I’m back. 🙂
Let’s take a peek at the Big Picture market setup to catch up…
click on image to enlarge
Let’s start with the monthly bar chart above…
The secular bull market that started in 2009 is still going strong. Price is extended from the VLT (very-long-term) trendline but until we start seeing lower lows begin to build and eventually a breach of that trendline support–the show goes on.
The initial rally from the 2009 lows was fueled by massive intervention (and trillions of new debt) including a very accommodating Fed. What remains to be seen going forward is if the Trump efforts to build a new economic juggernaut based upon actual wealth-creation can overcome a tightening Fed. They hate him, he hates them. Rock/hard place. Everyone is watching and waiting to see who wins the political struggle between Trump and the global socialists. Perhaps the upcoming mid-term elections will help to add some clarity on that score–but the market action since the beginning of the year suggests plenty of caution and nervousness as we all wait for the ridiculous FBI/DOJ fiasco (and perhaps an all-out desperate scramble to run out the statute of limitations clock on Hillary and company’s crimes) to be resolved.
So, basically… secular bull with a holding pattern inside the January/February pullback range.
Next, let’s take a peek at the weekly bar chart (above)…
The weekly bar chart reflects a real-time roadmap of the amazing paradigm that has been in place since 2009. What we watch for here are the formation of four bar pivot lows. Once those new higher lows are built then we watch for what I call ‘stop sweep/reversals’. That is when price is driven down by the pros below the last higher pivot low and then immediately reversed once the stops have been run. It has happened nine times since 2009–and seven of those stop/sweep/reversals were perfect entries to ride the secular bull with little to no stress after entry and massive gains. When it happens again I will be sure to point it out here in real-time–just as I did the last time it happened, which was when President Trump was elected (see point 9 on the chart above).
As I type, the last higher pivot low was formed at 2555.75 (see dashed blue line on chart above). That is the current ‘hard deck’ for bullish traders riding the rally since the last stop sweep/reversal entry at point 9. The trailing stops (at the hard deck) are now locking in approximately 450 points of gains–and the current net gain is up 700 points since the last stop sweep/reversal entry at the last green arrow! 😎
click on image to enlarge
The Stops and Targets screen capture and daily bar range chart (above) lays out the setup in three timeframes. The shaded areas on the chart show the range envelopes for three timeframes (light yellow is long-term, medium yellow is intermediate, and bright yellow is short-term). The stop/reverse lines from Stops and Targets are also shown on the chart along with the range envelopes. Note that the Stops and Targets analysis tab correlates directly with all of my charts.
If you look at the Stops and Targets screen capture you will notice that all three range top numbers are dark red. That indicates triple range top resistance at 2818.25 and that is the key number in play right now. The last time we hit triple resistance was on June 13 and the market pulled back to the bottom of the intermediate range envelope after the touch. If we were to get a break under the bottom of the short-term range envelope, the intermediate range channel bottom would again be the lower target. On the other hand, if you look above 2818.25 you will notice that there is no resistance above until 2887.25, which was the all-time high set in January.
So, two number to watch going forward… short-term range envelope support (currently at 2789.75) and triple resistance at 2818.25. A breakout on either side could lead to a quick move as momentum traders from either side pile in looking for either 2717.25 below or 2887.25 above.