Market Update

 

The current range envelopes are highlighted on the screen capture above from Stops and Targets.  The dark red colored highs show where the counter-trend sell was generated at 2878.50… and the green-colored 2818.50 on the short-term range envelope low shows where a short-term support test is currently occurring.  Note that the  ↑  range arrows on the intermediate and long term are both showing a trending bull market in those timeframes.  However, the  ↔  sideways arrow indicates that the short-term has changed from trending to rangebound.  If we get a breakdown below support then the short-term trend will change to bearish.

 

 

 

S&P 500 Futures – Daily Bar / Range Chart

click image to enlarge

 

Take a look at the chart just above.  Do you see the pattern?

Since the last touch of the intermediate range bottom (dashed green line) back in August of last year… every touch of the short-term range bottom (dotted green line) has been bought.  So you know what to do if it holds yet again.  If, on the other hand, we get a break through the bottom of the range that does not recover…then something different is going on.

The FISA memo has been voted on and will be released soon.  Last night’s State of The Union speech was very well received (75% approval rating from a Fake News sponsored poll, no less).  Joe Kennedy III’s big debut…not so much (Ask not what your country can ‘drool’ for you… (LOL).  Today we get the FOMC rate proclamation at 2 PM New York time.

As promised, this week has not disappointed for excitement thus far… and we still have 2.5 days to go.  Let’s keep an eye on yesterday’s low at 2818.50 as a benchmark going forward.  Price action remains bullish above–but would flip the short-term trend bearish on a cross below.

…my .02

 

 

 

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Market Update

S&P 500 Futures – weekly bars

(click image to expand)

 

The weekly bar chart above shows the overall broad market configuration nicely.  The last stop sweep/reversal in our paradigm happened at point #9 on Election Night in November of 2016.  Since then, we have had two higher 4-bar pivot lows–with that last one coming at 2416.75 in August of 2017.  The rising light green dotted trading range envelope bottom is currently at 2674.50.  That is a long way down from the current price.  The big gap has gotten that way because of four straight weeks of massive gains–but the important takeaway here is that price has not touched that envelope bottom for over 5 months.

In a recent post I pointed out that in a market breaking to new highs the pros often use channels as profit targets.  On the chart above I have drawn in two channels that could work out as resistance targets.  The dark green dashed channel is drawn off the February and November stop sweep/reversal lows, and the light green dashed channel is drawn off the 2016 Election Day low and the last price channel bottom touch at 2416.75.  We are near the top of both channels right here as we start a pullback, but not at the top just yet.  The confluence of the top rails comes in March/April, which is, interestingly, my time projection component for the rally target from many years ago.

 

 

S&P 500 Futures – Daily Bar/Trading Ranges

click image to enlarge

 

Moving in to the daily bars you can still see the parallel channels but I have also added the trading range envelopes.  The closest support lower is currently at 2791.75

So, as we can see, this market has plenty of breathing room for what lies ahead…

 

 

 

The week ahead is going to be full of noteworthy events.  The economic calendar above shows the FOMC Meeting Announcement on Wednesday.  But there is LOTS more going on this week…

 

Tuesday night at 9PM EST we get President Trump’s first State of The Union Address, and that could be a BIG deal for reasons that many may not be aware of…

The ball gets kicked off later today with a vote in the House Intelligence Oversight Committee to decide whether or not to release the FISA Abuse Memo.

 

If you are not sure what all of the background information is regarding the FISA memo and what is at stake–the following article, which is meticulously sourced and footnoted, does a great job at laying out just what is at stake for the wretched vermin who have infested the top layers of government and the intelligence community….

 

click image to read article

 

Be sure to stock up on popcorn and your favorite frosty beverages… this week ahead could be a real doozy.

…my .02

 

 

 

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S&P 500 Futures Update

 

Yesterday, Top Spotter Alert signals were invalidated on the Dow Industrials (DOW), Dow Futures (YM), and the S&P 500 Futures (ES).

 

 

 

click image to enlarge

 

As the chart above shows, the invalidation of the S&P 500 Futures came just a single point (2809.50) above the Top Spotter Alert hard deck (2808.50).  Ya gotta love the pros–they are absolutely ruthless in their efficiency.  But rules are rules and so that particular ES alert goes into the waste bin.

 

 

 

What is interesting to me is that although the three indices were invalidated yesterday–only 131 Top Spotters from the Russell 3000 and ETF’s were invalidated–while 44 Tops Spotter Alerts were newly confirmed.  That still leaves  1,168 active Spotter Signals (576 + 592) of the 1,295 present two days ago.  Maybe something, maybe nothing going forward…but that is still a LOT of active spotter signals.

 

 

 

One more observation to point out today…

When looking at the Buy/Sell Signals report we can see this is indeed a very healthy bull market with 71% of all tracked issues currently bullish versus just 29% bearish.

I have observed that previous major reversals have tended to come when one side hits about 80% saturation.  I have been watching this indicator for a while now and what strikes me is that this amazing rally has continued to advance in unprecedented fashion without hitting 80%.  That suggests to me that there has been healthy and efficient internal rotation amongst industry groups.  That all said, this market has run a very long way without a significant correction and all of those currently-active Russell 3000 and ETF Spotter Alerts are at least curious until/unless they too are invalidated–so, caveat emptor.

…my .02

 

 

 

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Top Spotters (Part 2)

 

The hourly bar chart above shows a good representation of the current Top Spotter setup…

The shaded magenta rectangle illustrates yesterday’s spotter bar high to low range of 2808.50 to 2769.25.  What we are watching for next is to see which side of that spotter bar range that price will eventually break out.  There are two possibilities going forward…

Invalidation
If price breaks above the spotter high of 2808.50 (either before or AFTER confirmation) then the Top Spotter setup is IMMEDIATELY and permanently invalidated.

Confirmation
If we get a DAILY BAR CLOSE below yesterday’s spotter bar low of 2769.25 then the Top Spotter Alert is confirmed.  If we get confirmation then the first target to the downside is always closest support, which in this case would be rising short-term support currently at 2736.50.

Until we get an eventual breakout on one side or the other this setup can potentially meander around inside the range.

 

Just for fun, I have added another (dotted blue) line on the chart above at 2790.50.  The region from that line above to 2808.50 represents an ‘ideal entry zone’ for bears using the Top Spotter as a HARD STOP and support at 2936.50 as the first downside target.  An entry above that line would lock in a 1:3 risk/reward ratio for that countertrend trade.  An important caveat here is that this trade pretty much goes against everything that Stops and Targets typically recommends (most notably: trade only WITH the trend).  However, in this exceptional case, the countertrend logic is (in my opinion) sound–but only if a hard exit of a short entry occurs on any push above a 2808.50 hard stop.  One certainly never wants to be caught short on the wrong side of a failed Top Spotter signal, which then morphs into a powerful trend continuation buy.

Why did I point that countertrend trade setup out?  I did so because that would be a reasonable assumption of what a pro might be thinking if yesterday was indeed a blow-off high.

Let’s watch and see how this Top Spotter Alert setup shakes out over the coming days but definitely keep two numbers in mind as this resolves… 2808.50 and 2769.25.

…my .02

 

 

 

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Top Spotter Alert Signals

 

At the close today Stops and Targets is showing unanimous Top Spotter Alert signals across all tracked indexes and index futures options (see the screen capture above).

 

(click image to enlarge)

 

Stops and Targets is also showing significant numbers of correlating Russell 3000 Top Spotters.  There were 704 new Top Spotter Alerts and 50 new Confirmed Top Spotters today.  Active Spotters and Confirmed Spotters combined now totals 1,325 symbols!

That’s a whole lotta Top Spotters… so head’s up right here as we watch to see if these initial Spotter Alert signals will be either confirmed or invalidated over the coming days and possibly weeks.

For a quick review of how Spotter Signals work, be sure to read the following link:  Stops and Targets User Guide – How Spotter Signals Work

This could be where a significant pullback begins after an amazing rally–so everyone should be sure to make plans to protect those big gains on the long side just in case the market eventually crosses the stop/reverse lines.

To my bearish friends, you might get to finally come out of hibernation for a bit and play on the short side if this setup eventually develops further.

I’ll post again tomorrow once I get an idea of how the overnight futures session goes.  At this point, a big futures jam and/or intraday rally could still easily invalidate those Spotter Alerts, so we’ll have to wait and see how it goes.  One single tick above today’s high at any time going forward will undo the setup–but a subsequent close under today’s low (even after a strong rally that falls short of the spotter high) would eventually confirm the spotter and at least target rising short-term support to the downside.

This many spotters occurring all at once doesn’t happen very often–so until/unless this setup is invalidated be very careful going forward as the market could be vulnerable to an unexpected shock.  Also, be sure to spread the news to friends and family if we eventually get confirmation going forward.

Be sure to protect those amazing gains everyone–and remember to never let the pros drag you to the wrong side of a trend (on the other side of the stop/reverse lines).

…my .02

 

 

 

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