ES Update

.

205_156541

.

Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.

– John Adams 1798

.

.

Last night a profound change occurred in this country.  A rogue and extremely unpopular President inexplicably sanctioned the illegality of millions–to the apparent detriment of hundreds of millions.  So, given that extremely troubling development–what might a rational person expect to happen in the markets?

But, as we have seen time and again–the pros can and do use the futures to accomplish political ends–and so the gaudy overnight squeeze should come as absolutely no surprise during arguably the most corrupt and reprehensible US regime ever to control the federal government.

.

.

Screen Shot 2014-11-21 at 9.43.47 AM

.

Yesterday’s IT trident setup was negated early on, which probably isn’t at all surprising in retrospect.

Today is November OpEx and so I started looking at the longer term trident channels to see where the next resistance setup might come…

I think we are going to get a sharp reversal at some point.  The next potential trident channel is drawn off the 11/16/2012 low and then through the recent IT pivots.  That channel’s rising top rail is today in the 2074 area.

On the daily chart above I have also drawn in a tentative bearish channel–but that is for a visual only–as we are still awaiting an official top to be signaled either by the confirmation of unanimous spotter signals–or by a technical target having been reached and then confirmed by a counter-trend sell signal.

This market is now very extended.  The closest primary trend support is more than 100 points lower–and we haven’t had a pullback in 27 trading days!

.

.

Screen Shot 2014-11-21 at 9.54.30 AM

.

Zooming in to hourly bars, we can see that yesterday’s move lower was simply to sweep the stops under the VST trendline break.  Once price broke back above 2043.75 it was off to the races and up to take out the remaining bear stops above 2054.

I have drawn in the next higher bullish trident channel and have highlighted today’s potential top rail touch location at 2074.  As I did yesterday, I have also drawn in a tentative bearish trident just in case we were to get a pullback started.

These are crazy times–and so be prepared for the unexpected.  As I said above, this market is now dangerously extended to the upside–and sooner or later we are going to get a correction so it is a good time to recheck those protective trailing stops under winning positions using Stops and Targets for individual issues.

This market is fully bullish above 1968, with the first ST counter-trend sell coming at 2014.50–but those supports are way below current prices.  It would take a decline to 2025 from here to establish a new minimal ST pivot low and eventually allow the trailing stops to advance higher.

As I mentioned in a previous post–if I were pulling the levers of the market and wanted to reach a capitulation point…this is exactly how I would do it using the election as a fulcrum.  The bears have been absolutely decimated and so once those forced buyers (to cover) have been eliminated…who is left to buy in such an extended market?  That said, the trend is your friend until it ain’t…

…my .02

.

.

ES Update

 

.

Screen Shot 2014-11-20 at 9.35.36 AM

.

.

Screen Shot 2014-11-20 at 9.11.00 AM

.

We got the small overshoot I was looking for at the top rail of the IT bullish trident.

Now we are watching this pullback to see where it goes.  I have drawn in two tentative bearish trident channels on the hourly chart above; the dashed red channel corresponds to an IT and ST trident and the dashed blue channel represents the VST bearish channel.

If this pullback continues beyond the current VST support trendline stop run, those channel tops should work well for trailing bearish protective stops.

In order for the pros to build a minimal ST pivot low we would need a pullback to 2025.  To break the previous weekly low, they would need to get under 2021 and that would line up well with the bottom of the dashed blue channel.

A reversal back above the VST sell line at 2043.75 and then a breakout above the top rails would, of course, negate this counter-trend setup.

.

.

Screen Shot 2014-11-20 at 9.24.12 AM

.

All major trends are up and there are currently no resistance targets above.  The first downside support target for both the ST and IT is at 2014.50.  It would take a move under that line to trigger the first S&T counter-trend sell in both time frames.

November OpEx is tomorrow, so today’s action will likely be about squaring the books for the option sellers to be sure that the house payout is minimized.

…my .02

.

.

ES Update

Almost there…

.

Screen Shot 2014-11-18 at 10.07.03 AM

.

In my last post I pointed out the two currently-active IT trident channels.  The chart above shows the bullish channel in light green and the bearish channel (which is still awaiting a top) in red.

My best guess is that the remarkable squeeze that has been on since 10/15 from 1813 might be deflected back at a touch or slight overshoot of that upper green rail.

This is November options expiration week for what would have been the front month during the pre-election take down from 2015.50 to 1813.  The pros may have some big fish on the hook here and likely have a great payday awaiting them.  For any unfortunate bear who missed the turn at the 1824.25 gap fill that I pointed out at the time–this squeeze has undoubtedly been excruciatingly painful.  For bulls, quite the opposite.

All things come to an end eventually, however, and this now 24 day advance without even a VST pullback has been extremely interesting, to say the least.

.

.

Screen Shot 2014-11-18 at 10.51.02 AM

.

We are still awaiting apogee.  Let’s pay careful attention to what happens at the rising top rail (currently at around the 2050 area) if/when price gets there.  The hourly chart above shows current support targets underneath.

Remember…a volatile market is an option seller’s market and a dull market is an option buyer’s market.

You guys have read my words before on this type of technical setup…first they bore you to tears and then when least expected (by most) …whammo!

…my .02

.

.

 

ES Update

Screen Shot 2014-11-10 at 9.31.42 AM

.

It has now been 18 trading days without even a VST pullback!

Last support for VST, ST, and IT is way back at 1813.  When price gets this far ahead of nearest support, the most likely outcome is a pullback once capitulation is complete and buyers are exhausted.

There are two IT channels in play currently.  The light green bullish channel and the red bearish channel which still needs a top before it can be drawn accurately.  If I extrapolate the top rail of the bullish channel as a likely top then the bearish channel would appear as above.  That’s just a guess at this point but helps with visualization.  The rising top rail is currently at about 2044, so keep that number in mind.  Also keep in mind the current confirmed support level of 2014.50 for both the ST and IT time frames.  That is where the first S&T counter-trend sell would come in.

..

.

Screen Shot 2014-11-10 at 9.40.47 AM

..

Here are the same channels projected on a weekly candle chart.

The weekly chart has been the road map to this administration’s efforts since 2009.  Looking at tendencies after each of the last stop sweep/reversal bottoms (marked by green ovals) we see that the typical advance afterwards lasts about 4 weeks, on average.  We are in week four now.  The reason for that pattern is likely options related.  A high volatility market is an option seller’s market due to the high premium markups.  A low volatility market evaporates that sold premium and eventually leads to an option buyer’s market as premium diminishes.

Fear crept into the market during the pre-election takedown and you can be assured that the pros sold tons of options in the ensuing melee and so naturally, their best interests are served by pocketing that premium and running out the clock on those who missed the turn at 1813.

So, once they are done with their four corner offense–expect a pullback, perhaps quite sharp.  As always, we will be looking for a day that starts up and then reverses sharply lower to potentially set up top spotters.  I would expect spotters, a counter-trend sell, and spotter confirmation when the time comes.

Until then, we await apogee and continue to inch up protective trailing stops behind winning trades.

…my .02

.

.

 

ES Update

The 2014 US midterm election results are now mostly in…

.

Screen Shot 2014-11-05 at 8.34.09 AMSenate

.

.

Screen Shot 2014-11-05 at 8.34.22 AMHouse of Representatives

.

..

Screen Shot 2014-11-05 at 8.34.35 AMState Governors

.

.

This election was a stinging voter rebuke of an extremely unpopular President–an individual who has inexplicably squandered away every possible political advantage.  There is simply no way to spin these results other than as a complete and unmitigated disaster for Democrats.

.

So, the big question now is ‘how will the election results ultimately affect the market going forward?’…

.

Screen Shot 2014-11-05 at 9.22.01 AM

.

Obama and the Democrats were handed the keys to the entire Federal Government in 2009.  The monthly chart above shows how the market has accelerated up in an unnatural trajectory since then.

I gotta tell you…that last push since the red trendline breakout sure is awfully-steep and it has gone without a reversion back to the dominant trendline.  The technical breakout at 1650 has also not been back-tested.  So, even though everything is currently as bullish as bullish can be…remember what I have said before about how the institutional-level traders like to use the previous month’s close as the first counter-trend sell line.

Bears have now been completely demoralized after that last gigantic outside bar eviscerated those who attempted to front-run the election on the short side.  With all resistance targets tagged and the stops run–all of the elements are now in place here for a possible reversal after the euphoria or depression (depending on your political lean) of the mid-term election wears off.

So, let’s keep an eye on ES 2011.50 (the October monthly bar close) as the first potential institutional tell once the current buying slows down.

If we get a daily bar close > 2014.50, that line will become the first counter-trend sell line for both the short and intermediate terms on Stops and Targets.

Also, we are going to want to keep a sharp eye on the spotter signals–if we eventually get a day that starts up and hits new highs and then reverses sharply lower.

Yep, if I were pulling the levers and preparing to reverse a major paradigm…this is exactly how I would do it, but we’ll see what the pros have in mind in the coming weeks.

…my .02

.

.