ES Update

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We have now had four consecutive trading days of bearish advances…starting with the VST sell at 1330 on 7/26, then the flip of ST and IT primary trends and ST trendline break sell at 1307 on 7/27, yesterdays close under the range bottom at 1300, and now today’s stop run under 1291.25

The new stop/reverse line is at 1291.25, and if the game has been to squeeze bulls out to accumulate positions ahead of a resolution to the ‘crisis’, this could be a spot where we see a reversal once the stops are run under that line.

Simplest way to look at this is VST bearish below 1291.25 and reversing to VST (and ST/IT counter-trend) bullish above that line.

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I have had a couple of questions recently about the two spotters in play, and I have included a daily chart to show the ‘really big picture’, which is the spotter range between 1368 and 1252.25. Note that the centerline is at 1310 and the ideal entry zones to assure 3:1 gain to risk are bounded by 1295 and 1324. The blue triangle represents the contracting range within. That is what the pros are looking at while shorter-term players are getting chopped up between the range.

Both spotters remain valid until either 1252.25 or 1368 is ultimately broken. The spotter odds have been approximately equal for the eventual trending resolution of this large range–but odds skew bearish under 1310 and bullish above.

…my .02

ES Update

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Yesterday’s selling broke ST trendline support at 1307 and has pushed ES to a test of the bottom of Stops and Targets’ trading range at 1300.50

Just below this area is VST confirmed support at 1291.25. That is the line bears must now cross and hold to seize momentum by triggering sellers under 1291. Otherwise, above 1300.50 and we are back inside the trading range.

The early battle today could be in a narrow range defined by 1307 on top and 1291 on the bottom. Above 1307 and the most aggressive bears will start to cover to get out of the way of a possible intra-range rally which could initially target the open gap at 1341.75, and then the other side of the S&T trading range at 1351.75

The next target lower is the stop area under 1291. If ES is pushed under that line, it would trigger protective stops and provide sellers in volume. That is a climate where either a stop/sweep reversal could form (centered around 1291)– or we could see a clean break of VST confirmed support followed by a fast move towards the next bearish objective near 1264.

For now, 1307 can provide a VST bull/bear line…  intraday price action is bearish below/bullish above.

The pros love to set up these ambush zones around a contrived ‘financial crisis’.  As always, it is best to ignore the news and noise and focus on the support and resistance as the carefully choreographed stage show plays out.

…my .02

ES Update

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As I type, decliners are leading advancers > 5:1 on NYSE… so it is a very negative trading environment early on.

VST trend is down under 1330 and the next minor stop level is under 1315, which is the 7/21 low. If ES doesn’t recover after a stop run under that line, the next target lower would be the rising ST trendline support at about 1307.

Market remains range-bound between 1300 – 1354, but eventually we are going to see a trending breakout from this consolidation.

…my .02

ES Update

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The Stops and Targets trading range for ES has tightened to 1300.50 to 1351.75, and that corresponds to the contracting ST trend lines in the hourly bar chart above.

…my .02

ES Update

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ES is opening with a gap down this morning and the two early VST levels in play are the same that I pointed out last week near 1341.75 and 1328…

ES stalled just after attaining the VST partials target at 1341.75 and closed under that line on Friday.  If one works on the general assumption that ‘markets don’t move…but rather are moved’, then today’s gap appears to target Friday’s late bulls who find themselves trapped under the daily bar low of 1332.75

S&T macro trending assessment remains the same… trading range between 1264 and 1351.75 with an upward bias above the ST primary trend line at 1316.50.  Bears would need to get below 1290 to generate significant selling, and bulls above 1352 to create buyers.

Checking in on the daily bars and a different (slower) method of fixing trends using trendline support and resistance, we see that ES is indeed in a ST trading range above rising trendline support and below falling trendline resistance. That ST triangle is sandwiched inside of an IT triangle range, and the LT trend remains fully bullish since the breakout back in October of 2010. So, trendline configurations are in general agreement with S&T for layout and levels.

As I mentioned before, the focus is currently on those ST range boundaries. This remains a trading range until one side or the other is broken. In ranges, the volatility targets are typically the stops of the VST players.

…my .02