ES Update

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Screen Shot 2014-01-31 at 9.14.22 AM

The daily bar range chart above shows the new IT range between 1754 and 1846.50, which should be established at the end of day on Stops and Targets.  As I have been saying, it is all about 1754 here…

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Screen Shot 2014-01-31 at 9.17.35 AM

I have drawn in the new IT ‘ideal buy zone’ (1754 to 1777) on the hourly bar chart above.  If the pros decide to protect 1754, this should be the general area to grab a place for the next leg up.  It is also the place for ST bears to take profits on at least partials for short trades initiated at the 1809.50 sell signal.

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Screen Shot 2014-01-31 at 9.22.44 AM

If, however, the plan here is to break under 1754 and trigger that huge trove of sell stops now congregated below–we could see a potential stop sweep / reversal play centered around that 1754 number similar to what happened at the two green ovals in the weekly chart above–or in a best case scenario for bears we could see a breakdown similar to the yellow oval above.

Based on the ARRA manipulation paradigm since 2009 and with 1754 now in play;  the best odds favor a higher low forming above that line, next best is a stop sweep/reversal, and finally– in what would be a potential break of the 5 year paradigm–we would see a breakdown under 1754 without recovery.

The market is currently ST bearish below 1809.50 and IT bullish above 1754

Did I mention that ES 1754 is a v-e-r-y important line to keep an eye on?  😉

…my .02

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ES Update

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Screen Shot 2014-01-28 at 9.21.31 AM

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Yesterday’s pullback bottomed with a direct hit on confirmed support at 1767, which also aligned with a back test of the (now broken) VLT trend channel.

IT primary trendline support at 1754 is just below this area and could be in play over the next two days…

Today is the opening day of the two day FOMC policy meeting, with the edict coming tomorrow at 2pm.  Tonight is also the State of the Union address.  So, plenty of opportunity for news driven spikes in the futures.

Keep in mind the immense significance of 1754.  On two out of only three occasions since Obama’s coronation in 2009 where an intermediate structural low has been broken (see the weekly bar charts from yesterday’s post)–it was followed by a stop sweep/reversal.  Only once did we see a breakdown.  On every other pullback to near IT structural support–a higher low was built.

…my .02

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ES Update

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Screen Shot 2014-01-27 at 8.58.45 AM

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On my January 22nd post I wrote the following in my closing paragraph…

Remember on these consolidations; first the pros bore everyone nearly to death, and then when least expected…whammo!  I think we might have one of those deals coming.

I would say the past couple of trading days definitely count as a ‘whammo!’  🙂

The pros pulled the plug and drove the market down through several support layers, the most important being the key ST primary trend support at 1809.50.  That was where the ST trailing stops had accumulated and the key line that had to be crossed, and held, to flip the first major trend (short-term) bearish.  Once that support broke, we saw only black hourly bars.  The gap at 1802 was filled, as expected, and then price continued lower to tag the next target at 1786.25, which is near where price is currently sitting as I type.

This is exactly what it takes to re-energize the bears, who likely weren’t biting in the last sideways consolidation.  As I have pointed out many times before, the pros need the bears to take the other side of trades to keep the game going.  Those short positions represent guaranteed buyers at higher prices.

Now, that all said…the first shift in the fully-bullish paradigm has occurred with a break and hold under 1809.50 and the market is short-term bearish so long as price trades under that line.  We have the most miserly series of a short term lower high and lower low–but now with the breakdown under 1809.25–we have a more substantial lower short-term low guaranteed.

Snapback counter-trend rally targets are 1809.50 and then 1817.25 (VST) as best candidates for the next lower ST high in the sequence.

The next key support level lower is intermediate structural support at 1754, and I will talk about that more in the paragraphs that follow.

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Let’s take a look and see how this recent decline stacks up in the ‘big picture’…

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Screen Shot 2014-01-27 at 9.20.39 AM

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The monthly bar chart above shows an inside bar for the month of January thus far.  All of the monthly trading action has remained within the high low range of the December bar (1846.50 and 1754).

So, there is that key 1754 number I said we need to keep an eye on as the next major support below.  If you look at the monthly bar chart above, you will see that the last time we had a monthly lower low was June of 2013 and the last before that was November of 2012.  Another way to look at that is that 14 of the past 15 months have had higher lows–so clearly, that is a pattern in the paradigm that must be watched.

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Screen Shot 2014-01-27 at 9.27.08 AM

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Let’s zoom in a bit closer using weekly bars and I would like to make that point more strongly…

The weekly chart above shows all of the intermediate structural lows since the 2009 Obama regime began, and they are marked as green dots.  There have only been three ‘lower lows’ the entire rally!  Two of those were stop/sweep reversal buys and only one, in August of 2011, was a tradable breakdown that led to a sequence of lower highs.  Note the red resistance trendline that was broken in December of 2011.  That was the last intermediate bearish structure!

So, if you are looking for a road map of the character of the market with buying tells vividly illustrated–this is the chart to watch.  The pros, using tens of billions of dollars per month to manipulate the markets courtesy of ARRA, have left us a pattern to use to determine if and when the game has really ended.

Note that the last green dot is at 1754.  Until/unless that trailing support is broken, the paradigm continues.  If it is broken and recovers quickly–then we will have another stop/sweep reversal buy.  If not, then professional bears can finally come out of hibernation after a very long rest.

Keep an eye on this weekly chart structure going forward.  It represents how the pros have been doing it–and is a tell of their tendencies.  As I mentioned previously, the odds continue to favor the long side plays in the intermediate term so long as these higher lows continue to be built.

Did I mention that 1754 is a very big number to watch?  😉

…my .02

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ES Update

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Screen Shot 2014-01-24 at 7.40.26 AM

The Stops and Targets short-term analysis says it all…

A test of bullish trend support is underway and trade bias is up above 1,809.50, but would reverse to bearish below.  A trade entered here is a bet that once stops have been run at or below the bottom of the short-term trading range at 1,809.50, a bullish bias inside the current range will resume.  If this buy signal fails, the short-term trend will reverse to bearish.

Price is inside the ST ideal buy zone on the chart above after touching trend support.

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Screen Shot 2014-01-24 at 7.49.50 AM

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I commented at the start of the year that I thought we might be in a gap range between 1846.25 and 1802.  The pros created a new lower short-term high inside the gap, and this morning with a poke below ST primary trend support, we are guaranteed a new short-term lower low.  By the absolute slimmest of margins, the pros have again created the minimal pullback scenario here with the new ST range narrowing between 1845.75 and 1809.50.  If this support stands, I will again chuckle at how miserly the pros have been in creating the absolute narrowest definition of a bearish trend with a ‘lower high and lower low’.  Much of trading these days comes from automated black box trading programs–and that move is the absolute minimum required to bait them back to the short side.  The algorithms liquidate long at the bottom, flip short, and then get taken for a ride back to the top of the range where the pros sell back to them at higher prices.  Easy peasy.

The two gaps at 1846.25 and 1802 both remain unfilled at this point–but if the idea is to run the stops underneath, we could possibly see a push lower to fill the open gap at 1802.  As I mentioned previously, these type of breakaway gaps are usually filled.

There is support just below this area at 1809.50, then at 1805.25, and finally the gap fill at 1802.  If ES were to break through all of those supports without recovering, then the bears could be onto something here with the next target lower at 1786.25

Let’s see what happens once those bull stops congregated between 1809.50 and 1802 have been digested.  ES 1809.50 is the current ST bull/bear line here.  If they go down to fill 1802, that can become the intraday VST bull/bear line.

…my .02

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ES Update

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Screen Shot 2014-01-22 at 9.12.26 AM

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Welcome to Day 15 inside the gap range between 1846.25 and 1802!

It’s been pretty dang boring lately, eh?

This sideways breather has allowed the technical supports to catch up after the big goosing on 12/18 at the last Fed announcement.  As expected, we now have higher lows built in not only the ST timeframe at 1809.50, but also in the IT at 1754.  Those new higher lows will attract stop placement as trend followers protect profits.

ES 1809.25 now becomes the first hard deck line for the current bullish paradigm.  So long as price remains above–this is a fully trending bull market.  It would take a break and hold below that last higher low at 1809.25 to trigger the first signs of a potential paradigm shift.  Until/unless that happens, the Fed-fueled bull continues to chug right along.

When you get compression, as we have here, what typically follows is a release of energy once the constraints are broken.  Until the paradigm shifts, that means bulls continue to have better odds than bears on directional plays.

Short-term range here is 1846.50 to 1809.50.  Bear stops are above the higher number–and bull stops below.  One (or maybe both) are about to get whacked, methinks.  😉

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Screen Shot 2014-01-22 at 9.29.31 AM

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Stops and Target’s ST risk/reward continues to be poor for the entry of new trades in this area–so we continue to await the partials target at 1846.50 from the last ideal buy zone entry on 1/13

Remember on these consolidations; first the pros bore everyone nearly to death, and then when least expected…whammo!  I think we might have one of those deals coming.

…my .02

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