ES Update

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Yesterday’s range breakout > 1846.50 tapped into 36 days worth of bear stops that had been accumulating since 12/31/13

It also broke the very marginal ST bearish pattern of lower highs–so technical bears were forced to buy ’em back higher–and that was the initial, and very obvious, goal of the IT stop sweep/reversal move under 1754

The pros were undoubtedly fully long from 1732-1754 and with last Friday’s February option expiration they now have/had plenty of called inventory to distribute.  The easiest path from here is up until that inventory has been distributed.  When the buyers ultimately dry up, we will likely get a pullback in search of a higher low to accompany the new higher high.  The minimal pullback from this area would be to just under 1817.25

Odds favor higher highs, and if the macro pattern holds–eventually we will get a new high into exhaustion, followed by a sharp intraday reversal.  If/when that happens, we could get the unanimous spotter signature that has accompanied every major structural high in the ES contract since it’s inception.

For now, however, the trend is your friend until it ain’t–and all major trends are up > 1809.50

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Checking in with Stops and Targets, we see strategy agreement–with a partial profit target reached yesterday at 1846.50 from an intermediate trade initiated at 1754, and also for the ST from a trade initiated at 1809.50.  Stops for the remainder of positions are now locked in at breakeven–so another big winning trade sequence there.  Full positions go back on > 1846.50 (for those with partials).  Gotta love it…

…my .02

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ES Update

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Nothing has changed yet technically since my last post–but I wanted to point out that the descending ST trendline target has been reached on a touch at 1844.50 and we saw some profit taking come in at that line.

The ST range is between 1732 and 1845.75 and the two ST trend lines outline that range.  It is going to take a breakout on one side or the other to get things moving again from a trending perspective–but we could see some action inside of this range for the VST traders.

A move above the local high at 1846.50 would take out the bear stops and would also negate the shallow lower high/lower low pattern.  As I said before, I rather doubt that we have seen the ultimate high in the macro bullish push since the 2009 low.

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Stops and Targets is showing 1809.50 as the ST line in play with an ideal entry zone between that number and 1818.50.  A poke below would send the ST momentum bearish, but still range-bound above 1732

So, bottom line here is that we remain in a wide trading range for now between 1732 and 1846.50.  We are seeing a pullback from the ST descending trendline drawn from the last two ST highs…

Next downside targets are the ST ideal entry zone, then the top of the old VST range at 1801.25, and if we were to get a sharp break lower–the IT primary trendline at 1754

Next upside targets are concentrated between 1844 and 1846.50.  The stops for nearly all bearish positions initiated since 12/31/13 are resting just above 1846.50–and those bear stops represent guaranteed buyers to the pros.

…my .02

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ES Update

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The Fed Fun is now over, and the hourly and daily bar range charts above show the outcome…

As I pointed out at the time–it was front-run with a stop sweep/reversal play centered around the last IT higher low at 1754.  That break under IT support sucked in the bears and the Yellen testimony before both houses of Congress provided the news event to drive those ‘guaranteed buyers’ into higher prices.

We now have a new ST structural low built at 1732–so the market has entered a ST trading range between 1732 and 1845.75

The red and green arrows on the chart above show the ST structural highs and lows.  Since the 1846.50 high set on 12/31/13 we have had a lower high at 1845.75 followed by a lower low at 1732.  Lower highs and lower lows are the hallmark of a bearish trending structure and that is undoubtedly what helped to draw in the bears under 1754–and what I was warning about with the immense significance of 1754, and the importance of staying on the right side of that line with trades.

To break the ST bearish trending structure, the pros would need to exceed 1845.75.  If that happens, then any technical argument the bears had would be erased.  On the other hand, if the current push higher were to stall under the red descending trendline drawn off the two lower ST highs–then we could see another round of bears hitting the sell button looking for the eventual formation of a bearish ‘M’ pattern.

The ST low at 1732 was a deep enough pullback to eventually morph into an IT low if that level holds on subsequent pullbacks.

The combined ST/IT trading range now is between 1732 and 1846.50

As I mentioned in previous posts–I rather doubt that the ultimate high of this larger macro push has been reached because we did not get the unanimous top spotter signature at the 1846.50 local high that has been there at every major paradigm shift since the inception of the ES contract.  There is a first time for everything, of course, but until that spotter model breaks–it is pretty hard to argue with a 100% historical correlation.  😉

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To help put things into perspective–the weekly chart above shows the road map of the market since the ARRA act passed at the start of the Obama regime in 2009…

The recent pullback was very shallow in comparison to the April 2010 and July 2011 intermediate dips.

The current macro push from the October 2011 IT low is very extended and nobody would be terribly surprised to see a deeper pullback develop at some point–but so long as the new ST low at 1732 holds up, the bears are running against significant trending momentum.

If I were the one pulling the levers–I think I would push to new highs before yanking the rug (a stop sweep reversal above 1846.50 would be a nice touch).  Under the right circumstances, a push into new highs followed by a sharp reversal could trigger the unanimous top spotter signals that I like–and then maybe we could get to work on finding some bearish downside potential.

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For now, though, Stops and Targets has it exactly right (as always), we have two embedded ranges here… short-term between 1732 and 1845.75 inside of intermediate between 1754 and 1846.50.  The big trove of bear stops is above and the real sellers are below.

…my .02

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ES Update

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ES has made it back to the first upside target  of 1801.25 (VST) I mentioned for the IT stop sweep/reversal setup centered around 1754

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Price is now inside the ST ‘ideal sell zone’ (shown as a shaded rectangle in the hourly chart above) under the ST primary trend line at 1809.50.  Next resistance above (VST) is at 1817.25

The IT bulls are driving here from the 1754 stop sweep/reversal entry.  A move back above 1809.50 would flip the ST trend bullish–so that is the line currently in play.

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Today, Janet Yellen is scheduled to testify before the House Financial Services Committee and she testifies again on Thursday before the Senate Banking Committee.  Everyone wants to know if she is planning on taking away the ‘Quantitative Easing’ punch bowl.

As it so often happens in these circumstances, the market has been maneuvered into a pressure zone between bulls and bears–in this case IT bulls and ST bears.

The low of the recent pullback was at ES 1732, and that is the line that must be protected over the next couple of days to set up a new short-term structural (lower) low.  The last ST structural lower high was at 1845.75, so that would be the eventual level that must be taken out to the upside to break the current lower high/lower low ST bearish channel.

It’s time for the Fed Show to begin, so let’s see what sort of testimonial entertainment they have in store for us…

…my .02

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ES Update

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The weekly chart above illustrates the bullish paradigm I have pointed out previously that has been in play since 2009…

This is only the fourth intermediate-term ‘lower low’ built since the start of the Obama regime.  Of the previous three–two were stop sweep/reversals designed to lure the bears in before relaunching…and the other instance was a deeper pullback that sliced through the previous two higher lows before culminating in a double bottom.  The red resistance trendline broken in December of 2011 was the last bearish structure formed in the IT.  Since that breakout the current leg made eight higher lows without a single lower high.  The current break under 1754 was the first IT lower low since October of 2011!

So far, we have another stop sweep/reversal play after breaking under the technical mark of 1754.  As I alluded to previously, we could yet still see some chicanery around this area–but the bull/bear line of immense consequence remains at 1754.  The momentum is bullish above and bearish below that key line.

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The hourly bar chart above shows the stop sweep/reversal setup–and how 1754 has worked out perfectly, so far.  The next VST resistance is at 1801.25, and the ST primary trend line is at 1809.50

The early pop is currently in a minor resistance zone between 1777.50 and 1783.75 (see shaded rectangle on the chart above), which was formed on the opening hourly bar of the current weekly bar.  The weekly candlestick is positive > 1777.50 and the bear stops (set above the previous weekly high) are triggered > 1783.75.  That shaded zone is what the bulls are going to need to overcome to keep this going today.  Otherwise, there are VST traders who will sell the old high at 1783.75

It’s all technically good > 1754…but if that line were to be broken again, that could bring back into play the 1720.50 to 1730.25 target zone I pointed out in my previous post.

…my .02

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