ES Update

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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

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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

…my .02

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Option Rollover Day

 

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Volume shifts from the March 2016 to June 2016 futures option contracts today with a difference of –9.25 points from ESH16 (March) to ESM16 (June).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the intermediate-term primary trend line from the expiring March contract at 2017.25 now becomes 2008, and so forth.

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The Stops and Targets long-term buy signal at 1804.75 (adjusted for continuous contract pricing) is nearing the intermediate primary trend line target at 2008.  The pros have thus far given the bears who missed the turn at that long-term buy signal no quarter in the relentless squeeze from the low on 2/11/16.

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Barring something extraordinary happening before tomorrow’s close–the weekly paradigm chart continues to work like a charm as a roadmap and point number 7 on the chart above should be confirmed on the current weekly bar close.

The 2/11/16 double bottom and stop sweep/reversal at long-term support has created what could be the start of wave 5, which if successful, could eventually take take out the trendline resistance and ultimately move to new all-time highs. The weekly chart roadmap paradigm remains in effect until/unless we get a break below a last 4-bar pivot low (all marked by green dots on the chart above) that is not reversed.  That hasn’t happened since 2009 –and I will be the first to point it out right here when the paradigm finally breaks down.

…my .02

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ES Update

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Today ES has achieved the major resistance target at 1983.25 that I pointed out in my last post.  That line is particularly important because it is where the short-term range breakdown sell occurred back on January 7th.

To review…

We got the first major trendline break (short-term) at 2014.50 on January 4th.  That was just below the Stops and Targets intermediate primary trend line at 2017.25, which was broken the same day.

The bottom of the (at that time) short-term range was broken on a close to the downside at 1983.25 on January 7th.  That same day we got a break of the intermediate trendline support at 1959, which then targeted the bull stops under the bottom of the intermediate range at 1853.25 for the bears.

After a stop sweep/reversal under 1853.25 we got a new lower short-term pivot high at 1940, followed by a trip down to set a double bottom at an exact touch of the major bearish trend channel bottom rail at 1802.50 on February 11th.  That double bottom was also a stop sweep/reversal under the long-term range bottom at 1814 and was a major long-term buy signal on Stops and Targets.

Since that buy signal, bears who missed the turn signal have been given no quarter, as expected, and here we are at major resistance, which is the initial target from that stop sweep/reversal off the 1802.50 bottom signal buy.

I sniffed out the hysterical headlines at the bottom in real-time and pointed out the setup on my 2/11 post at this link.

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The recent price action perfectly follows the weekly bar paradigm pattern that has been in place since 2009.  We will need another week of price action above the recent double bottom at 1802.50 to make it official, but as the chart shows above.  Point 7, should it hold up, will be the wave four corollary of of its’ wave three counterpart at point 3.  That is, a double bottom following a break of the last higher low that wasn’t immediately reversed (see yellow highlight ovals).  Pretty cool, eh?

If the script remains the same, we could eventually see a push up to the top of the descending bearish channel followed by another tradable pullback and then ultimately a breakout to new highs for the wave five equivalent.

First things first though… and that means the market has to first negotiate the major resistance right here at 1983.25.  We will see if the bears get a reprieve here for at least long enough to set a higher short-term pivot high–or if the squeeze will continue on a breakout above 1983.25.

If we do get a pullback, the next target lower would be VST stops under 1920.75.  If the rally continues above 1983.25, the next target higher will be the original trendline break at 2014.50, which correlates with the Stops and Targets intermediate primary trendline at 2017.25

…my .02

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