ES Update

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Okay, there it is…the touch at the bottom rail of the spotter channel at 1956.50 now becomes the intraday bull/bear line.

If they bounce it here, we could see a stop sweep reversal play around now broken ST support at 1968, and that is what traders have been conditioned to expect.  If it breaks below that channel bottom then we could get a bearish trap door opening.

So, it’s all about 1956.50 here today in the early going…

…my .02

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ES Update

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ES is getting close to the bottom of the red spotter channel here and the SPY puts that I bought yesterday are now up >100%.  So, the plan here is to sell half of those right here and let the remainder ride free as ‘crash puts’ with 50% stop loss on current value if it rallies from the bottom rail.  It is always good when you can establish a free options position under these circumstances.  Nothing better than playing with ‘house money’ on a side bet.

The pros have accomplished what they were looking for, and what I pointed out here yesterday, which is the stop run under 1968.  The bottom rail of the red channel is the last support before heading down to the open gaps at 1944-45 and then the rising IT trendline support currently near 1921.

So, let’s see how it goes at this upcoming channel bottom test.  Bears would start to cover on a push back up through broken ST support at 1968, as that would then set up as a potential stop sweep/reversal play.

Ya gotta love those confirmed spotters signals.

…my .02

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ES Update

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I do love confirmed spotter signals in an extended market.  🙂

At yesterday’s close we saw the pullback from the spotter signal at 2014.50 and the first S&T counter-trend sell at 2003 reach down to a single tick above ST primary trendline support at 1968.  That was as low as the pros could possibly go without triggering the black box short-term sell programs.

Since that buying intervention just above 1968 support, we have seen a rally back to ST resistance at 1977.75.  Remember from my last post that was the next ST downside target once 1991.50 gave way.  Old support becomes new resistance, and so here we are watching now to see if this current rally leg from the bottom of the ideal buy zone at 1968.25 can punch through that line of resistance (and then through VST resistance just above at 1980.25).

If this rally leg can get past 1980.25, the next target higher would be 1991.50.

The spotter signal has attained the minimum goal of dipping to a ST buy, but the real question remains here whether 1968 holds as ST support–or if we get another leg lower to take out the bull stops that have congregated in large numbers just below that line.  Add to those the new stops of the VST dip buyers here who will be right in there with all the others just under 1968.  That’s how the pros roll more often than not–by setting up concentrations of stops to be harvested in the future, so don’t be too surprised if those stops all get taken out in the near future.  That would provide the pros with large numbers of panicky sellers–and there is no better environment in which to take profits on short trades.  😉

For today, the very obvious bull/bear line is at 1968.  Intraday action is bullish above, but would switch back to bearish below.  Rally targets are 1980.25 and then 1991.50.  Should we get a reversal back down after a rally failure–the obvious target would be all those protecive stops under 1968.  The next target underneath would be the bottom rail of the red descending spotter trident channel, which is presently near 1959.

…my .02

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ES Update

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On Friday’s close, after all the quadruple witching and FOMC silliness had concluded, Stops and Targets detected a new round of potential Top Spotter setups on many of the indexes and futures.

 

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There were 210 new Top Spotters detected in the Russell 3000, which isn’t a huge number by itself–but remember that there are already 694 confirmed top spotters–so altogether nearly a third of the Russell 3000 is feeling the potential exhaustion pinch.

It can get expensive trying to guess at a top before support actually gets broken, but as I have been saying recently–to my eye this thing looks tired and could use a little breather…but we’ll see.

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We have a ST counter-trend sell under 2003–and the next downside target is the top of the ideal entry zone at 1984.  That is where the pros came in on the last dip on 9/17 (see hourly bar chart below) so that initial support has been tested already.

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As I type, ES is testing VST support at 1991.50 and rising ST trendline support is just below near the 1988 area.  A failure here next targets ST support at 1977.75.

So long as ES remains above 1968 on today’s decline, that line will become new ST primary trendline support.  Underneath 1968 is a significant support void down to the open gaps at the 1944-1945 area.  The top of that support  void (at 1968) is where the pros stepped in to save their options expiration last week and, of course, to allow the emperor to strut a bit in his new clothes after the FOMC announcement.  A break below could bring significant selling now that last weeks’ incentives to defend have been removed.

Okay, let’s watch and see if the cavalry arrives to save this again–or if we finally get the start of a more substantial correction from the new spotter setup.

The key line in play today is the countertrend sell at ES 2003.  That is the backstop for bears probing for a possible breach of support under the green lines on the chart above.

To confirm Friday’s ES spotter alert it would take a daily bar close under 1998.25

…my .02

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FOMC Day

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Today we get the latest FOMC proclamation at 2pm, followed by a spin session at 2:30pm

You know and I know that The Emperor Has No Clothes, but hey–all those closed business store fronts out there, the hordes of unemployed (and increasing numbers of unemployable) folks, and widespread general dysfunction aside shouldn’t stop ’em from continuing to do their thing and fervently believing the spin.  And for any of us who can’t actually see the emperor’s new clothes, well clearly we are either too stupid or too incompetent to appreciate the splendor of the cloth.  Right?

<rant/>

I have been observing and analyzing the markets for a long time and I believe that there has always been coordinated manipulation to one extent or the other.  It used to be that the markets were allowed to trade naturally for long stretches and then we would see the ‘invisible heavy hand’ come in at critical junctures.  Since 2009, however, the orchestration has become nearly continuous–and while it can be extremely frustrating intellectually for folks who live in a world of rational thought and common sense–the near-constant futures manipulation actually makes it much easier for those of us who just shrug our shoulders and go with the flow to see and predict where the market will likely go.  I have called out in real-time the exact turns here since the recent spotter signal and that is because in the pro’s zeal to engineer the illusion of prosperity–they are relying more and more on black box trading algorithms, and those mathematical models make the market pressure points pretty easy to see for us who are using Stops and Targets.  So, while it is sad on the one hand that America apparently continues to careen towards central government planning under the current regime–at least we are able to prosper here with a great tool to ride the pro’s machinations.  Socialist central government planning has failed in every previous attempt to create a sustainably-prosperous economy, but that won’t dissuade the current kool-aid drinkers from giving it their best try to make it different this time.  So today when the emperor trots outs his New Clothes, try to act suitably impressed–lest any of us be socially or professionally ostracized otherwise

😉

</rant>

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The red channel has served its purpose for a very controlled descent–but this morning we see a breakout to the upside, which is undoubtedly intended to run the bears back to their stops ahead of today’s Fed show.

I think the key line in play here remains the August close at 1993.50, but there is also an open hourly bar gap above at 1999.50–and of course, 11 days worth of accumulated bear stops above 2003.  Normally, I would just yawn here and wait for those bear stops to be run on Fed Day, but we do have a confirmed spotter signal in place and I always am cautious until/unless that signal is invalidated.

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If 1968 is all we get from this current spotter decline, that would be a little disappointing from the apparent technical need for a reset from the recent irrational exuberance that we have seen.  ES 1968 is certainly sufficient to create a higher ST low, and it did touch the top of the ST support void–but for longer-term market viability, it sure would be nice to see a deeper pullback develop to allow a stronger support structure to be put in place.

The weekly chart above shows the road map of the pro’s strategy since 2009.  As I have pointed out many times before, until/unless we get a break of the weekly higher low pattern the current paradigm remains in effect.  However, to my eye, we could use a deeper pullback here to continue the pattern–and an attack on that rising weekly trendline support is where I would go if I were pulling the levers.

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At any rate, the pros are going to do whatever it is that they are going to do–and I remain fascinated and impressed at their amazing ability to place the market at a point of maximum uncertainty just before the proclamation utterance.

The big boy line in play remains 1993.50 and guess right where it is that they have price parked as I type…  🙂

So let’s sit back and enjoy the choreographed show today, which could be kinda interesting this time.  All trends are presently up and the next ST upside target is 2003.  A short-term countertrend sell would come on a move under confirmed support at 1977.75

…my .02

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