ES Update

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We have now had a textbook pullback from key resistance at 1467.50 to test the ST support trend line.  Yesterday’s low also entered the short-term ideal buy zone on Stops and Targets, so we now have all the requirements met for a minimal structural pullback.

ES 1424 becomes the new ST low candidate and I have drawn in two check structures to test that tentative low on pullbacks.  The first is a tentative ST trend channel in purple, the second is a tentative ST support trend line in dashed blue.  If 1424 turns out to be a good ST bottom, one or preferably both of those structures should hold.  If not, then we could see another poke lower.

VST trend is down under 1443.50, but that would reverse on a move back above.  Hard deck for bears remains the descending trend line resistance presently at 1457.

Yesterday’s low at 1424 is what is in play here.  Day trading action is bullish above/bearish below.  If the tentative support structures are broken to the downside, the next VST target lower would be the stops resting under 1414.50, with a sharper pullback targeting ST trend support at 1387.50

So, we have a little bounce going here–but we’ll have to watch and see if 1424 sticks.

…my .02

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ES Update

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Okay, we got the push down under 1443.50 that I have been looking for.  That establishes the minimum for creating a possible new structural pivot, which in this case would be a higher low in the macro bullish sequence.  Price is nearing ST trend line support as shown on the range chart above.

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Zooming in a little closer on the chart above, we can see the ST support trend line and the ST ideal entry zone from Stops and Targets (shown as a shaded rectangle 1417.75 to 1430).

The poke under 1443.50 raided the close-in long stops of those who chased the breakout but missed the partials exit at 1467.50, and it also broke the ST trident channel.  Now we have a VST bearish test of ST support and we’ll see how this goes.  The VST bears have something going, but to roll over another timeframe, they will need to break below the ST trend line and ultimately take out 1387.50 to flip the ST trend.

If what we are seeing here is simply a VST pullback to ST support, then we could see buying kick in around this general area followed by a possible run toward the other side of the ST range > 1468

As I mentioned yesterday, the VST bull/bear line is at 1443.50 and ST trend line support is currently at about 1427.75, so that is the early battle zone.

If we see buyers come in and 1443.50 is exceeded, the descending trend line resistance I pointed out yesterday (currently at 1458.50) would become the hard deck for any countertrend bear trades.  If that line were to be broken to the upside, odds favor new highs.

On the other hand, a VST bearish continuation move from here that breaks under the ST trend line could next target the VST stops under 1414.50

This entire pullback move was predicated by the touch of key resistance at 1467.50.  Now we watch to see if the pros take it back up once the ST minimum has been met, or if the idea is to run lower into the ST trading range (1387.50 to 1468) and possibly flip a second trend.

We did not get a large number of spotters at 1468, so it would take another eventual poke to new highs to reset the algorithm and potentially enable spotters to form, which I would expect to see before a major pullback of IT magnitude or better begins.

1443.50 and 1427.75 is the area to watch today…

…my .02

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ES Update

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The VST range has narrowed to 1468 to 1443.50

I have moved my VST bull/bear line to 1443.50, which also currently lines up with the bottom of the ST bearish trident channel.  As I mentioned in my last post, that is the line that would have to be broken to form an eventual structural pivot from here.  If that were to happen, 1443.50 would come into play as a potential stop sweep/reversal line if we were to see a push below followed by a recovery back above.

To the upside, I have drawn in a tentative VST resistance trend line (dotted red-currently at about 1459.75), which if broken could signify a run toward new highs to raid the bear stops > 1468.  Countertrend bears probably don’t want to be short if that happens.

We are approaching the end of the month and end of the quarter…

All eyes are now on the small range between 1443.50 and 1468 as that is where the close-in stops are congregating during this sideways consolidation.  If I were pulling the levers, I think I might go down to at least set a minimal new higher low and then back up to take the bear stops–but we’ll see.  If the dotted red trend line resistance is broken to the upside, the odds increase for a run to new highs.

All this uncertainty has been caused by a touch of key resistance at 1467.50 (local high is 1468).  We continue to await the resolution of that line.

VST is bullish > 1443.50, but would switch to bearish below.

…my .02

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ES Update

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The setup hasn’t changed since my last post.  ES is still being held in a narrow breakout consolidation range between 1431.75 and the target resistance at 1467.50

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The first bearish indication would be a break of the bottom rail of the light green bullish trident channel shown on the chart above.  As I type, that rising trend line is located at about 1438

Bear stops are located > 1468, and that would be the next upside target.

Stops and Targets is showing the ideal entry zone at 1417.75 to 1431 for the short-term timeframe (shown as a shaded rectangle on the chart above), so this is no man’s land for new trade entries –as we patiently wait to see how this initial poke at 1467.50 turns out.

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The range chart has been updated above.  All major trends are up as we await the formation of the next structural pivot.  To form a new higher low from here, we would need to see a pullback under 1443.50

…my .02

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Options Expiration Day

September option contracts expire today.  For the broad markets, the September index contracts have been on a tear since the July/September rollover date

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During the same period, the US Dollar has taken a beating…

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Commodities prices have been up…

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Gold has also been on a tear…

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I have posted quite a bit on the VLT trend line breakout, but let’s take a look at straight line resistance and also the market performance during the current US presidential cycle…

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The blue vertical line shows President Obama’s inauguration date.

The magenta dotted line shows the Bush administration high of 1525.75 (adjusted for continuous contract) and the red solid line at 1467.50 shows the original sell confirmation line from that October 2007 top.

So, here we are smack dab in the thick of the presidential election cycle and the market is right up against the original sell line and within reach of the Bush administration highs.  We’ll see how this plays out into November–but the chart above tells the story.

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There hasn’t been much to write about since ES tagged the target at 1467.50, as absolutely nothing has changed.  However, now that options are expiring the market could start getting interesting again.  The VST chart above shows the current key levels.

Have a great weekend all

…my .02

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