ES Update

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After the pros swept the close-in stops underneath, and VST support at 1387.50 held yesterday–ES has rallied up to the next S&T short-term partials target at 1416.50.  Almost 30 points from VST support to ST resistance, so not too shabby on the run up from VST support after the gap range filled.

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ES has advanced +5.7% since the confirmed bottom spotter signal on November 16th!

As I was pointing out yesterday, the pattern for a reversal is to set a structural bottom and then to eventually exceed the previous lower high in the bearish sequence.  Just above that last lower high is where the majority of remaining bears will be trailing buy to cover stops.  The pros know that those are guaranteed buyers–so it is a slam dunk for them to reverse the market to drive the price back to where they know that those who borrowed shares to short will be forced to buy to cover that debt.

Now, the question here is whether we get a lower structural high before 1431.75–or if the pros continue to drive directly to that range top to trigger the stops.  ES 1416.50 to 1421.50 represents the best likely place to get a turn back down if the plan is to set a lower short-term structural high (than 1431.75) and that is why Stops and Targets is pointing out a partials sell at 1416.50 and showing the possibility of a counter-trend trade for those so inclined.

You just have to love those confirmed spotter signals with heavy Russell 3000 confirmation.

…my .02

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ES Update

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ES has now filled both sides of the small gap range between 1391.25 and 1404.75 I pointed out in my last post.

The next layer of small range stops are located at 1387.25 and 1407.75, which define the boundaries of the push on 11/23 to break ST trendline resistance (intraday basis) and to tag the long-term counter-trend sell line at 1406.25 from Stops and Targets.

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The range chart above shows the transition from the former bullish sequence to the current bearish sequence starting at 1468.

Look at the green and red arrows to see that the textbook bullish sequence of five higher lows and higher highs from June of 2012 was first broken on 10/5 with a lower high at 1466.  That was followed by a lower low at 1416.50 on 10/15 and we have now had a sequence three lower highs and three lower lows down to 1340.25.

In order to break the current downtrend, ES will need to hold a structural low (current candidate is 1340.25) followed by an eventual structural high (likely another lower high with 1407.75 being the current candidate).  Next we would expect to see a pullback to eventually form a higher structural low (>1340.25 if a tradable bottom is in).

The chart above shows a triangle formed by ST trendline support and ST trendline resistance.  Inside that triangle is the ‘wiggle zone’ as we watch to see if the bearish momentum can be absorbed and redirected above 1340.25.  As I mentioned in my previous post, the initial target of the spotter signal at 1340.25 was that ST trendline resistance –and we are seeing a pullback now from that resistance test.  Worst case scenario for bulls/best case for bears would be a deep pullback that eventually took out the structural support at 1340.25.  That would reset the cycle clock and the market would begin searching for the next downside ‘lower low’ target.  Best case scenario for bulls/worst case for bears would be an upside breakout (on a close) of the ST resistance trendline which would cause the most aggressive short sellers to begin covering as the market searches for the next structural high target (1416.50 would be the first candidate).

VST support is at 1387.50.  If that doesn’t stop this pullback from trendline resistance, 1369 is the next downside target.

…my .02

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ES Update

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Let’s get our bearings on the big picture by starting from the higher time frames and then zooming in…

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The monthly bar chart above shows the very long-term macro trend.  We can see that the current bar (November) is technically bearish by virtue of a lower high and lower low.  We can also see that the candlestick is currently a doji, indicating a point of equilibrium between bulls and bears from the close of the previous bar (1406.75).

From a very long-term perspective, the two key target levels are 1525.75 and 1043.  At this point, ES is much closer to the former than the latter.

The November monthly bar range is 1340.25 to 1431.75

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Stops and Targets agrees with the monthly bar range above–showing the short-term trading range between the same 1340.25 and 1431.75

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Moving in to the weekly bars we see a little better illustration of the breakout at VLT resistance, followed by a touch of last resistance at 1467.50, and then the subsequent pullback.  We can also see the bounce at 1340.25 and the weekly higher high and higher low, which is bullish.  ES 1407.50 is the previous week’s high and the number that bulls need to exceed to keep the rally party going.

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Moving in to hourly bars, we can see how the short-term resistance trend line target was achieved on Friday, and the subsequent pullback after those stops above that line were taken.

If 1407.50 is ultimately taken out, the next short-term upside target is 1416.50.  First appreciable sellers wouldn’t appear until/unless 1387.50 support fails.

We now have a small gap range between 1391.25 and 1404.75 formed by the fast move to take the stops, and that could define the targets here in the very short term.

Stops and Targets primary trends in all time frames remain up > 1393

…my .02

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ES Update

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You gotta love those confirmed spotter signals…

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ES is up > 4.3% since the spotter signal confirmed on November 19th. The short-term trend has flipped back to bullish > 1393

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The initial target for the confirmed bottom spotter at 1340.25 is the descending ST trendline resistance currently at the 1405 area.  That target lines up with the LT and IT counter-trend sell/long partials targets for Stops and Targets at 1406.25 and 1401.50 respectively…

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We have a short market day today, so we’ll see if that target can be reached–but that ST trendline resistance is the next line in play as we watch to see where the next ST structural high will form.

…my .02

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ES Update

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ES has rallied back up to the Stops and Targets short-term ideal entry zone (shaded red rectangle on the chart above) where profits are taken on short-term counter-trend long trades and short-term bears get a chance to reload for a possible trip to the next downside target at 1369.

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The short-term timeframe is currently ‘in play’ as we watch to see what sort of pullback we get from resistance.  The short-term primary trend remains down below 1393, and that is the line that IT and LT bulls need to ultimately take out to flip the ST trend to bullish.  Note that 1387.50 lines up with the descending top rail of the ST bearish trident from the first chart above.  We should see buyers if that line is broken to the upside, otherwise 1369 is the next target lower.

…my .02

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