomorrow’s FOMC announcement.

As I have been saying ever since we entered the trading range… ES 1338 is the key. Above there are guaranteed buyers (the bears who have been trying to pick a top in a raging bull market). Once the bears are forced to buy to cover short positions, there are momentum buyers who will step in anticipating an extension in price equal to the depth of the recent IT pullback–or about 40-50 points to the north.

Last ES IT buy signal was at 1295 and those buyers have been rewarded with partials at 1337 and a small range between 1329 and 1337 has been building a possible bull flag under the gap resistance at 1338.

Bears are in a tight spot here, whereas bulls have a decent cushion of profit to ride the wiggles. I suspected that the pros would save this resistance and those guaranteed buyers for the FOMC announcement, and here we are just a day away, right at the line again.

It is all about 1338…and if that range is broken to the upside, it could be spectacular if the pros turn the screws on buyers trying to get in on market orders.

If 1338 is broken…that line will become the new bull/bear line for very short-term traders.

…my .02

Range Top

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ES has come within .25 of the top edge of the 1338 – 1241 range and has broken the ST trend line resistance at 1336.

S&T short-term resistance is at 1337.50, so those who initiated trades since the IT buy signal get to take partial profits again.

Just above the cash premarket high is an unfilled gap at 1338 and on the other side of that line likely rests a very large number of bear stops–which, if triggered, could initiate a capitulation sequence.  In other words…there are guaranteed buyers above 1338–and buyers are what the pros need to start monetizing their gains.

The next FOMC meeting is now four trading days away.  Let’s see if they take the stops early to trigger a breakout–or if they pull back to fish for more bears to add to the pile of guaranteed buyers…

Above 1338 is a range breakout, and if that happens–that line will become a new bull/bear line for those looking to game a possible capitulation and reversal.  Above that line is also where new index top spotter signals could become possible–and so that will be interesting to watch for.

The market will only reverse lower when the majority of bears are too afraid to short.  That takes away the guaranteed buyers above which dries up liquidity from outside sources.  Retail bears have been way too eager to get short and it has been obvious to me that the situation wasn’t right yet for the market to experience a significant decline.  Those guys need to be flushed out and/or converted to bulls before we see the possibility of the start of a real bear move.

So far, we have seen a textbook pullback from IT trendline resistance at 1335 to IT support near 1295, and both were detected by S&T and pointed out here.

Now we are back to the range top and ST trendline resistance.  To bring in the momentum traders, we need to see the ST resistance trendline broken to the upside (and then possibly retested on a back-kiss).

The markets make complete sense when one tunes out from the ‘news and noise’ and steers a wide path away from the message board warriors and pundits who almost never get it right.  That S&P ‘news’ release two days ago was a real gem–and a perfect example of how the masses are manipulated.

ES 1338 is in play right here–and we’ll have to watch and see if it is another range top test, or turns into a breakout.  This could be an easy counter-trend play with minimal risk for VST range traders–but you sure don’t want to be short if this eventually breaks out above 1338

…my .02

ES Update

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The IT buy signal from 1295 (confirmed support inside the green ideal buy zone) has run to just under the S&T range top at 1329.25

A short squeeze from that IT entry signal has taken bear stops that were above the VST trend line resistance (now broken) as well as the old bull/bear line at 1318.75, where bears who chased the ‘news and noise’ and then missed the exit/reversal at 1295 likely had their stops sitting.

Support below is at 1318.75, then 1311.75

Next VST resistance above is at 1335, then the gap fill at 1338 at the top of the big range.

Dotted green line represents the tentative ST trend channel bottom rail I pointed out yesterday.  Bulls remain in control above that line, which is likely being used by pros to trail stops from the ideal entry near 1290.25

…my .02