ES Update

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By my count on an hourly bar basis, ES has now crossed the old 1685 all-time high line 28 times since July 18th!

Looks like the pros wanted to crush all volatility at that key distribution target.  If so, then mission accomplished.

Today that pin to the 1685 line could start to change…

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At 2 pm this afternoon we get the FOMC announcement.  As is often the case at these watering hole ambushes–it is a coin flip as to which way price will break away from the pin at 1685.

So, let’s work our way in from the longest time frame to the shortest to get our bearings…

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As I have been saying for some time now, ES 1685 was the key number.  That was the old all-time high and the ultimate political target from the 572.50 bottom.  The Chicago boys have done their part (it has been amazing, really) and so now we watch to see what comes next in the ‘real’ economy.  This is the ultimate Keynesian experiment.

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Looking at the weekly bars, we see that grand long-term trend channel from the lows.  ES last touched the top rail at the 5/22/13 high.

Last week’s bar range was 1670.50 to 1695.50 and those two numbers are the breakout lines.  So far, we have an inside bar working for the current week.  We’ll see if we get a breakout on either side (or perhaps a stop run of both) in the near future.

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Screen Shot 2013-07-31 at 9.39.41 AM

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The hourly bar chart above shows the current trading range setup.  ES would need to break under 1670.50 to the downside to flip the VST trend–otherwise bulls are good above that line, with bear stops sitting above 1695.50 and the top of the rising weekly bar channel currently near 1715– if we get a run to new highs.

This range is tight enough to potentially get a dual stop run on both sides of the small range if the pros are so inclined–but we’ll see if the market moves (is moved) after the FOMC announcement.

There is a top spotter in place at 1695.50 that hasn’t done much yet due to the range pin.  The recent local low at 1670.50 was enough to potentially form an eventual higher ST structural low if it holds.  If 1670.50 is taken out to the downside, however, the bears may get to play for a bit with the open breakaway gaps at 1648.50 and 1635.50 serving as the next targets lower.

…my .02

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ES Update

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After spending several days in the VST trading range between 1667.75 and 1695.50, the minimal pullback to move the short-term primary trend line higher is 1671.75, and that is the early low as I type.

As I mentioned previously, the big line in play during the current trading phase is the old high at 1685.  A sizable number of traders will be using that as a bull/bear line as partial profits are taken here and remaining bears are being squeezed to provide the liquidity to sell into.

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Screen Shot 2013-07-25 at 9.08.13 AM

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The screenshot above of the short-term tab from Stops and Targets sums up the current trading setup nicely…

There is a counter-trend sell at 1679.75 targeting 1664.50, which is the top of the ideal entry zone above 1649 for a short-term pullback continuation buy.

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We also have a confirmed top spotter in place from 1695.50, but I would be careful with that one for more than a scalp trade until/unless we start to break some supports and flip trends.  The first place that would happen is under 1665.75 to flip the VST bearish.

To my eye, ES is very extended here from support and probably needs to eventually build a higher short-term low to provide the structure for a W or M pattern later on–but we’ll see how this goes here.  To keep the VST trendline support on a positive slope we would expect the bounce to come between 1666 and 1661.75, and as I mentioned previously–1661.75 is the early low at the absolute minimum structural pullback number.

If ES breaks under 1665.75, we should see some sellers appear.  Of course, if it climbs back above 1695.50 that will bring in buyers (largely shorts covering) and that is the game on either side of 1685 as defined by the edges of the VST trading range.

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For perspective, I have included the weekly bar chart above with the dominant trading channel shown.  If I were pulling the levers, I think I might eventually try for a another touch of that top rail, but we’ll see how it goes here with a spotter in place.  Even though the weekly candlestick body is black at present–it is technically a bullish bar with a higher low and higher high.  If ES breaks under last week’s bar low at 1665.75, sellers would appear looking for a move back to that trendline support–but if the pros can protect the low and keep the bar bullish with a snap back rally, they might find more buyers to distribute into between last week’s high and the channel top.  The weekly/VST range between 1665.75 and 1695.50 is key.  Bears have the slight edge under 1679.75, but bulls would re-take momentum above that line.

…my .02

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ES Update

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As I mentioned in my last post, the old all-time high at 1685 is currently in play and will be used by long-term traders as a counter-trend bull/bear line after the stops have been run.  ES is very extended from support here after an incredible run of 16 bullish bars out of the last 19!

The minimal pullback target to establish a higher structural low is still 1665.50.  That lines up pretty well with the ideal entry zone around the top of the short-term trending breakout at 1649.

Of course, so long as the pros keep painting bullish bars, this can keep going for a bit.  The very first line that would draw significant sellers is 1665.75, and so long as price remains above–there is absolutely no reason to be short in this market, which exactly what one would expect if a distribution squeeze is underway.

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New highs indicate an ascending channel structure, and the weekly chart above shows one possibility for a top rail target.  That ascending trendline resistance is currently in the 1712 area.

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The monthly bar chart shows the VLT channel that I have been pointing out for some time now.  That rising top rail is currently at the 1756 area.

So, all time frames are bullish above 1665.75 (VST) and so long as price remains above that line, the channel top rails are the next likely upside targets.  If we get a pullback under 1665.75, the ideal entry zone is 1649 to 1664.50 for a minimal ST pullback target.

…my .02

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ES Update

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.The text on the short-term tab from Stops and Targets is saying everything you need to know here after ES has broken the old all-time high (adjusted for continuous contract pricing) at 1685.  Big gains have been accumulated in the latest S&T trades +46% in the long-term, +38% intermediate, and +5% short-term.  This is the place where partial profits are taken and big smiles abound.  🙂

ES has again gotten ahead of trailing support, so in order to move the short-term primary trend line higher, we would need to see a pullback to at least 1665.50 from the current setup.  The S&T ideal entry zone target for the counter-trend short trade here is 1664.50, so we are in accord.

Yesterday’s high tapped into the resting buy stops above 1685.  As I mentioned in my previous post–that was a big deal.  Odds are that was not a significant high and that it will be exceeded, possibly after a pullback to build a new structural higher low–but bears could get something going here for a bit if they can keep price under the ST counter-trend sell line at 1679.75.  Read the caveats in the Stops and Targets text carefully, however.  This is a trending market in all three major timeframes > 1649.

Structurally, we probably need to see a new higher structural low form–then we can get the retest move back up to probe higher above 1685.  First things first, though–and we need to see what happens here at 1679.75 today

…my .02

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ES Update

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Since the IT buy signal at 1553.25 on June 24th, we have now seen a string of 13 of the last 14 days being up!

ES is currently tickling the top of the IT range defined by the last top spotter signal on 5/22/13 at 1679.75…

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That IT range top at 1679.75 is itself, just below the all-time continuous contract high of 1685

The pros stopped just short of triggering the all-time high stops on 5/22/13 and set up a picture perfect pullback to the IT ideal buy zone, and we are now seeing the push back up from that IT buy.  There are buy-to-cover stops above 1679.75, where those bears who missed the turn at 1553.25 likely will be forced to capitulate.  There is also another set of major buy stops resting just above 1685.

The pros saved that all-time high level at 1685 on 5/22 for another day.  They know that above that line, with new all-time highs, there are no technical reasons left for anyone to suggest a bear market.  That level has been the Obama administration’s obvious goal since they assumed executive power in 2009 and I have harped on that many times over the years since.

I drew in a VLT bullish trident channel long ago and I am sure some of you thought I was nuts at the time–but here we are approaching the all-time high with the next higher target being that top rail (currently near 1750) that seemed so far away back then.

It now seems almost a given that the all-time high at 1685 is going to be eventually taken out.  They came ever so close at 1679.75 before pulling back to flush the system and to load up the other side of the trades.  So long as they keep dangling the bait and bears take it–the game can continue for a while before they finally decide to jump the resistance and harvest the buyers above.

If/when that breakout of 1685 comes–that will be a realization of the pro’s VLT targets from the bearish low at 572.50 and if new buyers materialize, that affords an opportunity to monetize what has been until now largely paper gains for some very large players.  Markets can be manipulated easily enough–but the pros need to have buyers inject new capital in order to eventually offload positions.  That is an important concept to always keep in mind.  That is why the trap and ramp game works with the short-sellers and so long as those players continue to provide bids to buy (to cover) that furnishes the juice to keep the game going until the real euphoria catches on–if it catches on.

If new money comes in off the sidelines–no telling how high this bull can go…if not, once the stops are run above the pro’s major VLT targets we will see big players looking to get out to lock in those huge gains.  If/when they do get out, the same big players would switch sides and then work together to actively push the market down to maximize their zero-sum short trading opportunities (bear markets are always a zero-sum game, unlike bull markets) to take the market back to bargain valuations and restart the game again.

So, if it is exceeded, 1685 will become a major bull/bear line for people with large positional gains to protect.

I have been asked many times what will we be looking for at a major top when it comes?  It could look like the polar opposite of the major bottom we saw at the last bottom spotter signal on October 4th, 2011.  I would encourage everyone to go back to the historical posts around that time and read what was written at that turn.

The last top-spotter signal on May 22nd was pretty strong, but it had 779 top spotters versus 1713 bottom spotters on October 4th 2011.  So far, we got an IT top and a perfect pullback to the IT ideal buy zone from that spotter.  If/when 1679.75 is taken out, that top spotter would be invalidated and the bottom spotter from 10/4/2011 will resume.  To detect the ultimate exhaustion top of this bull market, we would then be ideally looking for a strong top spotter to form and then to confirm.

When the VLT trendline resistance was broken in September of 2012, I pointed out that it was a very big deal.  I would also encourage newer readers to reread the posts from that time period as well, including the real-time post on September 6th 2012.

The pros are almost there to 1685, which is a remarkable achievement from the 2009 low at 572.50–nearly a tripling in value of the ES .  How they got here and the tactics/techniques/costs to do so are the subject of further scrutiny–but they have done it nonetheless.

Let’s keep an eye on the next targets higher–1679.75 and then 1685.  If the new highs come, the next major target higher is the top of the ascending VLT bullish trident channel.  But, as I pointed out above–once those highs are breached, new money has to come in to sustain the push once the remaining bears capitulate.

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Screen Shot 2013-07-16 at 9.19.02 AM

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The hourly bar chart above shows the sequence of bullish support levels collecting behind the current push.

All S&T trends are up > 1590.50

In case I haven’t made the point strongly enough–it is really all about 1685 now from a VLT perspective.  The next immediate resistance is, of course, just above at 1679.75–but the higher time frame target is imposing it’s power here.

…my .02

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