ES Update

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At the close yesterday we got 5 out of 7 possible index top spotter setup signals.  Missing from a unanimous sweep was the DOW and YM (DOW futures).

At around 3:30 yesterday the market internals were set up for a hard sell-off, but the futures were goosed into the close and so even though we got several marginal index top spotter signals–there weren’t as many confirming spotters (134) in the Russell 3000 as there could have been otherwise.

The last time we had a major top spotter setup that confirmed was September 19, 2014…

http://bigpicturecommentary.com/?p=7154

…and it also had 5 of 7 index spotters but more internal confirmations (204) along with a large number of unusual volume detections (2,025).

Spotters don’t mean a thing unless they confirm with a subsequent close below the signal bar low–so we will need to keep a watch here and see if this confirms or invalidates.

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ES spotter signal was at 2117.75, with a confirmation line at 2107.25 on a subsequent close.  If price breaks above 2117.75 by even one tick, then the signal is invalidated–but if we get a close under 2107.75, then maybe something more significant could be in store.  Those are the two numbers to watch for today.

So, head’s up…

…my .02

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ES Update

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The market has broken out above 2088.75, as expected, and there is no resistance above.  I have drawn in the current ST bullish channel and a time/price target of 2126.75 by month’s end.  That is just a rough guess at this point based upon the recent trendline breakout.  The key line to watch now is 2088.75, which is intermediate term confirmed support.  If we were to get a pullback after a stalled breakout, that line would be the first counter-trend sell signal.

Now that we are in new highs territory, we need to start watching for end of day spotter signals.  Once a tradable top is eventually in place I would expect to see unanimous index spotter signals confirmed internally by large numbers of Russell 3000 issues.  It could take a while to get there, however, and it is clear sailing above until the market eventually runs out of buyers.

For now, it’s all good > 2088.75 on a trending breakout in all timeframes.

…my .02

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ES Update

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Okay, so far so good…

In my last post I pointed out the trendline breakout and posited that what should come next is a raid on the stops above the first resistance level at 2062.50 followed by a pullback due to profit taking.

We got the expected pullback right to the short-term primary trend line at 2041.50 and then the pros took it back up to run the stops above the VST range top at 2068.  With those buyers in hand; who were mostly bears and range traders forced to cover on the range breakout–we now start the assault on the next higher stop level above 2088.75.  There could be another round of profit taking first, but the next clear objective for the pros would seem to be the large trove of stops resting above 2088.75.

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The bigger macro picture remains the same…rangebound between 1961.50 and 2088.75

I have had a couple of inquiries about what the mysterious cross point is at 2175 on the monthly chart above.  That is a time/price projection that I first drew in on my charts when we got the secular bear market trendline breakout way back in September of 2012.  To create that particular projection, one simply draws a trendline from the low of the move to the point where the trendline breakout occurred.  That line is then cloned and added to end of the first vector.  The time price projection from that is 2175 in March of 2016, shown on the chart above.

I will admit that when I first drew that on my charts it looked ridiculously unsustainable…but yet, here we (almost) are.  To my eye, the pros have gotten a little ahead of themselves on the slope–and the market could be ready for the equivalent of what would be a 4th leg pullback to Elliot Wave Theory advocates.  If I were pulling the levers, I think I would run the stops above 2088.75 to exhaustion and then pull the market back sharply toward that VLT trendline support–but that might be a bit on the radical side.  If/when we get the start of a tradable pullback in the macro sense–I would expect it to be indicated by unanimous top spotter signals at the top–and we can’t get any of those until that local high at 2088.75 is exceeded.  Once the high at 2088.75 has been exceeded–pay very close attention to spotter signals on the summary page of the signals matrix tab and, of course, I will keep readers posted from this blog.

The trend is your friend…until it ain’t.  😉

…my .02

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ES Update

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Okay, we got the triangle breakout that I posted a head’s up for yesterday, and the pros are into the first layer of stops just above 2062.50…

Range traders have been conditioned to sell the top of the recent range and so we should see some profit taking mixed with short-selling at 2062.50 resistance–but if the pros decide to goose it, those sellers at 2062.50 will be converted back into buyers.

The upside breakout of a contracting triangle greatly increases the odds for a run at the next layer of stops above 2088.75–but first we have to see what happens here at 2062.50–which is today’s bull/bear line for day traders.

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Moving out to the monthly bars…

The real fight remains between the December bar range of 2088.75 and 1961.50.  January was an inside bar to December with a range of 1970.25 to 2067.25 and February, so far, is an inside bar to January with a range, as I type, of 1973.75 to 2065.50.

So, still sideways in the macro picture–but let’s watch what happens today to see if we can finally get a range breakout.

…my .02

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ES Update

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In the early days of January, I pointed out that the setup at that time did not look good from a trend-following perspective.  The original range that I mentioned was 1984.25, which was the kickoff level for the pro’s bonus rally, to 2052.50, which was the December close.

Those initial levels have now been hit four times and reversed–as we have witnessed a sideways market forming a contracting triangle.  In my last post I pointed out the triangle formed by connecting the pivots of the ST range embedded inside of the IT range.

The constricting trendiness forming that triangle have been hit twice since…

We are now awaiting the eventual breakout of this incredibly boring holding pattern (from a trend-following perspective–but pretty exciting for range traders) formed after the pros sucked all of the oxygen out of the market to pull off their year-end bonus padding shenanigans.

As mentioned previously–this sort of environment tends to pull in the protective stops and those stop levels remain the same as in my last post.  Running those stops will undoubtedly be the next targets for the pros.  If I were pulling the levers, I think I would go up to exhaustion and then back down–but that remains to be seen.

As I type, the contracting triangle boundaries are located at 1977 and 2048.75.  Unless we get another touch and reverse from the top trendline–it could be about time for a breakout, so head’s up.

…my .02

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