Options Rollover

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Futures Options have now rolled over from the December 2018 to March 2019 futures contract with a difference of +4 points from ESZ18 (December) to ESH19 (March).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the Bottom Spotter from the expiring December contract at 2583 now becomes 2587, and so forth.

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S&P 500 Futures are still working off of the stop sweep poke below 2607 on 12-Dec.

The key line to watch going forward is the short-term stop/reverse line, which is presently located at 2652.50.  A move back below that line would flip the short-term back to bearish and could usher in a test of the low at 2587.

Bulls are good to go above 2652.50 but the bears would resume control underneath.

As I pointed out yesterday, there are two more events coming in quick succession that will dictate what the market does…

  1. The FOMC global socialists will issue their interest rate edict at 2 pm on 19-Dec
  2. Options Expire on 21-Dec (quadruple witching)

…my .02

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Market Update

 

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So far, 2603 is hanging in there–but the number of Bottom Spotter signals for the Russell 3000 was underwhelming on 12-10-18.  That was not what I would have expected to see at a major stop sweep/reversal–but we’ll see how it goes in the coming days.  Remember, price action is bullish above 2603 but reverts back to bearish below.

 

Head’s Up!  There are three significant events coming just ahead in quick succession.  I have marked each date with a vertical line on the chart above…

12-13-18: Options Rollover
12-19-18: FOMC announcement
12-21-18: Quadruple Witching Options Expiration

Those events taken together represent much incentive for shenanigans from the pros.  There has been tremendous recent volatility that has basically zig-zagged inside of the intermediate range (between 2583 to 2818).  If my thesis is correct that the pros have been destroying premium on options within that intermediate range then an approximate possibility for their OpEx target could be the dead center of that range…

(2583 + 2818) / 2 = 2700.50

I post that OpEx target number just for fun while looking ahead.  The market is going to do what the market is going to do, of course, so we’ll have to wait and see how the coming days play out.

It is still all about 2603 (that number will be adjusted for the March 2019 contract tomorrow at rollover).  Price action is bullish above/bearish below.

To fine tune a bit more…once we get (and if we get) a daily bar low that is higher than the current short-term stop/reverse line at 2648.50 then the short-term will begin to trend higher again and bullish protective stops can follow that rising stop/reverse line.  A break back under the short-term stop/reverse line at any point going forward, until we start to flip the intermediate and long-term trends, should set off alarm bells that the low could be retested–so keep that in mind for your own analysis purposes.

…my .02

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Weekly Bar Paradigm

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Okay, here we go…

For only the 10th time since the bear market bottom in 2009, we are experiencing a dip below the last higher four-bar pivot low (ES 2603on the weekly chart.

In seven out of the nine occurrences since 2009 we had what I call a stop sweep/reversal.  That is–price dipped below the 4-bar pivot low to trigger massive protective stop selling–and then the market reversed and rallied hard.

If the amazing Weekly Bar Paradigm that has been in effect since 2009 continues, we can expect some variation on that theme over the coming days… a sweep of the stops under 2603 and then a reversal back above.

If this dip fails to recover back above 2603–then that would be a significant event.

It couldn’t be any simpler… bearish under 2603 and reversing back to bullish above.  Note that the previous stop sweep/reversals have been perfect entry points to ride the big bull.  So let’s see how this goes!

 

Just in case we get a deeper pullback under 2603 here are some additional charts with targets…

 

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The monthly bar chart above shows the current bottom of the very long-term range envelope at 2542.75.  Note that bottom rail has only been touched twice since 2009.  Those were the two exceptions to immediate stop sweep/reversals (see points 2 and 6 on the next chart).

 

 

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The expanded weekly chart above shows all  nine previous occurrences.  (The extension to the right of the current price is a time price projection (2466.50 in the third week of January) based on leg one down from the recent top)

 

 

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The daily bar range chart above shows support levels underneath.  Notably triple strength support at 2542.75 and the open gap at 2532.50 and then confirmed support at 2503.25.

Head’s up!  It’s ALL about 2603 right here!

This is a BIG ONE, so be sure to let your friends and family who are in the market know about this very important juncture.

…my .02

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Addendum:

If/when we get a significant bottom in the coming days–we could see massive numbers of Bottom Spotter alerts.  Be sure to keep a close watch on those at Stops and Targets

*End of day spotters will appear at this link:  Spotter Signals

 

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Market Update

 

 

When I see these kinds of breathless headlines from the ‘Fake News’, my BS detector antennae start to twitch a little.  Those guys almost always get it wrong–so just something to think about.  The job of the financial fake media is to push people to the other side of the pros’s trades at the fringes.  It’s what they do… it’s what they have always done.

 

Let’s take a quick peek at the market structure here at a key inflection point…

 

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On the monthly bar chart above note that we are now in the second consecutive ‘inside bar’.  That configuration indicates a contraction of prices inside the long-term (second monthly bar back) and intermediate (previous monthly bar) trading ranges, which are 2603 to 2947 and 2626 and 2818 respectively.  Last signals for each at Stops and Targets were range envelope support on October 29th.

Eventually we will get a breakout–but until that happens all of this volatility is essentially just going sideways.  If price breaks and holds below 2626 that is a significant event and we would see new sellers come in under that line.

Note that the very long-term channel bottom is currently at 2542.75.  That channel bottom has only been touched twice in the last 9 years.

 

 

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Zooming in to weekly bars there are two significant things to point out…

  1. We now have a new weekly 4-bar higher pivot low at 2603.  That means that the hard deck for the Weekly Bar Paradigm that we have been exploiting here since 2009 moves up to that line.  It also means that would be the next downside target for a stop sweep/reversal, which would be #10 in the sequence since 2009.
  2. I have added a trident channel shown as light blue lines on the chart above.  As I type, price is testing the bottom rail of that channel.  Either we are going to get a bounce here–or a break would increase the likelihood of a downside breakout and a potential stop/sweep/reversal.

 

ES 2626 is the key number to watch.  That is the trading range bottom for the intermediate term and where many stops are resting underneath.  If 2626 gets taken out–then the big trove of stops under 2603 could be next.

If a move under 2603 happens then I will be on high alert to watch for a major stop sweep/reversal paradigm setup centered around 2603–and will have much to say about that, if it occurs.

So HEAD’S UP right here at 2626!

…my .02