ES Update

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Right on cue, ES bounced yesterday inside the S&T ideal buy zone (at the 1297.50 VST minor support line).

As I type, that rally has worked back to the dotted purple trend line resistance near 1317.  What is currently in play, in my opinion, is the VST range between 1301.50 and 1329.75 (shown as shaded yellow in the chart above).

I have drawn in two VST trident channels that will ultimately show where one side or the other gains the advantage once this range is broken.  A poke through the top of the red channel would be a victory for bulls–whereas a poke below the bottom of the light green channel would be a precursor to additional downside for bears.

The spotter for ES confirmed yesterday at the close, so the odds increase for downside risk–though a move above the signal high at 1329.75 will negate the spotter setup.

As it often goes at a possible reversal point–confusion will reign so long as price remains within the VST range.  Bears are looking for a break and hold below 1301.50 and then yesterday’s low of 1296.  Bulls would like to see that spotter signal invalidated.

All S&T trends are up > 1292… but keep an eye on that spotter signal and the signposts I pointed out above.

…my .02

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ES Update

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The daily chart above does a pretty good job of laying out the big picture for ES…

We have an as-yet unconfirmed Top Spotter signal at 1329.75 , with confirmation being an eventual close below the trigger line at 1309.25.  That line at 1309.25 becomes the new bull/bear line for any counter-trend short trades initiated from the spotter signal.

The VST range is now 1301.50 to 1329.75.  A sustained breakout below that range bottom would be a change in character for recent squeeze action–but the S&T primary trends remain up > 1290.25, which lines up fairly closely to the rising ST trend line support.

So, clearly the bears have a potential setup here for selling and the first step is in place with a spotter–and for time being, price < the trigger line at 1309.25.

My guess is that 1301.50 will be the early line in play today with day traders likely to sell below and/or to buy a rally above.  The closing price is important due to the trigger line mentioned above–as well as that range bottom at 1301.50

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The chart above shows the Stops and Targets’ ideal buy zone between 1290.25 and 1300.50.  That is the initial S&T pullback target for the spotter signal, and so we’ll see if a bounce materializes in that zone.

…my .02

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ES Update

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Yesterday’s high was a direct hit on the gap target I pointed out at 1329.25 (actual high was 1329.75).  Once that target was touched, selling came in –and at the end of the day Top Spotter signals were triggered across all the cash and futures indexes as well as several hundred individual equities.

Now, some folks get pretty excited when spotters are triggered, but I always remind readers that spotters are intended to be warning signals of an increased risk in the direction of the trend and not all spotter signals confirm.  To confirm the signal, the underlying security price must remain below the trigger bar high and must ultimately close below the signal bar low on a subsequent trading day.  If the high of the signal bar is breached at any time in the future, the signal is invalidated.

For today, the prior day’s bar shadow of 1329.75 to 1309.25 is in play… 1329.75 is the spotter signal, and a push back above that line negates the setup–whereas a close below 1309.25 would confirm the signal and increase the odds further that a tradable top may be in.

All S&T trends remain up > 1288, and the shaded green ideal entry zone between 1288 and 1298.75 would be the first dip target for a continued pullback from the spotter high.

…my .02

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ES Update

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As I suspected, the trend line touch at 1318 was used by the pros to fish for new bears just ahead of a breakout.

Next target higher is the open gap at 1329.25.  I have noticed that the pros like to use those gap targets around FOMC days, so we’ll see what, if anything, happens there.  (FYI: The next open gap lower is from the start of the New Year squeeze at 1253).

As I have been saying for some time now–the pro’s likely objective on this squeeze is to take the market as high as they can to force bears who missed the turn to capitulate and take the other side of the positions the pros accumulated during the long sideways range consolidation following the mini crash from 1336.25 – 1356.50 down to 1062.25

The next targets higher for a continued squeeze into bear stops are at 1336.25, 1343, and the big one at 1356.50… which is the top of the LT trading range and the spot where the very last bears would be forced to cover.

The first level lower where the technical pressure would start to lift from the squeeze is <1301.50 where the current breakout leg started…

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For those riding the S&T signals on the long side–the next upside partials target is resistance at 1331, which lines up fairly closely with the next stop area mentioned above at 1336

…my .02

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ES Update

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Setup is the same as yesterday…

ES 1318.25 is in play here.  That is the local high at the trendline resistance target I have been mentioning recently.  Quite a few professional bears may take a stab at top-picking here (with tight stops) and those sellers coupled with profit-taking by bulls give the bears their best chance in quite some time to get at least a tradable pullback.

The problem for the bears here is that there still seem to be a fair number of holdouts who missed the last turn (remember my ‘change in character’ post at 1198) and have not yet capitulated.  Some of those guys on the wrong side of this squeeze are definitely feeling the pain and have to be very close to throwing in the towel.

The pros could use this trendline touch as a place to fish for new bears to serve as additional fuel for a coming breakout above that line.  If/when that breakout comes it will be covering bears that fuel the rise and if it happens we could potentially get a pretty good breakout squeeze above 1318.  I just wanted to point that out to anyone out there who might be trading the countertrend here against the S&T signals.

I am not yet sensing the sort of sentiment one would expect at a significant top where we would expect the bears to have capitulated and for the risk appetite to be very low from the retail crowd for top-picking.  On the contrary, I am reading all sorts of ‘top calls’ from the usual suspects.  The setup is definitely here for a pullback–but the top spotters did not trigger at the first touch of 1318, and so we could see at least a marginal new high at some point unless the bears can break below VST range support/ST trend line support near 1272.75

…my .02

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