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The long-awaited ES partials target at 1375.75 has now been hit. That represents an approximate 13% gain since the last trend change buy signals in all three timeframes. This is payday for many who have been patiently awaiting the next partials signal–congratulations!
The end of the big pullback, that started on May 2, 2011 with a confirmed top spotter signal at 1356.50, was detected by a bottom spotter signal on October 4, 2011 at 1062.25 –and the market has rallied nearly 30% from that low!
The important thing to note here is that the entire selloff from 1356.50 (which was the top of the old long-term trading range) has been completely erased by the rally from the October bottom spotter low. That means persistent bears with accrued losses now have no technical reason to stay short above that line. As I have been saying for some time… those bears have undoubtedly been the target of the squeeze. They are guaranteed buyers for the ones who took the other side of those trades.
Squeezes can sometimes go parabolic after a breakout of last resistance (1356.50) and so we watch now to see where this goes before eventually taking a breather for a pullback to form a new structural low. At this point, ES would need to trade under 1350.25 to get into that structural low territory.
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So, the setup is the same going forward as we await capitulation and exhaustion. There is absolutely no valid technical reason to be short the market above at least 1356.50, which is the capitulation zone boundary, and it will take a move below 1350.25 to set the first new structural pivot low since 1296. That said–we have significant resistance here at 1375.75 and that is the line in play today.
…my .02
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