Market Update

 

Stops and Targets is currently showing the E-Mini S&P 500 Futures Option (see screen shot above) is rated BULL 3, which is the second stage of an intermediate rally within the context of a long-term bear market.  As we oscillate inside the current very small range it occasionally flips to BEAR 8, which is a short-term pullback in an intermediate bull market.  There is indecision here awaiting resolution, but that will likely change very soon as I will explain below.

Let’s take a quick look at where the market is at currently–starting from the monthly bars and then working back towards the daily bars to get a feel for all three major timeframes…

 

 

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The currently monthly bar (January) is painting as an ‘inside bar’, which means we have a lower high and higher low against December.  With two more trading days to go in January, the highest probability is to stay as an inside bar, which could set up February for the first ‘monthly buy’ signal (on a cross above the January high).

Although the market has been rallying hard from the VLT trendline bounce and Bottom Spotter at 2316.75 we still see a bearish progression of lower highs and lower lows on the monthly bars.  As mentioned in the paragraph above, that pattern could be broken with a new higher high in February–but for now, the pattern remains bearish in this timeframe until/unless we see a new monthly higher high in the future.

Note that the monthly bar chart correlates well with the Stops and Targets assessment.  It’s still a long-term bear market, but the top of the long-term monthly range has been descending (currently at 2822, down from 2951 top) as the long-term range bottom (2316.75) holds.

 

Next, let’s take a look at the weekly bars

 

 

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The chart above shows weekly bars, and is very interesting…

It shows the current status of The Weekly Bar Paradigm…. which, to refresh for newbies reading here, simply states that so long as new higher 4-bar pivot lows are building on the weekly chart–any pullback that dips below the last 4-bar pivot low and then crosses back above is a ‘stop sweep/reversal buy’.

The 10th instance of that very powerful paradigm, which has yielded perfect entry points since the 2009 bottom, has just occurred at the recent low with an ensuing rally back above the last higher 4-bar weekly low pivot at 2607.

The time will eventually come when price cannot recover and hold back above the last four-bar pivot low.  When that happens the glorious secular bull market that has been roaring along since 2009 will have officially ended and I will be sure to point that significant reversal out right here.

My definition of a bull market in any analysis is simply ‘higher highs and higher lows‘.  When the current secular bull ends–we will then start to experience a pattern of 4-bar weekly ‘lower highs and lower lows‘ and the same strategy in play since 2009 may work in reverse for the bears.

We can see how the recent pullback bottomed at the very long-term support trendline and then rallied for five consecutive weeks before stalling at the current week’s ‘inside bar’… which is itself an inside bar to the previous week.

The initial ‘weekly bar buy‘ signal came on a cross above 2523 (see green arrow on chart above).  The current weekly trailing stop is located just under last week’s low at 2612.50.  Note also that line is equal to the current short-term range bottom from Stops and Targets.

That line at 2612.50 is what I am focusing on right now.  Lets move next to the daily bars/range chart to see why…

 

 

 

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On the daily bar/range chart above you can see why the market stalled right at 2677.75 and we got the original range-top counter-trend sell alert for short and intermediate timeframes right there from Stops and Targets.

That was a perfect ‘back-kiss‘ of the broken short-term trendline support trendline (see red arrow on the chart above).  The pros often use a back-kiss of a broken trendline to be sure they have exhausted all stops on a counter-trend move.  In the current case–the stops that are under heavy pressure are those of bears who shorted at and below the trendline break on 14-Dec but then missed the huge Bottom Spotter turn at 2316.75.

Since the back-kiss at 2677.75,  the market has basically traded sideways in a very narrow range between 2612.50 and 2672.50.  That is equal to the short-term range at Stops and Targets.  See how that works?

This market is presently coiling for a momentum breakout from that very tight range–once the pros decide the time is right.

Remember what I often say here about these constricting periods of limited volatility… ‘first they bore you to tears, and then whammo!‘  The pros are distributing and/or accumulating for the next move and option players who guess right on direction can do very well once that breakout gets going.

The ‘whammo!‘ is likely incoming.  Only thing is–we don’t yet know which way the pros will take this on a breakout.  So, let’s look in both directions for some possible targets…

If they breakout to the downside of the short-term range (below 2612.50), the most likely major downside target would be the rising intermediate range envelope bottom, which is presently at 2397–but will start to rise rapidly soon.  ES 2438.50 will be the next stop higher and it will sit there for a few days before eventually leapfrogging way up to 2523.25 on or about 5-Feb and then rapidly advancing north after that date.  So, bottom line is to keep an eye on the bottom of the intermediate range envelope if this breaks bearish.

If the pros breakout to the north side of the short-term range top (above 2672.50) then we need to start watching the descending long-term range top (presently at 2822) as a next likely major upside target.  You can see on the chart above that the long-term range envelope has been descending from the Top Spotter at 2951 all the way to its present location at 2822.  The next notch down will be to 2818 and then it will stay there for some time–so for all intent and purpose, let’s just use 2818 as the next upside target if the pullback bottom is in.

So, head’s up right here inside the very small short-term trading range.  Once the pros decide to give the futures a kick in the pants–we’ll be off on the next leg toward the major range envelope targets that I have pointed out above.

…my .02

 

 

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Market Update

 

Yesterday, the intermediate trend flipped bullish when the top of the intermediate range envelope was broken to the upside for the first time since the Top Spotter at 2951 on 21-Sep-18.

That’s a pretty big deal if the market can continue to hold above the intermediate stop/reverse line, which is presently located at 2626.25.  

The broad market is now rated BULL 2, which is the second stage of a short-term rally.

 

 

click image to enlarge

 

What makes this development particularly interesting is that for only the 10th time in the past 10 years, we have a stop sweep/reversal setup on the weekly bars.  This is what I call The Weekly Bar Paradigm, and I have been pointing out each of these setups here for years now.

With a move back above the last higher weekly four-bar pivot low at 2607, we now have the potential makings for yet another perfect entry in the secular bull market that has been impressively trucking along since the 2009 bottom.

The reason I emphasize the word ‘potential’ is because we still have 2/3 scenarios where that recent Bottom Spotter low at 2316.75 could still be tested…

 

Scenario One:  The correction bottom is in at 2316.75 and will not be touched again on a pullback–similar to what happened at numbered occurrences  1, 3, 4, 5, 7, 8, and 9 on the weekly bar chart above.

 

Scenario Two:  We get an eventual double bottom–similar to what happened after numbered sequences 2 and 6 on the chart above.

 

Scenario Three:  We get an eventual sharp reversal back below 2316.75 that fails to retake that level.

 

To my thinking the scenario order above represents the order of the odds going forward.  We will eventually get a pullback, of course, and a cross below the short-term stop/reverse line (currently at 2602.50) will let us know when that pullback starts.  Until then, it’s all good for the bulls.

Seriously, aren’t Stops and Target’s  Spotter Signals just flat-out amazing?  🙂

…my .02

 

 

 

Market Update

 

In the screen capture for the S&P 500 Futures from Stops and Targets above I have highlighted the current Multitrend Rating (Bull 1) explanation, with particular emphasis on the intermediate range envelope top, which is currently equal to the intermediate stop/reverse line since the intermediate timeframe has been trending bearish.  That value is currently at 2652.75, but it will decline at today’s close, likely to the daily bar high (since today’s high will be the highest high of the past four trading weeks).  As I type the daily bar high is at 2624.

 

 

 

click image to enlarge

 

In my last post I pointed out the upcoming test of intermediate resistance–and we are now here!

The intermediate timeframe signals have been very important in the major correction that started in September.  To clear away some clutter and to make that point more obvious I have removed all of the short-term and long-term signals from the second screen capture above, which is from my daily bar/range chart.

 

I have labeled in blue text some of the significant waypoints:

  1. Top Spotter signal at 2951 on 21-Sep-18.
  2. The next event was the first sell signal at 2874 on 10-Oct, when price broke out below the intermediate range envelope bottom.
  3. The intermediate timeframe started trending at 2873 on 8-Nov, when the range top descended below the first sell signal.
  4. An intermediate trendline break at 2618.25 on 14-Dec signaled the start of the next leg down.
  5. The Bottom Spotter at 2316.75 on 26-Dec coincided with a test of very long term trendline support.
  6. The first counter-trend buy signal came at 2434.50, also on 26-Dec.

That brings us to TODAY, where we have a simultaneous test of the key Weekly Bar Paradigm line at 2607 and a perfect back-kiss (so far) at 2624 of the extended intermediate trendline support that was broken on 14-Dec.  A back-kiss occurs when price touches the underside of a previously broken trendline.  That is where the pros often run price on a bounce to guarantee that all bears who shorted the trendline break are in a negative profit position (to run bearish buy-to-cover stops and create guaranteed buyers).

This is the area where we can start to get a feel for either the start of a pullback leg from a touch of intermediate resistance (once bearish stops are run)–or alternatively, a major upside range envelope breakout that will flip the intermediate stop/reverse line bullish.  Trending markets officially reverse when the range envelope is broken.

We have seen lower highs in the intermediate range envelope since the original Top Spotter alert way back on 21-sep-18.  Today (at the close) will be the first time that the intermediate range envelope top rail has been touched since the top.

…so HEAD’s UP!

…my .02

 

 

 

 

 

 

 

Market Update

 

In my last post I pointed out the huge number of Bottom Spotter alert signals at stopsandtargets.com

As of yesterday’s close 1589 of those initial signals have been confirmed… that’s a big number.

 

The following link shows a sorted list of all active Confirmed Bottom Spotters:

https://stopsandtargets.com/members/signals/spotter.php?param=BSbuy

You can sort the list by any column heading to uncover new potential market leaders.  The default starting sort is by last signal date and then by percentage gain on each date.  Lots of interesting symbols to look at starting on 12-27-18 (the day after the massive bottom numbers of bottom spotter alert signals were triggered).

 

 

Let’s take a quick peek at the stopsandtargets.com analysis tab for the S&P 500 Futures and then the timeframe charts to get our bearings…

 

 

Above is a screen capture of the current S&P 500 Futures ‘Summary’ analysis tab.

  1. The broad market rating is now BULL 1, which indicates ‘the first stage of a new uptrend progression in an extended long-term bear market’.
  2. The Bottom Spotter signal on December 26th was confirmed on the 27th and has advanced 11.6% to date.
  3. The short-term timeframe is currently ‘in play’ and remains bullish above 2568.50
  4. The long-term range envelope is between 2316.75 (countertrend buy on 26-Dec-18) and 2,895.25
  5. The intermediate range envelope is between 2316.75 (countertrend buy on 26-Dec-18)  and 2,690.50
  6. The short-term range envelope is between 2,438.50 and 2599.50 (countertrend sell yesterday).

*Note that the range envelope range lines are now drawn in on the summary Stop/Reverse Lines chart in a light gold color and are labeled L, I, and S. 

I find the new labeling to be extremely useful to help visualize where the stop/reverse lines are within the ranges…

  1. The long-term stop/reverse line is clearly rangebound with a bearish bias (),
  2. The intermediate stop/reverse line is equal to the descending intermediate top ( trending bearish).
  3. The short-term stop/reverse line is equal to the last higher daily bar low, which indicates it is trending bullish ().  Remember that short-term is now in ‘aggressive mode’, which means the stop/reverse line instantly indicates and follows a trending move whenever a daily bar low (at the end of a trading day) is higher than the stop/reverse line (trending bullish) or a daily bar high is lower than the stop/reverse line (trending bearish).

Taken together we see a Bull 1 market structure where the short-term is trending against bearish long-term (2782.75) and intermediate (2690.50) stop/reverse lines.

That’s a lot of very useful information packed into a quick glance.

 

 

 

Since the short-term timeframe is currently ‘in play’ I have also included a screenshot of that tab above.  Note that the range envelope lines are also on the timeframe charts.  That is a VERY cool addition since it now helps to quickly visualize where an ideal entry zone sits in relation to the range boundaries.  In the example above we can see that ES has been banging on the top of the range envelope to expand higher.  Yesterday we got a countertrend sell signal at the range top when the advance stalled and

 

Next I’ll show you what that means and why it is happening, using my charts..

 

 

click on image to enlarge

 

The initial ES monthly bar sell signal came at 2874.

Notice that the very long term range envelope bottom (see dashed lines on the monthly bar chart above) was previously pierced at 2546.75 (on the way to an eventual bounce off of the very long term trendline at 2316.75). That range envelope lower channel had not been broken to the downside since the last bear market bottomed in 2009–so, obviously, that’s a pretty big deal.

That line at 2546.75 was the source of recent short-term resistance that cracked in the last few days.  That now opens up a test of the next MAJOR hurdle above, which is 2607

 

click on image to enlarge

 

Zooming into the weekly bar chart above, we can see perfectly the dynamic that created the massive Bottom Spotters… That was the bounce off of the very long term (VLT) trendline support.  That test was preceded by a break underneath the last higher weekly 4-bar pivot low at 2607.  That was only the tenth time that has happened since 2009–and in each and every other occurrence price eventually reclaimed that level to resume the bull market climb.  That pattern is what I call The Weekly Bar Paradigm and I have been saying here for almost ten years that we will know with absolute certainty when the secular bull market has ended when the time comes that price can NOT reclaim a break through the last higher weekly 4-bar pivot low.

We are now here after an impressive short-term rally from the trendline bounce!  This is the big test of the first rally after a major pullback sequence–and that is why we can expect some nervousness and possible profit taking in this area.

Long story short… in order for the secular bull market to continue 2607 MUST be reclaimed.  If price cannot make it through on this poke, then we could possibly get a pullback with eventual consolidation for a second run higher from a ‘W’ pattern–but no matter how the coming days and weeks shake out—2607 is the KEY!

HEAD’S UP!

 

 

click on image to enlarge

 

The last image above is the daily bar/range chart which shows support and resistance, stop/reverse lines, and range envelopes.

Notice how the rally from the VLT trendline has advanced to just under the key 2607 line.  The stop/reverse line for the ST is at the last higher daily bar low (2568.50) and the top of the short-term range envelope is just above at 2599.50.  There is additional resistance above at 2630.  Somehow, the market will need to get through there to continue climbing higher.

Note also that the intermediate range top continues to descend and will soon be within striking distance if the short-term trend can continue higher.  If price eventually touches the top of the descending intermediate range envelope top then look for a potential pullback from there.

It’s all about 2607 and the short-term stop/reverse line will let us know when the next pullback starts.  Watch 2607 and then the descending intermediate range top (which will be descending rapidly in the coming few days) for upside targets.

…my .o2