ES Update

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In my last post I pointed out the February close line at 2095.25 as the intraday line in play–and we got the downside breakout right on cue at the close the next trading day.

The daily bar range chart above does a great job in illustrating the current big picture setup…

The high at 2110.25 has now morphed into an IT range top and we are in the process of building a lower ST range top at 2107 but still need a couple more days under that level to do so.

The action since the last ST low at 2030.75 has just been rangebound thus far–but we would need a break under the ST range low at 2030.75 or an eventual breakout above 2107 to escape the sideways action.

Keep that line at 2030.75 in mind as we zoom out to the weekly chart, which has been a flawless roadmap for the current administration and their pals in Chicago who have been engineering the illusion of economic prosperity–even when there really hasn’t been any, unfortunately, in spite of the trillions of new debt incurred during the current regime’s disastrous reign.

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So let’s take a closer look at that weekly ‘roadmap’ chart to revisit the key tendencies since 2009 as virtually unlimited liquidity has been used to manipulate the futures markets, which of course lead the cash markets via forced arbitrage…

The pros have been building a continuous series of higher lows (marked on the chart above with green dots at pivots).  Only five times since 2009 have one of those pivots been breached to the downside.  In every instance (except the one marked by a yellow oval) those breaks have been stop sweeps marked by sharp reversals.  So, the key for us is to watch how they build those pivots and to pay special attention when one is touched.  My thesis is that the paradigm change will come when we get a pivot low that is broken and not immediately reversed, but until then the game remains the same.

The last higher pivot low in the pattern came in at 1954–but if we were to get a poke under 2030.75, it could be set up for a potential new higher pivot low to form so long as 1954 remained untouched on the pullback.  Until/unless that happens, the current paradigm hard deck is 1954.

So, the key line in play currently is 2030.75 for the reasons explained above.  If the pros poke under that line we would see a resurgence of bearishness and selling as all new bullish positions since February could be instantly squeezed out.

As another aside, the current ST primary trend line at 2034 has been crossed dozens of times in the past five months.  This market hasn’t gone anywhere as it has been unable, thus far, to build a higher ST pivot low–and yesterday’s dip under that primary trend line assures that no new higher ST low will be built in the immediately foreseeable future.

This is a market trapped in an IT trading range with a contracting ST range embedded.  If they were to break under 2030.75, however, we would have a new lower high lower low sequence in the ST and that is what would draw in sellers.

Let’s see what happens here near the bottom of the ST range at 2030.75 in the coming days–and keep in mind the larger context of the weekly chart as others become fixated on the shorter term.

…my .02

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Options Expiration Day

Today is quadruple witching for options…

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As mentioned in my last post, the FOMC statement set up expiration with a continuation of the ‘head’s we win…tails you lose’ logic, which ensures that now matter how dire the actual underlying economic evidence is that the Fed will almost always find a way to spin it as positive.  In this case the logic goes that since the Fed and this administration has failed miserably on their economic policies that the good news is that interest rates won’t be rising anytime soon.  Well, okay.  Let’s run with that then.  Never mind that actual employment participation was actually better in the Carter era than it is now and our borders have been thrown open to absorb hundreds of thousands of illegals to exacerbate that problem and many American taxpayers are about to get a big surprise on April 15th as the new tax grabs continue to further erode income.

VST/ST trading range is now 2030.75 to 2110.25 with the last of the bear stops sitting above and the bull stops underneath.

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The current bounce continues from a Stops and Targets buy signal at the ST primary trendline.  Next target higher are the last of the bear stops resting just above the spotter high at 2110.25

Countertrend bears started to cover at the first minor trendline resistance breakout I pointed out at 2056 and the Fed announcement took out the bear’s trailing stops above the VST trendline resistance at 2069. This morning we are back up to the February close at 2095.25 and that should be the intraday line in play early on.

…my .02

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ES Update

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There are two key events occurring this week…the FOMC announcement on Wednesday and March options expiration on Friday.  The first event is used to set up the second, of course.

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The VST (very short term) range bottom is now at 2030.75.  That is the hard deck for short-term bullish dip buyers–and as I mentioned in my last post, the last stop level before a support void down to 1966.25 is just underneath 2029.

The early target this morning could be the dotted red minor trendline resistance on the hourly bar chart above.  The most aggressive bears will start to cover on a poke above.  Next upside target would then be 2074.75 if we were to get a sustained breakout of that dotted trendline.  The next targets lower are the stops resting under 2029 and then an open gap at 2015.75 if they reverse back down.

…my .02

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Option Rollover Day

Volume shifts from the March 2015 to June 2015 futures option contracts today with a difference of –7.5 points from ESH15 (March) to ESM15 (June).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the short-term primary trend line from the expiring March contract at 2041.50 now becomes 2034, and so forth.

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Here are the updated ES charts by timeframe…

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monthly

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weekly

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Daily/Range chart

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Hourly

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S&T Summary tab

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S&T short-term tab

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We have an opening rally going here off the primary trendline buy signal at 2034.  ES 2058 (2065.50 March contract) was yesterday’s bull/bear line and that would be the first rally target from the bounce off 2034.

If this bounce were to fail–or if the next pullback pokes back under the current local low at 2030.75, the next layer of stops is just underneath 2029, with an open gap at 2015.75 and then a support void all the way down to 1966.25.  Pros love to sweep all the stops down to a support void and then reverse, so head’s up from this general area.

…my .02

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ES Update

Let’s take a quick end of day peek at the macro setup for ES as we watch this confirmed top spotter signal play out…

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On the monthly bars, we have an inside bar with a countertrend sell from the February close at 2102.75.  From a monthly perspective, no biggie here until/unless the February low of 1973.75 were to be taken out.  So far, we have a roughly 50% retracement of the February range.

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On the weekly bars we have a bearish lower high/lower low sequence underway.  Next stop target lower is under 2036.50–and the stop sweep/reversal number above is the prior week’s low at 2065.50, which is our current bull/bear line.

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Today’s action has brought us back to the trendline breakout level at 2048.50, which is the last place where momentum switched from bears to bulls.  So, in other words, the pros have now chased all bulls who bought the trendline breakout back to losses at this point, with position stop loss level for that breakout likely sitting just under the initial pullback low on 2/9 at 2036.50

..do you see where I am going with this yet?  😉

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Now, to really fine tune things we move into the hourly bar chart that shows how this has been a textbook decline hitting and then retracing the levels I have been pointing out in previous posts…

Next target underneath is the stop level at 2036.50.  That’s where I would go if I were pulling the levers.  If it gets there, then that will become the next stop sweep/reversal line with action bearish below but switching back to bullish above if the pros push into those stops and then cover into the selling.

Under 2036.50 is an open gap at 2023.25

The pros are squeezing the bulls now, and the first place that pressure would start to come off is on a move above the current stop sweep reversal line at 2065.50–otherwise, if we get another push down under 2036.50, that will become the next stop sweep/reversal line.

Bearish full position trailing stops for those playing the confirmed spotter are now moved down to just above the descending red trendline resistance, currently at about 2095, but covering would likely start on a move above 2065.50.

Spotter signals rock!

…my .02

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