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With three trading days left in 2012, let’s get our key bearings starting from the higher time frames and working inward…
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At this point, the December monthly bar is showing a bullish higher low and higher high with a bar range between 1390.50 to 1446
VLT trendline resistance has been previously broken –and trend line support remains intact > 1242
The very long-term range is 1036.75 to 1519.50 and there could be major trend/momentum consequences when one side or the other of that range is eventually breached.
ES is much closer to the top than the bottom of the range and the pros have come a long way since that 583.25 low back in March of 2009. Monthly bars aren’t real sexy to most short-term traders–but this is the setup that the big boys are playing, and so it makes imminent sense to keep this big picture in mind as the hysteria of ‘fiscal cliff’ is being promulgated by the press. A bit of unsolicited advice for traders is to simply IGNORE the media. Their job is to stun, confuse, and to drive the herd toward the ambush areas–and they are pretty good at it.
The chart above shows a clear pattern of directional intent since the start of the current US administration’s first term. The objective at 1519.50, if eventually overcome, would completely invalidate the secular bear market since March of 2000 and reawaken the investing masses after a nearly 1,000 point run from wholesale to retail pricing! They are currently only about 100 points away..but as I have said before, these VLT moves can take a long time to play out.
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Moving in to the weekly bars, we can see that the current holiday week has been trapped in about a 15 point range between 1410.75 to 1425.50 thus far. The real range to watch is the previous week’s hi/low–which is 1391.25 and 1446 (current VST range).
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On the daily bar chart above we can see the VST range between 1391.25 and 1446.
There are two open gaps at 1426 and below at 1353.50. Generally speaking, ES doesn’t like unfilled gaps except for those created at the start of a reversal in the direction of the pro’s trade. The gap at ES 1353.50 was established at the bottom spotter low confirmation from 1334.
The previous bar’s low at 1410.75 establishes the current bull/bear line for VST traders. The pros have already raided the stops down to 1391.25, so there is probably no reason to revisit that area below–unless the intent is to extend the low under 1391.25. So, that is a line to keep in mind.
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And finally, we move to the hourly bars…
The small range has been between the gap fill at 1410.50 and the opening gap at 1428.50.
The dominant feature on the chart currently is the 50 point late night take down on 12/20. As I mentioned before, that cleverly established a minimum structural pivot in the futures, while simultaneously shutting out the massive selling that would have occurred had the event occurred during cash market hours. That low at 1391.25 was deviously sneaky, to be sure–and we’ll see how it holds up in the coming days as we watch the year end maneuvering play out.
…my .02
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Addendum @ 10:30 am (New York)…
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The Stops and Targets screenshot above shows the short-term counter-trend setup from 1417.75. The initial target from that signal is the ideal entry zone between 1400 and 1404.50 (shown as shaded area on hourly chart above), which has now been achieved. It will be interesting to see if a bounce can stick here near the 1400 level–or if we head to the next target lower, which would be the 12/20 low at 1391.25. If they take out that low it would restart the cycle clock for finding the next structural pivot–so 1391.25 is a key VST/ST number.
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