S&P 500 Futures Update

ES Daily/Range
ES Daily/Range

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ES Hourly
ES Hourly

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For fractal fans, there is an interesting one currently in place in the S&P 500 futures…

The Daily Bar/Range chart (top above) shows the Trump Trident Channel that has been defining the action since the US Election in November.  As I have pointed out previously, the period from the November bottom until April shows price support on the centerline of that trident channel.  Since April, the centerline has been acting as resistance.

We see a similar echo of that trident channel on the hourly bar chart in the current very short-term channel that has been directing the squeeze up from the stop sweep/reversal under short-term support at 2412.50.  Initially, the centerline acted as support from 7/7 to 7/18, but since then the centerline has better defined resistance.  This morning we are seeing a test of the bottom rail of that VST trident channel.

Initially we should see buyers at the bottom of the channel, but f the VST channel breaks, the first VST support is at 2461.25, followed by the old short-term range top (now confirmed support) at 2451.50.  If the pros decide to retrace the entire move since the trendline resistance breakout (the second layer of bear stops pointed out previously) then 2437 could be a good target to the downside.  Otherwise, if a bounce sticks then we could reasonably expect a trip back up to perhaps test the underside of the VST trident channel’s centerline (echoing the bigger Trump Trident channel behavior).

Nothing much else of interest going on right now as all trends remain up above the current VST range bottom at 2405.25.  Price is extended here, so an eventual pullback to ultimately raise the range bottoms would be reasonable.  The minimum pullback to raise the VST range bottom is 2457.50 and it would take a big move down to 2441.75 today (rising to 2447.75 on Monday and Tuesday) to eventually achieve a minimum ST higher pivot low.

So, Cliff’s Note version is this: technically, it’s all good here for bulls > 2405.25 (current VST range bottom) …but the market could be susceptible to a quick downside corrective move under the right conditions.  For traders who have been riding the pop from the ST stop sweep/reversal under 2412.50, let’s use the VST confirmed support line at 2461.25 as a bull/bear line today.  That is where the first VST counter-trend sell would trigger and we could see sellers emerge if that line fails to hold.  If that were to happen, the first ST counter-trend sell would come under 2451.50.

If the pros head back up to continue the bear squeeze after this little dip to the bottom of the VST channel–then the next target higher would likely be the centerline of the Trump Trident channel for another wash-rinse-repeat cycle until the post-election Trump Trident channel paradigm changes.

…my .02

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S&P 500 Futures Update

S&P 500 Futures Hourly Bars
S&P 500 Futures Hourly Bars

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In my last post I pointed out the two bear stop harvesting targets after the counter-trend sell buy-to-cover target was achieved–and also the minimum requirement for a new short-term pivot high to potentially form on the S&P 500 Futures.  All of those minimum objectives have now been met.

Day traders have to be nimble to catch the counter-trend pullbacks in a raging bull market.  That’s what the 2443.50 to 2412.50 trade was.   The snapback rally from that stop sweep reversal under 2412.50 now is back to just beneath where that counter-trend move started.  Bull markets are merciless for bears who overstay their welcome, and many of those bears just got washed out.

Let’s watch and see what happens next after the bear stops are digested.  If they don’t pull it back here, the next targets higher are at 2445, 2447.50, and then new highs above 2451.50.  Short-term trading range is now 2402.25 to 2451.50, with ES 2402.25 continuing to be very important for reasons explained in my last post.

…my .02

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S&P 500 Futures Update

S&P 500 Monthly Bars
S&P 500 Monthly Bars

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Fun Fact:  July marks the eighth straight month of higher monthly bar lows for the S&P 500 Futures!  The current streak started with the election of President Trump in November of last year.

That streak is being challenged right here, so let’s keep a sharp eye on June’s low, which was 2402.25.  If we get a break under that line then something has changed.

On the monthly bar chart above we can see that the time/price projection continues to chug along toward the ultimate goal of 2515.50 in April.  The ascent since November has been a little steep and so a pullback is not out of the question and we remain at a vulnerable point right here which won’t abate until/unless the candlestick body reverts back to white at prices above 2422 (July’s monthly bar open).  There are likely many nervous investors out there since the market hasn’t had a significant pullback since November, so to answer a question many have asked recently…the first alarm bells would not start to go off for me until/unless we get a move under 2402.25 since that would represent a break in the monthly bar higher low pattern since the election.  Until/unless that happens–it remains all good for the bullish side from a monthly bar perspective.

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S&P 500 Weekly Bars
S&P 500 Weekly Bars

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On the weekly bar chart (which has been our perfect paradigm tracker since 2009) the hard deck is currently at 2315.50.  Remember the ‘roadmap rules’ here…the bullish paradigm that has been in place since 2009 cannot end until/unless we get a break of the last higher 4-bar pivot low that is unable to move back above that line.  A bull market is a sequence of higher highs and higher lows–a bear market can only begin when we start to get a sequence of lower highs and lower lows that forms below the last higher pivot low from the bullish sequence.  So, the easy way to look at that is…it’s all good for the 2009 to present roadmap paradigm above the current last higher 4-bar pivot low, which is at 2315.50.

The next thing we want to look at on the weekly chart is what it would take to form a new higher pivot low to extend the bullish sequence and raise the hard deck.  From the current configuration it would take a move under June’s low of 2402.25.  So, with that understanding, you can see why the market is vulnerable to some downside here.  The minimum pullback from the current configuration to set up the left side of a new potential 4-bar pivot low would be 2402.

The last thing to point out on the chart above is the Trump Trident Channel (shown as light green dashed lines on the chart above).  The centerline of that channel has perfectly defined the trajectory since November–acting as support until April and as resistance since.  If we were to get a break under 2402.25 then the target lower could be the bottom rail of that channel.

This weekly bar roadmap is the chart that really matters for long-term investors going forward–as it has been since 2009.  The hard deck is 2315.50.  The 8-year long game has been for the pros to periodically engineer deep pullbacks to just under the last higher 4-bar weekly pivot and to followup with reversals once the stops underneath have been swept.  Eventually that game will end–but until it does we just keep riding the wave along with the pros.

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S&P 500 Daily Bar/Range
S&P 500 Daily Bar/Range

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The chart above shows the current trading ranges.  If price remains above 2402.25 today then the short-term range will expand lower from 2412.50 to that line.  Otherwise, a break below will open up a short-term bearish scenario as explained above.

The top of the intermediate-term range breakout (from 5/24) is at 2395.75 so there is a band of support between that line and the current short-term stop reverse line at 2412.50.  If this dip down stays above 2412.50 going forward then it was just a short-term stop sweep.  Again, 2402.25 is the key

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S&P 500 Hourly Bars
S&P 500 Hourly Bars

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The last chart above shows the hourly bar setup.  I pointed out the counter-trend sell at 2443.50 in a previous post and that was a great entry for aggressive day traders.  The initial buy-to-cover target for that counter-trend pullback was 2412.50.  For any bears who shorted and missed the cover exit I have plotted the two levels where profitable trailing stops would likely be located.  Those bears represent guaranteed buyers should the pros elect to harvest those stops.  Otherwise that is where the smart counter-trend bears hoping for a downside breakout will be protecting their profitable positions. The minimum upside target to set a lower short-term high from the current configuration is 2436.75.  So, the two key numbers for day traders are 2402.25 underneath, which is the VST range bottom and 2436.75 above.

…my .02

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