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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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I have an included updated range chart and intraday chart above to show the new VST bottom at 1350.25

The bear stops have been run (again) above 1369.50 and that new high prevented the setting of a ST structural pivot at that line and so resets the cycle clock.

As I mentioned yesterday, the new VST range support line at 1350.25 is the line the bears would need to cross (and hold) to start to flipping trends.  Under that line is where the close-in bull stops are resting–and if we get a deep pullback, those could be the downside target.

Otherwise, the next target higher is Stops and Target’s triple timeframe target at 1375.75 (which means that could be very strong resistance).

Stops and Targets has been long since December 20, 2011 and is currently up about 13% from that signal as we approach the target that has been displayed for weeks.  Not too shabby.

It is still all about 1350.25 on the downside and now 1375.75 to the upside

…my .02

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ES is now in the seventh consecutive trading session inside a narrow range between 1350.25 and 1369.50

Those are the two lines currently in play as we await a move out of this consolidation zone.  Above (the old long-term range top) 1356.50 represents the ‘capitulation zone’ where many stalwart bears have been forced to cover for technical reasons.  The unknown at present is whether this zone represents consolidation before another push higher–or if this is a distribution area before exhaustion of the squeeze and a tradable move lower.

If we get another day between 1350.25 and 1369.50, the VST range would narrow further –and 1369.50 could become a short-term range high.

Bears would like to see a move below 1350 to set up the eventual formation of the first structural low since 1296, which is the current ST range bottom.  The first stage of changing a trend is to start the sequence of lower highs and lower lows.  The relentless ferocity of the current squeeze has not allowed a new structural low to form since 1296.

Bulls would ideally like to see 1350.25 remain untouched on this pullback (though a stop run and reversal at that line is a tactical possibility from the present setup) and for a rally to eventually take out the local high at 1369.50.  That would keep the most pressure on bears, and another push to higher highs might just be what it takes to shake loose the last capitulation holdouts from the New Year squeeze.

So, bottom line (in my opinion) is to watch 1350.25 on this pullback.

…my .02

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The setup remains the same as we await the next move away from consolidation after the gap over resistance at 1364.50 to a local high at 1369.50

Bears remain in a squeeze above the top of the VST range at 1352.75 and all timeframes are trending > 1356.50

In order to flip the first trend, bears would need to see a move below 1334.25, which is the bottom of the VST range–and that lines up with Stops and Target’s short-term primary trend line at 1335.25.

The key lines in play during this consolidation are 1352.75 and 1369.50

…my .02

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Above 1356.50 (the old LT range top) and ES is trending in all timeframes…

Closest trend support (VST) is at 1333.75 –and that is the line bears would have to cross and hold to flip the first trend.

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The squeeze continues, with futures gapping over key resistance between 1362 – 1364.50, and then pulling back to fill that gap at 1360.25

The capitulation zone is > 1356.50 with the next VST target higher being 1375.50 –and that lines up nicely with Stops and Targets’ multiple timeframe target of 1375.75

Bulls are fine on any pullback above 1333.75, which remains the bull/bear line for the VST.

…my .02

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