ES Update

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Screen Shot 2014-08-21 at 10.05.13 AM

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With a move above the previous month’s high (and all-time high) at 1985.75, we now have a bullish engulfing candlestick on the monthly bars.  That pattern is the most ruthless move the pros can make–to first lure in bears and then crush them on a reversal through their trailing stops.  There is forced buying here as the bears’ trailing protective stops are being run–and so we have the potential setup for a stop sweep/reversal for the second time in a month.  The first bullish stop sweep reversal was pointed out in my posts on July 31st and at the current leg’s launch on August 8th.

The line to keep an eye on now is ES 1985.75 to see if that level can be sustained after the buying dries up from bears covering.  For counter-trend traders, that line now becomes the bull/bear line–but bearish top-pickers need to beware of additional potential upside similar to what occurred after the last monthly engulfing bar in February. Engulfing bars are historically followed by increased odds of weakness ahead–but never in history has the market seen the sort of blatant (futures-driven) intervention that has occurred since 2009–so we’ll see how this goes in the coming weeks.

 

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Screen Shot 2014-08-21 at 10.26.55 AM

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On the weekly chart above, we see that the last move down to establish a minimum higher low is looking good at this point for a continuation of the higher high/higher low paradigm from 1890.25.  If that pivot successfully builds, that is the line that would ultimately need to be crossed and held to flip the paradigm.  So, essentially, what we are seeing is simply more of the same.  As I have pointed out in my commentary many times recently–I would expect to see any significant pullback to be tipped by unanimous top spotter signals across the indexes and index futures and mirrored by large numbers of spotters in the Russell 3000 stocks.

Until/unless we see a bearish capitulation and an evaporation of new buyers, this market can just keep chugging along so long as others are willing to take the opposite sides of the pro’s trades.

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Screen Shot 2014-08-21 at 10.34.00 AM

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The daily bar range chart above shows the relentless squeeze since the trap was sprung at the last ST pivot low of 1890.25.  Price is extended from that ST low, so let’s see how things go here at the range top breakout > 1985.75.  When the current squeeze wanes, the next logical move would be a pullback to build a higher short-term low as the gains from the current bullish leg are consolidated.  We would need to see a daily bar close above 1985.75 followed by selling underneath that line for Stops and Targets to generate a new ST counter-trend sell signal.

 

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Screen Shot 2014-08-21 at 10.39.52 AM

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And finally. the hourly bar chart above shows the VST support targets for ES.  There are currently no resistance targets as we are into all-time high territory again, so the above support levels serve as downside targets once we eventually get a pullback in the current leg.

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Be sure to keep a close eye on the end of day summary tab from the top navigation bar if we get a day that starts strong and ends weak.  We will be particularly interested in watching the Spotter alerts and also to watch the trend leaders in the Russell 3000.

The trend is your friend…until it ain’t

From Stops and Targets–net gains for ES since last trend change signals:

The long-term trend turned bullish at 1,117.50 on November 28, 2011.  Net change to date is +870.50 (+77.90 %)
The intermediate trend turned bullish at 1,739.75 on February 6, 2014.  Net change to date is +248.25 (+14.27 %)
The short-term trend turned bullish at 1,942.50 on August 13, 2014.  Net change to date is +45.50 (+2.34 %)

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Screen Shot 2014-08-21 at 10.54.28 AM

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All major trends remain up > 1942.50

For Type A counter-trend traders out there, you would be looking for a daily close above 1985.75 and then a subsequent cross back under that line to trigger the first counter-trend sell.  For those protecting massive long-term bullish gains, keep an eye on those spotter signals going forward and I will be sure to point out any potential major developments here in this blog as I see them unfold.

…my .02

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ES Update

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Let’s take a look at the current configuration for ES…

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Screen Shot 2014-08-18 at 10.27.09 AM

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Starting with the monthly bars, we see that the current candle has a lower high and lower low.  That is technically bearish until/unless last month’s high at 1985.75 is taken out to the upside.  If that were to happen, it would paint a bullish engulfing candle similar to what last happened in February after the previous black monthly candlestick.

As I have pointed out in previous posts, from a monthly bar perspective, the key line to continue to watch is at ES 1924.75 and the higher timeframe selling pressure is off so long as price remains above that level.  Right now, the pros have the bears who shorted under that line on the ropes and this is the short-covering that we expected to see once that line was crossed to the upside.  Only thing to do here is to wait and see if there is enough fuel to take out the previous monthly bar high.  If so, then we could get another stop sweep/reversal setup.  If not, then once the covering wanes, we could see a lower high build in the shorter timeframes to go along with the recent lower low.

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Screen Shot 2014-08-18 at 10.41.40 AM

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On the weekly bars, the pros got their minimum pullback to potentially build a new higher low in that sequence at 1890.25.  We would need to see a couple more weeks of holding above that level before a new higher pivot low can officially build.  The plot of this recent engineered pullback was probably to break that trendline support, lure in the sellers in concert with the previous monthly bar close black candle break–and then reverse. just above weekly bar breakout support at 1885.25.  The pros need to have parties on the other side of their trades to capitalize on the setup and this looks like paradigm-typical chart engineering by guys with an agenda…the same as it has been since 2009, when the current political regime assumed office.

Like I have pointed out exhaustively in previous posts–the paradigm will not change until we eventually see a higher weekly pivot low that is broken and does not recover.  Currently, we are watching to see if 1890.25 can stick as the most recent higher low in the ARRA game plan.

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Screen Shot 2014-08-18 at 10.55.49 AM

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The daily range chart above shows the current setup best…

We see the short-term low at 1890.25 and the next upside targets of the local high at 1985.75 and a more subtle descending trendline target just below at the top of the current short-term trident channel.  If we are going to get a lower high inside the monthly bearish candle and the sideways action while we await the building of the weekly pivot–that would be a good spot for it.

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And finally, we have the hourly bars where all the higher time frame targets are shown, along with the next VST resistance target at 1979.50 and the descending trident channel top rail presently at the 1978 area.

Let’s see where this squeeze goes as the bigger picture bull/bear lines remain at 1924.75 (monthly) and 1890.25 (weekly).

…my .02

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ES Update

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The line in play this morning is the top of the ideal entry range that I pointed out in my last post.  That line is ES 1936.25.

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ES 1936.25 is itself the bottom of a resistance band between 1936.25 and 1945.25, which is where key trend support was broken on the recent takedown to 1890.25 from the CT sell signal at 1978.25.

We have been on a countertrend buy signal since 1891.25 and this is the zone where we find out if that was it for the pullback–or if we are going to get another leg lower from resistance.  We can extend that resistance zone up to the descending VST trendline resistance which is presently at 1958 area.

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Screen Shot 2014-08-12 at 8.55.40 AM

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The daily bar range chart shows the current setup a little better.

Damage was done when that last higher low was broken at 1945.25 and though we got a bounce from a stop sweep/reversal there to a new high, that was the move that paved the way for the larger decline down to 1890.25–and so that line at 1945.25 is key resistance and the top of the resistance band I pointed out above.  The bottom of the resistance band at ES 1936.25 was the preceding higher low before the sequence change to a lower low at 1942.50.  Remember the definition of a trend…higher highs and higher lows is bullish, lower highs and lower lows are bearish.  What we are potentially working on now is building the next lower high in a bearish sequence, and this current move is at the tipping point where bullish and bearish pressures are at an equilibrium.

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Moving out to the weekly bars…

The pullback gave the pros the minimum needed to build a new higher low in the weekly sequence, which had gotten very extended.  This chart is the ‘roadmap’ for keeping an eye on the strategy to prop the markets since 2009.  Until/unless we get a break of a previous higher low in the sequence that doesn’t recover–the game remains the same.  From here, it would take a move under 1796 to accomplish that paradigm shift.  The more likely outcome is the building of a new higher low in the sequence–and then we might get a setup for something more bearish if the ensuing rally were to fail from new highs and then break under that new low.  These things take time to play out, so we’ll have to see how it goes–but I would expect massive new top spotter signals before that breakdown occurs–as we know the pros have insatiable greed, and I should think that they would want to clear the shelves of inventory before yanking the rug on a major decline.  That is the nature of a bearish capitulation, and I don’t think we have seen that yet from a higher timeframe perspective.  The key is watching the support pattern, though, and presently that support remains down at 1796 until/unless we get a new higher low built in the sequence.  Note that this pullback broke the trendline and now is riding that old trendline path–so that might have been the intent of the pros on the latest ambush.

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Screen Shot 2014-08-12 at 9.27.38 AM

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The last chart above shows monthly bars, and this is the perspective that institutional traders care about.  We see a lower high and lower low on the present candle and that is bearish.  The key dividing line from a trader in the long-term time frame is last months close at 1924.75.  Under that line invites selling, but above and that same pressure comes off.  Again, the pros know where they need to go to trigger the black box trading programs and that is why 1924.75 is key.

Bottom line here is that the market is presently bearish under the resistance band between 1936.25 to 1945.25 and so if we are going to see a reassertion from the bears after the counter-trend rally this is where it likely will come.  A move back above 1945.25 however, could ignite furious short-covering as the pressure would switch from bearish to bullish across multiple timeframes.

…my .02

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ES Update

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Stops and Targets has had this pullback sniffed out since the original counter-trend sell signal at 1978.25.  In the premarket this morning, the ST countertrend support target at 1891.25 was hit and we have seen buying come in off that line.  The analysis text in the screenshot above says it all.  ST bias remains short under 1942.50, but with the first ST target now hit, it’s time to be on watch for a potential counter-trend rally in the ST.

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Screen Shot 2014-08-08 at 8.08.24 AM

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Bulls have thus far been shown no quarter since the back kiss at 1979.50 of that original countertrend sell signal at 1978.25.  You can see on the hourly bar chart above how the pros have held ES under last month’s close at 1924.75 for the last few days to stifle buying.  This morning marks the first tradable ST support and we’ll see how high it bounces.  These type of setups remind me of holding a ball underwater (the water level being 1924.75).  When the ball is finally released, it can pop very quickly above the surface–so bears need to remain diligent and honor those stops when the snap back rally comes.

The next support below is an open gap at 1889.25 and then intermediate confirmed support at 1885.25, which was the last buy signal in that time-frame from May 23, 2014

The next target higher is 1925, which is the bottom of the ST ideal entry zone (for short trades).

If the ST bounce here at 1890.25 doesn’t stick, the support band below is between 1878.75 and 1889.25.  Underneath there is a void down to 1851.75.

Let’s use the premarket low as a bull/bear line today for VST traders.

…my .02

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ES Update

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Screen Shot 2014-08-05 at 8.53.59 AM

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Yesterday’s rally tagged confirmed resistance at 1936.25 and that triggered some profit-taking from the channel bottom touch entry I pointed out at 1910.50

As the S&T analysis text above points out–the short-term trend remains bearish under 1942.50, but as I also pointed out in my last post; the same VST levels that were support/bearish targets on the way down now become resistance/bullish targets on the way back up…

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Screen Shot 2014-08-05 at 9.02.07 AM

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From the bottom rail touch at 1910.50 the first VST countertrend bull/bearish partial target was at 1917.50, then 1936.25.  Now we are watching to see if the pattern of hourly higher lows/higher highs since 1910.50 can be sustained.

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Screen Shot 2014-08-05 at 9.07.44 AM

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Yesterday’s daily bar range of 1914.75 to 1937.50 is what will likely be in play today.  So far, we have an inside bar–with both bulls and bears looking for a breakout in their favor.  The next daily targets are 1942.50 to the upside and 1885.25 to the downside.

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Screen Shot 2014-08-05 at 9.14.10 AM

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You may have noticed the light blue line at 1924.75 that I drew in on the hourly bar chart.  The monthly bar chart above shows what is going on right here from the big boy’s perspective…

ES 1924.75 was the July monthly close, and that is a very important number to keep in mind.  In the current August bar, any print below that line is bearish and any print above is bullish from the institutional perspective.  Bears are fine below that line, but if the August candle goes white, then remaining bears should continue to heed my advice and watch your wallets.  These take downs are fun to ride, but the trick is to hang on to profits when the rallies come and a quick scan with your eyes to previous black candles followed by white candles should make that point abundantly clear.

From a monthly bar perspective, we have a lower high and a lower low at present and that is bearish so long as price stays under 1924.75, which is why we are seeing this current tug-o-war around that number.

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As I mentioned previously, yesterday’s daily bar range is currently in play.  We would likely see sellers appear underneath 1914.75 and buyers above 1937.50.  If you look closely at yesterday’s action you will see that the action was predominantly between the two target levels of 1917.50 and 1936.25 that I had pointed out in my last post.  Now we are watching to see which of the sides takes control here in the VST.  The pros have their minimum pullback targets in hand and we don’t have tops spotters in play–so I suspect that the odds favor up over down before we get a true topping signal from this very extended market and in a perfect world, that major top should be detected by unanimous spotters when it finally comes.

So, let’s watch the battle here around the July close of 1924.75

…my .02

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