Let’s take a quick look at where we currently are in the Big Picture…
Starting with the Stops and Targets summary and the daily bar/timeframe chart we can see that ES is again in a Bull 9 configuration. What that means is that all timeframes are up but the short-term timeframe has not yet been able to break out to a higher pivot low above the intermediate primary trend line. There was a similar Bull 9 setup back at the end of October but ES could not break out of the double top at 2100, stalling just short at 2093.25 before eventually plummeting to an IT low at 1793.25 on 2/11/16 and triggering a major LT buy signal at 1804.75
Since that big double bottom and stop sweep/reversal buy signal at 1793.25, ES has been in a relentless short squeeze mode.
On 3/22 ES hit the middle of the new IT bullish trident channel (shown as purple on the chart above) and we have been in a shallow pullback since.
There is also a ST bullish trident channel embedded within the IT channel (marked as light green) that has been guiding the trajectory of the short squeeze back to the center of the IT trident. The center of that ST trident channel lined up with the center of the IT trident channel and so, logically, we are seeing some profit-taking from that convergence.
To move from a Bull 9 to a fully-bullish Bull 10 configuration would require a new higher ST pivot low to be established ABOVE the current IT primary trend line at 2008 (which would move the ST primary trend line up above the IT primary trend line). It could technically happen from the current setup, but the pullback would have to be halted at or above 2008 but below 2012.25 (the 3/24 low). Should that happen, a perfect VST buy signal would come on a move back up and through 2012.25. That would be nice and neat from a technical perspective –but might be a bit much to expect in such a narrow price window.
The other options are…
1) a continuation of the short squeeze that has netted only one ST pullback (to 1958) since 2/11. If that occurs, then the next ST partials target higher is 2063.50
2) a pullback that breaks under 2008 to eventually set a higher ST pivot low that settles somewhere under 2008 (perhaps at the bottom rail of the rising ST trident channel).
From a Big Picture perspective this market continues to be LT/IT rangebound but has been making a run at descending LT/IT trendline resistance, which is currently at the 2082 area. If the pros can push up and through 2063.50/2065.75 that will start another round of short-covering (buying) since bears tend to set capitulation stops at the last pivot high (2065.75) before the start of a large decline. If ES gets into that short-covering buying fuel, the IT trendline resistance isn’t too much higher –and then of course the ultimate prize for the pros squeezing from a major bottom is the final bearish capitulation coupled with momentum buyers on a breakout to new all-time highs above 2100.
At this point, ES would not likely generate any significant new selling until/unless 1958 was broken –so there is still a decent cushion for pullback here without breaking any major technical sell barriers, should the pros opt for it. Otherwise, the next target higher would be those bear stops resting just above 2063.50/2065.75