ES Update

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Quick Friday afternoon update on the current range chart setup…

The ST and intermediate trends turned down at a break of old range support at 2046.50 and 2034.25 respectively.  Those lines now become resistance.

When those lines broke, I pointed out the start of the void at 1946.25 and the downside target at 1860.25.  The actual low on an overshoot was 1831 and that is now the bottom of a (temporarily) very wide VST range.

We got the expected rally from 1831 back to 1946.25 (twice!) and after a couple of wide range days ES has now broken above that key resistance line at 1946.25.  The range chart above shows the wide VST range that was created by the fast move down and then a squeeze back up.  Typically, the market will eventually pause long enough to form a VST high and that pullback should determine whether we get a new ST pivot at 1831 in the next few trading days–or if that current low at 1831 will get challenged.

So far, this engineered takedown is behaving similarly to the other ones in the paradigm in place since 2009, but until/unless ES can reclaim the important 2034.50 level, this remains an intermediate-term bearish market and should be traded acordingly.

The band of resistance above is located between 2023 and 2046.50 and the intermediate ideal entry zone between 2003.75 and 2023 is shown on the chart above (and the IT tab screenshot is shown from Stops and Targets).  That shaded zone is where we could see some selling come in if today’s high is eventually broken to the upside.  If that happens, 1946.25 would again be the first countertrend support target.

Technically, ES 1831 can ultimately work as a long-term takedown low target for the pros if the paradigm continues.  That was enough of a scare to shake loose plenty of cheap shares for the pros to both cover and relaod–but as I mentioned earlier, this market is bearish until/unless that band of resistance between 2023 and 2046.50 can be overcome.

…my .02

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ES Update

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Intraday follow-on to my post from earlier this morning…

We indeed got the buy-to-cover target at 1860.25 that I pointed out in my first post –and that was a place for the most nimble bears to take off some or all of the massively profitable short trade.  We have just had a powerful bounce back to old support/new resistance at 1946.25 and this is the high-probability place to take profit on a counter-trend long trade up from the earlier bull/bear line at 1860.25.  The bearish trend could now potentially reassert here from resistance.

The pros have already made big money two ways on this ambush setup today at the 1860.25 to 1946.25 targets I pointed out in my first post.  The new intraday bull/bear line is now 1946.25 and path of least resistance is down under that line.

FYI…there are open gaps above at 1971.50 and below at 1828.50, which could define this new range for a bit.

…my .02

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PS:  I have received a ton of private messages and email, so please be patient with me.  I will try to answer some of the common questions in my posts, but otherwise it might be a while before I can respond to individual messages.  I am very glad to hear how well some of you are doing here using Stops and Targets interspersed with my ramblings, and very much appreciate the compliments!  🙂

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ES Update

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As I type, the S&P 500 futures and Dow futures are down -101.50 and -852 respectively!

One thing we can be absolutely certain about is that the pros are currently short the market, and that long sideways consolidation/distribution that the market was in for most of the year officially broke south under 2034.25.

The futures market is the manipulative instrument of choice by the pros to nudge the market in whatever direction they choose.  Had they so desired, it would have been a simple and relatively inexpensive task for the pros to support the futures overnight–but instead we are seeing a massive gap and run south.  Unfilled gaps show intent, and clearly the intent for the pros is to get as much of jump on this trade as they possibly can.

I have been pounding the table about the need to respect 2034.25 and I hope most of you got out of the way (and/or got short!) at the rug pull, but I think most investors out there have been very skillfully trapped here by the pros.  Those of you reading my commentary for a long time know that I believe there are rarely ‘accidents’ in the market.  In my opinion, this is all carefully choreographed to yield the maximum profit for the pros–and to do that they need to maneuver as many people as possible to the other side of their trades.  That was a masterful bit of subterfuge last week by the pros to spring the trap when most had been lulled into complacency.  Personally, I think the pros had been selling premium and once that was killed by the sideways compression they snapped up the opportunity to swoop up as many of the ‘worthless’ puts as they could into expiration –and fortunes are being made by a very few at the expense of many.

Now, we see an engineered gap and run opening most likely designed to sweep the maximum number of stops —and so we start looking for the last support level that exists before a large void opening down to the next support layer…and that is 1946.25, with the next target at the other side of that void being 1860.25, followed by an open gap at 1828.50 and then LT range support at 1791

I looked around at some of the perma-bear message boards over the weekend and it is plainly obvious to me that the same folks who have been pining away for a bear market all the way up since 2009 completely missed this entry, which is no surprise to me.  I saw almost no cheerleading for downside carnage…so this ‘shock and awe’ move by the pros was perfect–as they successfully trapped the bulls and excluded most bears, and so they have this trade nearly all to themselves.

To review the weekly bar paradigm rules…ES 2034.24 was the last higher weekly pivot low.  I have said before that either we would see an almost immediate stop sweep/reversal–or the paradigm has finally changed.  Reversals in four out of five previous instances have typically came within 1-2 weeks, but the double bottom outlier in 2011 took about four months to finally clear the original weekly pivot breakdown.

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So, for today, let’s start with that support void number of 1946.25, pointed out above, as an intraday bull/bear line and move protective buy-to-cover trailing stops down (on short trades) and see how it goes as we watch the downside targets pointed out above as partials targets.  ES 1860.25 is the next S&T target, so let’s move the bull/bear line down to that number if when it is hit.

ST and IT trends are down < 2034.25.  LT trend remains up > 1791

…my .02

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ES 2034.25!

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On the weekly bar chart above I have marked all 4-bar pivots with small green dots for pivot lows and red dots for pivot highs.

Since 2009, at the start of the present US political regime, the market has been skillfully engineered higher using the ES futures options as an instrument to force arbitrage on the cash markets.  So long as the market is guided higher and those trailing higher pivot lows are not violated–it is a simple task for the pros to control selling and to obtain the desired result.

In my post on August 12th, I pointed out that something very BIG had just occurred.  ES had finally built a new higher pivot low at 2034.25, and I pointed out the extreme importance of that line.

Since 2009 there have been only five previous occasions where a pivot low on the weekly chart has been broken to the downside.  With a break below 2034.25 this is now just the sixth time in six years this has happened.   All pivot low breaks are marked with numbers 1-6 on the chart above and highlighted.  

Note that in four out of five previous instances–the pivot low was broken and then almost immediately reversed resulting in what I call a ‘stop sweep/reversal’ play, which is when the pros intentionally force massive selling that creates an environment where they can cover their short positions–and then reverse back to long without driving the market against their positions in either direction.  The one outlier to this pattern occurred in August of 2011 when a double bottom was eventually made (see yellow shaded oval on chart above).

With a break under 2034.25, the market now has two ways to go…either it recovers almost immediately, as it has in 4 out of 5 previous instances–or we get a break that does not recover and the US enters an intermediate bear market pullback that can accelerate to the downside quickly.

The KEY line is ES 2034.25!  Technically, this is an intermediate bear market under that line, but if we see a stop sweep/reversal pattern develop again where price rallies back above that line–then watch for the engineered bull market pattern to continue.

As I have said MANY times over the past several years, there has been a consistent market-rigging paradigm in play using the futures options and until/unless that pattern is broken then we can continue to expect more of the same.  What happens in the coming trading days is critical to determining whether that paradigm finally ends–or if this is just another feint by the pros to engineer a buying opportunity.  That weekly bar chart above has been a perfect roadmap since 2009.

This is no place for emotions to intervene for savvy traders.  The market just ‘IS’ …and under 2034.25 it is now intermediate-term bearish.  If we don’t see a quick recovery back above 2034.25 then the 2009-2015 propping paradigm is likely over and investors should immediately protect accrued profits.

If we do get another leg higher after a stop sweep and reversal then we might see the fifth ideal buying opportunity since 2009 develop.  Notice that a buy at any of those previous 5 ovals was a nearly perfect entry and only one low was tested again once the rally started.

I just can’t possibly begin to emphasize the importance of respecting ES 2034.25 as a hard and fast bull/bear line.  Bears are now firmly in the driver’s seat under that line–but should definitely cover on a move back above.

Don’t freeze here traders…this is the time to have a plan and to execute.  Remember that Stops and Targets was created for precisely this type of situation.  It is a coldly-logical set of algorithms that identifies the best probabilities based on the current numbers at hand–it has no bias and is completely unaffected by the ‘news and noise’.

…my .02

 

 

ES Update

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The pros love to pop trendiness and then reverse–and we are close to two in this area…

The ST trendline lines up with IT primary trend line at 2049.25 and that is what is in play right here.  If we don’t get a sustained bounce from this area, the next targets lower are the bull stops under the bottom of the IT range, an open gap at 2041.25, and then the rising IT support trendline currently near 2039

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ES 2034.25 is the real hard deck here.  Since 2009, only once has the last weekly bar pivot low been broken without immediately recovering and rallying to new highs after a major stop sweep/reversal.  That pattern, which I have explained in great detail in previous posts, has been the six-year market-rigging paradigm…and so I will be keeping a very close eye on that number!

…my .02

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