ES Update

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Screen Shot 2013-04-25 at 8.52.46 AM

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ES has just filled the second of two breakaway gaps (1569.75 and 1582) from the bounce after the pullback to 1530.75.  That low is now a (marginally lower) ST structural low and defines the bottom of the current trading range between 1530.75 and 1593.

Bear stops are resting just above the trading range, and bull stops just below…

On the chart above we can see that the previous descending counter-trend trailing stop trendline worked very well to set up the current VST trade profile.  The initial breakout at 1548.75 was followed by a back kiss of that trendline extension, and then we got a second pullback to an exact touch of the breakout line at 1548.75 and then the launch back toward the gaps (both are now closed).

ES is now inside the counter-trend ideal sell zone between 1593 and 1581.75.  That zone would technically come into play only if we got a stop run above 1593, followed by a failure of that support to set up a counter-trend trade signal in Stops and Targets–but we may see some continued resistance as some counter-trend bears add positions here and then use 1593 as the protective buy-to-cover stop.  That congregation of stops is what makes the squueze strategy work for the pros so long as pessimism of the prevalent trending move remains high.  If enough bears pile on, it guarantees buyers at a higher price as the pros know those bears have to eventually buy to close the open short trades.  Of course, the pros get to ‘read the mail’, by always knowing the real-time position of traders, so they will know if/when the calculus is correct to apply a squeeze into the stops–or to eventually let the trade die.  The deck is always stacked against the top/bottom pickers for that reason–but that doesn’t seem to dissuade them.

The counter-trend bears are looking for an ‘M’ pattern to form as the momentum possibly could wane from the bounce from the stop sweep under 1533.25 and reversal higher.  This second gap fill is one of the places where those type A bears might take a shot.  Not my usual style to trade against the trend, but eventually one of these guesses is going to hit for those guys.  So, let’s watch this gap fill here and see if the pros set the hook with feigned weakness potentially setting up another push to new highs –and a reset of the game.

The counter-trend bears have slightly increased odds of this setup working by virtue of the formation of a lower structural low–that is often a tell that a top is in (or nearly so), and therefore the reason that some would be looking for the right side of an ‘M’ pattern to form.  Trends are defined as a series of higher highs and higher lows (bullish)–or lower highs and lower lows (bearish).  Bears now have their lower low–so they just need a lower high and then an eventual break of the lower low to start the trend reversal.  Of course, a move above 1593 would reset to a higher high and negate the setup except in the case of a stop sweep/reversal from a marginal new high to set a higher right shoulder on the ‘M”.  Inside the range, we are currently watching to see what happens from the stop sweep/reversal from 1530.75, which is the inverse of the trade described in the previous sentence, to form a bullish ‘W’.

The light blue trident channel defines the short-term bullish structure.  A break below that bottom rail would signal potential trouble for the bulls and a change of the existing pradigm.  As I mentioned above, we have now reached a place where weakness could occur due to conservative profit-taking at the gap fill and the touch of the counter-trend ideal entry zone, but all trends remain up > 1533.25.

Next ST/VST target higher is the range top at 1593, next target lower if we get a pullback from this area is the bottom rail of the rising trident channel, currently at the 1552 area.

…my .02

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ES Update

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Screen Shot 2013-04-22 at 9.51.54 AM

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In my last post I pointed out that ES had achieved the minimal IT pullback target at 1531.75.  That line is now the bull/bear line.

ES has also broken out of the previous dashed red VST resistance trendline with a move above 1548.75.  Now we are watching to see if 1530.75 can hold first as a VST low–if so, then as time goes by, we’ll see if it holds as a (minimally lower) ST low, and finally if all goes well for bulls–as an eventual IT higher low.

I have drawn in a couple of lines that should act as early tells for this initial pullback to test that fledgling low candidate.  The first is the trendline breakout line at 1548.75, then a preliminary trident channel lower rail–currently at the 1539 area and rising.  Stops and Target’s ST primary trend line is at 1533.25

There are now six week’s worth of accumulating bull stops located under the support shelf at 1529.50.  If the lines above fail to hold, that trove of stops would be the initial downside target for the pros.

S&T’s short-term ideal buy zone is 1533.25 to 1548, with the next upside trending target for partials at 1593–which is now a confirmed ST top.  Let’s see how this fledgling low holds up at 1530.75.

…my .02..

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ES Update

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Screen Shot 2013-04-18 at 10.19.33 AM

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Okay, here we go… this is the third poke into the ideal buy zone above the ST primary trend line at 1533.25

As I type, the low is touching short-term trendline support at 1535.75.  This is the hard deck for the macro bullish trend and 1533.25 now becomes the bull/bear line for the short-term trend.

This is dangerous territory here, where a break below that primary support line could kick off automated sell programs–but it is also a sentiment pressure point juxtaposed against the media-driven pessimism that we often see at ideal entries.

The dashed red descending trendline has been working nicely for trailing stops on VST counter-trend bearish trades.  Let’s swap the lower rail of yesterday’s failed bullish channel with short-term trendline support to define the triangle in play and let’s watch and see what happens here at this critical test of short-term primary trend support.  Bears win on a break and hold below 1533.25–bulls win on a breakout and hold above the descending dashed red trendline currently at the 1557 area.

…my .02

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Update @ 3 pm ET:  ES has breached ST trendline support and the S&T primary trend line at 1533.25.  It is interesting to note that ES has also now accomplished the minimal pullback to establish a new potential IT higher low by crossing under 1531.75.  If we don’t get a rally into the close, the overnight session could be vulnerable to antics to the downside ahead of April options expiration on the open tomorrow morning.  This action is a little reminiscent of the pullback to set a lower ST low but higher IT low on 2/25/13.  Let’s call 1531.75 the new VST bull/bear line here as we watch for a stop sweep/reversal setup–but beware, because under that line is bear territory.

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ES Update

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Screen Shot 2013-04-17 at 9.35.24 AM

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In the early going today we have a small triangle in play using the descending dashed red trendline and the bottom of a tentative bullish ST trident channel (triangulated from the recent three ideal buy and sell zone extremes; 1533.25, 1593, and 1538.75)

The rising channel bottom is at about 1549 as I type.  If the pros are planning on building a new higher low at 1538.75, that channel bottom should hold–if not, then we could get an eventual test of the ST primary support level at 1533.25

As I pointed out yesterday, counter-trend bears are still in the game here until/unless that descending dashed red trendline is broken to the upside.  The last VST counter-trend entry was at 1568 and we have a breakaway gap just above at 1569.75.  Those would be the next upside targets if the channel bottom generates a bounce.

This is the pullback that I mentioned yesterday to test the fledgling ST higher low candidate at 1538.75

All trends remain up > 1533.25

…my .02

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ES Update

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Screen Shot 2013-04-16 at 10.18.42 AM

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In my post yesterday, I pointed out the level of 1558.75, which was the top of the old short-term range at the most recently completed short-term structural high.  That weak support level did not hold, which opened the door to the ideal entry zone near short-term primary trend support at 1533.25.  The low yesterday at 1538.75 touched the top of that zone between 1533.25 and 1539.25 (from Stops and Targets) and targeted the counter-trend sell line at 1558.75 on the initial bouce, so both of those targets have been achieved and that is where price is hovering, as I type.

Looking at the VST setup, the descending dashed red trendline continues to define the trailing stop/reversal line for remaining partials on counter-trend short trades.  That trailing stop line is presently at about 1568 and will be the next upside resistance test if ES can get past 1558.75.

Yesterday’s low at 1538.75 has meet the bare minimum criteria for a potential higher structural low, if it can hold.  As I continue to point out…for the bullish macro trending pattern to break in the short-term, bears need to get below and hold beneath the 1533.25 level to flip the ST trend.  We may get a pullback test of 1538.75 and we’ll see if that fledgling higher low candidate will hold like the similar minimal pullbacks previously in this trending move–or if we get a break lower to test short-term primary trend support–and a signal that the existing paradigm is shifting.  Counter-trend bears remain in the hunt until/unless the descending dashed red trendline is broken to the upside.  If price moves back above that dashed red line, there would again be no technical reason for any bear to remain short.

Whether it was fortuitous or nefarious for the current US political apparatus, the end result of yesterday’s explosions at the Boston Marathon was to effectively bury any mention of the personal income tax filing deadline in the media.  Just something to contemplate as the inevitable politicization of the event unfolds over the coming days.

All primary trends remain up > 1533.25

…my .02

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