S&P 500 Futures Option Update

S&P 500 Futures - Hourly Bars
S&P 500 Futures – Hourly Bars

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S&P 500 Futures - Daily Bars
S&P 500 Futures – Daily Bars

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The S&P 500 Futures have just filled the second of two gaps (see blue arrows at aqua blue and magenta gap lines on the charts above).  Both gaps are within the intermediate trading range and I have drawn in a (very) preliminary bearish trident channel (shown as descending dotted lines on the charts above) that shows where price would likely be constrained if that channel were to eventually become confirmed.  A move above the top rail would void that preliminary bearish channel structure and indicate an increased likelihood of new highs.  New selling starting from the gap fill right here, however, would indicate that this might be a very good place to lighten up on the long side.

The first gap at 2347.50 (created on 4/21) was the perfect downside target for the pullback from 5/16 to 5/18, as pointed out in my previous post.  The second gap at 2397 (created on 5/16) was the logical upside target from that bounce at 2347.50 and it was just filled in the pre-market.

If we are going to see selling resume after the gap fill below and the recovery bounce from that event–this would seem to be a very good place for that to happen.

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Stops and Targets - S&P 500 Futures (Intermediate timeframe)
Stops and Targets – S&P 500 Futures (Intermediate timeframe)

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Let’s use 2398 as a bull/bear line right here.  That lines up with Stops and Targets intermediate timeframe setup for the counter-trend sell signal (see screen capture above) and also correlates with the gap fill at 2397 and the preliminary bearish trident channel top rail just above.

Pros like to use gaps and support and resistance so head’s up right here as we watch to see whether the bears or bulls come out on top going forward.

…my .02

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Trump Channel Update

S&P 500 Futures Hourly Bars 5-17-2017
S&P 500 Futures Hourly Bars 5-17-2017

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In my last post, I pointed out the center line of the Trump Trident Channel that has been guiding the market since Election Day in November.  Take a look at the hourly chart above to see that the pros perfectly tagged the centerline resistance from underneath (see the red circle highlight) and then pulled the plug.  It was a nicely done maneuver (and extremely predictable) because they first took out the bear stops just above the previous high at 2403.75 before yanking the rug.

The obvious first downside target is the stops under the short-term stop reverse line at 2375.50 and that is where price is as I type.  The chart above shows minor support levels at 2366.75 and 2363.25, the old short-term stop/reverse line at 2351 and then the open gap at 2345.25 (2347.50 on daily bar chart).  If those fail to stop the selling then the pros might be ultimately shooting for 2317.75 as explained yesterday.

I love it when a plan comes together.  🙂

…my .02

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The Trump Trident Channel

S&P 500 Futures Daily Bar/Range 5-15-17
S&P 500 Futures Daily Bar/Range 5-15-17

(click image to enlarge)

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I have commented several times about what I am now calling the Trump Trident Channel, which is shown on the chart above as parallel dashed blue lines with a dotted blue line for the centerline. The trident channel is formed by linking the last three long-term pivots, with the last reference point being established at the overnight low (ES 2020.25) on election night November 9th.

It is the attractive strength of that Trump Trident centerline that has been amazing.

Take a look at how the market has ridden that centerline now for months!  At first, the centerline was powerful support with price continually bouncing to the upside until a new intermediate top was ultimately established at 2398 on March 1st.  Then, on April 5th we saw the very first daily bar close under that centerline support leading to selling down to 2322.75.  Then on April 24th there was a huge gap and go at 2347.50 that trapped the bears who were slow to exit.  Price returned to again ride the centerline (more weakly this time) and hasn’t returned to fill that open gap (yet).  The remaining bears who have been squeezed since that gap and go are in pretty bad shape by now, especially since the stop sweep above 2398, which topped out at 2403.75 before again selling off and losing that centerline support.  That stop sweep area above 2398 is being revisited today as is the underside of the trident centerline, which is serving more as resistance lately than support.

So, the bottom line here is the same as it has been since November 9th.  The Trump Trident Centerline is in play yet again–but let’s see what happens right here at the touch (or near touch) from underneath in confluence with the second visit to the stop sweep area.

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Stops and Targets ES 5-15-2017
Stops and Targets ES 5-15-2017

 

The Stops and Targets short-term primary stop/reverse line has now also moved higher to 2375.50.  That is the new hard deck for the first level of protective profit stops for those sitting with big gains.  The second level is the intermediate primary trend line at 2317.75.  Notice how all of this recent sideways-up price action has allowed profit stops in all three timeframes to finally catch up to the explosive move since November 9th.  Ya’ gotta admit, it’s pretty cool the way Stops and Targets works.

Notice how all of this recent sideways-up price action has allowed profit stops in all three timeframes to finally catch up to the explosive move since November 9th.  Ya’ gotta admit, it’s pretty cool the way Stops and Targets works.

A move back under 2398 would be the first counter-trend signal and a move under 2375.50 would be the first timeframe sell.  Support has snugged up and so should protective stops as we watch to see how the centerline test plays out.

If I were pulling the levers I think I might want to head back down and fill that open gap at 2347.50 at some point and perhaps even eventually undercut the intermediate stop/reverse line at 2317.75 in order to get to a potential higher pivot low for the long-term timeframe, which 2317.17 is not eligible to become.  First things first, though, and for now we are watching this push up to see if the market has the stamina to overcome that Trump Trident centerline resistance.

So, head’s up right here.

…my .02

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