ES Update

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ES has been driven up >100 Points in just 12 trading days–without even one VST pullback!

Take a look at the lows on the daily candlesticks and you will see that with the exception of yesterday when we got a tiny push under the previous low–it has been nothing but higher lows with zero escape opportunities for trapped bears.

In the premarket, the previous highs on the futures have now been taken out, which officially retires the excellent top spotter signal that clued us into the pullback down to the gap fill at 1824.25…and the reversal buy there.

There is no resistance above 2014.50, so that line now becomes a potential stop sweep/reversal line if we were to get buying exhaustion and capitulation after the bears have finished covering.  Psychologically, this has to be the ‘uncle point’ for bears–so let’s watch with interest to see what develops in case the pros decide to take their foot off the gas either just before or just after the upcoming mid-term elections here in the US.

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I have been pointing to the weekly chart above as the definitive road map for the pro’s strategy since the current regime came to power in 2009.  There have only been five times that a lower pivot low has been built since the lows, and in each case save one–as soon as the stops were swept underneath we immediately saw a blast off and rally back to take out the last higher high.

As I have pointed out many times, until we get a lower low that does not immediately reverse–the paradigm remains unchanged.

As I also pointed out in a previous post–once the pivot sweep occurs (the most recent being under 1882.25) they have not revisited that line…so keep that in mind going forward.

With the upcoming elections and what should be a butt-kicking for the very unpopular regime in power (if the votes are counted fairly, that is) there is a possibility for a paradigm shift just ahead and so we’ll have to watch and see.  If I were pulling the levers and looking to make an escape, however, this is exactly how I would do it.  The market has been driven into nosebleed territory again and soon everyone who wants to be in will be and if the buyers dry up, then there’s only one way to go after that.

So, let’s watch carefully to see what happens after the forced buyers are processed above the old high at 2014.50

There is nothing even remotely bearish about this market > 2014.50–but there are some who will attempt to enter counter-trend trades centered around 2014.50 for the reasons that I have explained above.  That trade will only work if the bears capitulate, though, so let’s also keep an eye on the sentiment of the usual suspects for a potential tell.

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That was one heck of an intermediate buy signal back at 1882.25 for Stops and Targets (the first counter-trend buy was at 1824.25), but we have now reached the upside target where partial profits should be taken and the protective stop moved up to the key stop sweep/reversal line at 1882.25 that I explained above.  If the current paradigm continues, they likely won’t touch that trailing stop line again–but if we were to get capitulation and exhaustion then we will know something major is potentially up if that line is taken out in the future.

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In the short-term we also have a partials target achieved at 2014.50.  It’s all good for bulls above 1968, but if that line were to be taken out to the downside then it would become the first counter-trend sell signal.  If we get a close above 2014.50, that line would move up to the first counter-trend sell line for both the ST and IT.

…my .02

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ES Update

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Today is the start of a two-day FOMC meeting.  As usual, the pros have the market positioned at a pressure point ahead of the proclamation tomorrow at 2 pm ET.  We also have mid-term elections right around the corner, so factor that into expectations as well.

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I couldn’t help but notice recently the precipitous drop in gas prices ahead of the election.  Get ready for the blaring media headlines of gas price under $3/gal nationwide.  Coincidence? …yeah right.

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Yesterday I pointed out the bearish channel drawn from the last two major pivot lows and shown on the chart above as parallel pink lines.  The descending top rail of that channel is currently at the 1974.75 area–just above the resting stop zone for bears between 1968 and 1971.  That resting stop zone is where the last two VST pivot highs built just before the take down to 1813 where the market bottomed and turned after filling the open gap at 1824.25

As I mentioned yesterday, if I were pulling the levers I think I would push up through those stops to generate guaranteed buyers and then pull it back off the channel touch to see if I could suck in more short-sellers before eventually reversing and then breaking out above that channel to harvest the second tier of forced buyers.

We’ll have to see what the pros have in mind here for their latest FOMC shenanigans, but it wouldn’t surprise me to see them go for the happiest possible news ahead of the mid-term elections which are now a week away.

Americans appear to be pretty ticked off at the current administration, however, if this CNN story and poll is to be believed.  If the votes are counted fairly–we could see huge losses for the current administration’s party.  The next couple of weeks could be interesting.

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The hourly bar chart above helps to fine tune the setup illustrated on the daily bar chart…

ES is tapping on the ST primary trend line at 1968 as I type and that correlates with the September monthly close at 1965.50.  Those are pressure points for bears and the resting bear stops are sitting just above 1968.50 and 1971

The descending top rail of the bearish channel is currently at 1974.75 area–so those are the next upside targets.  Let’s see if we get a pullback off that channel if the stops are run.

…my .02

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ES Update

Not much has changed since my last post from a technical standpoint.  The pros have been torturing the bears who missed the turn (as usual) with a relentless squeeze back to the last technical sell zone.  We are drawing close to short-term resistance and that primary trend line at 1968, so let’s update the charts here with a few short comments on each…

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On the monthly chart the most important line to watch is the September close at 1965.50.  Bears are still in the game below that line, but if the pros were to close October above that line, that would be one heck of a monthly reversal.  Technically, the monthly bar is bearish here with a lower high and lower low–and so long as price remains under 1965.50, the monthly counter-trend sell signal remains in place for institutional-level traders.  A move back above could start a flurry of short-covering, however.

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The weekly bar chart above shows the key line of 1882.25.  That is where the stop sweep/reversal occurred.  It would take a pullback that broke below and stayed below to finally break the existing intervention paradigm.  For those who are feeling adventurous, last week’s close at ES 1959.75 is a counter-trend sell signal, but bears need to step aside quickly if that fails to the upside.

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The daily range chart above shows the two possible trident channels currently in play.  Price is getting close to the top rail of the bearish channel and there is a layer of bear stops resting above the top of the short-term range at 1968.50 that correlate closely with that channel top.  Often, the pros like to tag the channel and then feign a pullback to suck in bears, only to reverse and break out to the upside a few days later.  So, bears should be aware that those stops are there and if hit, they represent buying fuel.  If they do eventually take out the bearish channel top, the next target higher is the open gap at 2003.75 from the original top spotter sell signal.

Note also that the pros left a gap down at 1850.50 in case we eventually get a decent pullback from a ST lower high.

…my .02

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ES Update

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Stops and Targets is telling us that the intermediate timeframe is currently ‘in play’.

The summary chart shows that we got a bounce from near IT primary trend support at 1882.25

We can also see that the IT time frame has now established a new trading range between 2014.50 and 1882.25

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Clicking on the intermediate tab, we can see that the bullish trend has resumed after a stop sweep under 1882.25 and that line is now the bull/bear line on new trades from this area.  If 1882.25 holds, we could see an eventual test of the current high as the next IT target up.

…if 1882.25 holds

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Let’s take a peek at our handy dandy weekly chart to see what is going on here a bit more clearly…

I have pointed out many times in the past that this chart is the essential road map to the efforts of the current administration and their allies since the massive ARRA infusion starting in 2009.

Pay close attention to the highlighted ovals on the chart above and note that only 5 times since 2009 have we had a breach of a last higher pivot low.  Only once, at oval #2, did we have a subsequent lower low (and then, just barely).  On every other occasion, the pros have swept the stops after an engineered take down and reset.

That is the existing paradigm in play and the only way we will know something is different is when that pattern finally changes.

I have been pounding the table about the extreme importance of 1882.25, and this chart explains why.  That is the major bull/bear line and Stops and Targets has the analysis just right (as always).

Taking into account the current paradigm’s history, there would seem to be little point to remain bearish above that line since we got the stop sweep and reversal–but if it were to drop back below, that’s potentially a horse of a different color.

So, again…watch 1882.25 carefully and be aware of what they have been doing and how they have been doing it.

Further note that once the stop sweep reversal happened in 4 out the 5 previous occurrences–the pros never came back to touch that level again!  😉

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The daily bar range chart above shows that we have set a new VST range bottom and it’s current high is at 1968.50.  If that low at 1813 holds in the coming days it will also expand the ST range down to 1813.

The next logical structure to build after a lower pivot low is in place is a lower pivot high and that pullback could start at any time here.

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The hourly bar chart above shows the next targets higher.  ES 1918.25 is minor resistance and a breakout above 1934.50 would squeeze many bears back to where they chased the move lower after the IT trendline break.

To fine tune the current setup from IT down to VST…the key hourly support level is obviously the VST pivot at 1813, which was a deep enough pullback to accommodate all the way down to an eventual long-term pivot if that line were to remain untouched in the coming weeks and months.

…my .02

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ES Update

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Okay, here we are back at the ideal (short) entry zone from the expected bounce at the gap fill at 1824.25 and at the key 1882.25 intermediate primary trend line.  Stops and Targets’ counter-trend long trade signal has netted 50+ points!

The key line in play is 1882.25 here.  That is the IT primary trend line and so long as price remains below we are in an intermediate bear market.  If it crosses back above, then we have to consider the possibility of a stop sweep/reversal, which I will explain on the weekly chart below.

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Looking at the monthly chart above…the current pullback has already wiped out five months of bullish gains.  The key line here is last month’s close at 1965.50.  So long as price remains below that line we have a candle with a lower high and lower low and that is bearish from a monthly bar perspective no matter how you slice it.

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Taking a look at the weekly chart, which has been our trusty road map to the pro’s strategy since the current US regime came to power in 2009…

The paradigm since 2009 has been to set a series of higher pivot lows.  Only five times in the last five years have we seen a previous higher low broken to the downside.  Three of the previous four have been quick stop runs followed by a reversal.  Only once did we see a sustained pullback (marked by the yellow oval on the chart above) leading to the double bottom in October of 2011.

The first point of business is to see how ES 1882.25 gets resolved.  Are they going to sweep and reverse again–or will we see what is akin to an Elliot wave four pullback that has a current downside target of about 1650 (which is the bottom of the rising parallel channel drawn off wave one and three termination points)?

I am certainly not an Elliot Wave enthusiast, but the ‘impulse’ five wave imagery helps to describe the structural setup shown above.

We can keep it much simpler at this point by carefully watching the Stops and Targets’ intermediate primary trend line at 1882.25.  This market is weekly bar bearish below that line, but would revert to a stop sweep/reversal bullish mode above.

Last week’s close was at 1894.25 and that is where the black box buy programs would light off if we get another reversal here.  Structurally, we have a lower high and lower low on the current candle–but as i have pointed out before, pros like to use the last bar’s close as a counter-trend entry point–so head’s up here and be keenly aware of the pro’s past tendencies on the chart above.

We are looking to see if the weekly pivot paradigm resumes–or if it changes.  What happens here at 1882.25 is very important!

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Zooming in to the daily bars on our range chart…

The first order of business on setting a potential bottom is to establish a new VST pivot.  That will happen if today closes above 1813, which seems probable barring something extraordinary.  VST pivots can eventually morph into ST pivots and so forth.  The current provisional low at 1813 meets all the minimal requirements to eventually become a new LT pivot if it remains untouched in the months ahead–but first things first, and that is the current test here at 1882.25 and how it resolves as explained above on the weekly chart.

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And finally, we look at the hourly bars which fine tune the points made above…

ES is at key IT/paradigm resistance right here.  Next target above would be last week’s close at 1894.25

So, ya getting the point yet about the importance of 1882.25?

Have a great weekend everyone.  This has been a spectacular trading market lately and I hope everyone has been doing well.

…my .02

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