Market Update

In my last post I pointed out the resistance band located between 2846.50 and 2952.75 and explained why those resistance levels were important going forward…


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The Weekly Bar Paradigm stop sweep/reversal line is located at 2846.50 (see the dashed blue horizontal line on the chart above).  We will know with absolute certainty when the amazing secular bull market that has been stampeding since 2009 has finally ended when the market is unable to rally and ultimately hold above the last higher weekly 4-bar pivot low.   The last higher weekly 4-bar pivot low was at 2846.50.

Note that if/when we start building  a trend of lower weekly 4-bar pivot highs then we will officially be in a new secular bear market.  I have no way of knowing how this ultimately will play out going forward–but that line is only the 11th occurrence of a long-term entry strategy that has worked brilliantly for the past 11 years –> so we’ll continue to keep a very close eye on it going forward.

This morning the market filled an extremely important open gap at 2952.75, which is the top part of the resistance range I pointed out –> so this is that point of reckoning that I ranted about in my last post.  The S&P Futures traders love to fill open gaps.  You can see what I mean by observing the previous bearish gaps colored magenta and the previous bullish gaps colored cyan on the chart above.  As a recent point of reference–note that the bottom of the powerful thrust down from the top filled an open gap at 2252.50 before turning and burning back northward in a scorching bear market rally that is now six weeks old. 

This morning we hit the next major higher gap and once it filled the sellers immediately came in.  There is one more open bearish gap way up at 3328.  That is exactly where the pros gapped and trapped the bulls on an opening rout back in February.  The most elegant solution for gap traders would be an expectation of a trip back down to 2482.75 followed by a leg back up trying to ultimately fill 3328. That is one of many scenarios that could play out.

Much damage has been done to this market and when one looks at what it will take to get back to the point where that upper gap gets filled–well, clearly some serious work will have to be done and usually that takes time–though a couple trillion dollars being injected to juice the markets could certainly help.

The easier path for the market in the long-term would usually be down since the long-term timeframe is trending bearish under 2965  (starting tonight at the close unless the market trades higher than 2965 today).  However, if price can hold near the top of the current monthly bar today then there is a possibility for the market to be moved above the previous month’s high in the coming trading month, which would be a long-term trend reversal to bullish!

So, do you now see what I mean about an upcoming point of reckoning?

The pros love to set up these win-win situations for themselves in advance of an upcoming major news event.  That event could be the reopening of the economy starting in May for a bullish resolution higher.  It could also be something much more ominous that we can’t yet see coming–like an escalation in the thus-far undeclared US war with China, for example.  So far, that war is being fought economically, but these are the exact sort of historical environments where global conflagrations can erupt.  If not that, then something else ominous that could give an excuse to push the market lower in the coming month.



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The chart above shows monthly bars, which correspond to the long-term timeframe at Stops and Targets.  Today is the last day of the trading month for April.  The April monthly bar (an ‘inside bar’ is where the low is higher than the previous month and the high is lower) will go from live to static at the close today and the range envelope numbers will update accordingly across all symbols.

The black box trading algorithms that focus on digesting monthly bar data will have fresh levels to pursue starting tonight when those reference points are updated…

For example:  the monthly bar range for the S&P 500 Futures (ES) will change from the current 21743125.74 to… 2424.752965 (unless one side of the current April range is exceeded today).  For the pros, that means counter-trend long-term profit stops on the bullish side will be advanced to 2424.75 to lock in bear market rally gains from the 2174 low.  That also means that the trend-following stop for bearish trades will be moved lower to 2965 to lock in gains on the short side from 3125.75



When I read the range envelopes above, I would say to anyone who asked my opinion… we are currently in a short-term pullback below 2959.75.  The intermediate range would also generate a counter-trend pullback alert if price were to trade below yesterday’s breakout at 2875.50.  That is all in the context of a long-term bear market rally that started at 2174 on 01-Apr-20.

So, basically the pullback I predicted at the gap fill has started and it remains to be seen how deep that pullback goes.  It’s still technically all good for bulls–especially if price climbs back above 2959.75  but bears could start to get rolling if price were to drop below 2875.50–and especially if the short-term trend were to flip on a bigger move below 2860.75.

Let’s see how this day goes and then more importantly what happens at the start of the new trading month tomorrow.  Head’s up here.  Everything is lined up nicely for a possible nudge one way or the other from the pros.

…my .02





Market Update


Reading the tea leaves here on the current market configuration…

The screen capture above for the S&P 500 Futures from Stops and Targets shows that since the market bounce at 2174 (see long-term range bottom) we are currently experiencing an intermediate rally in a long-term bear market.  The summary text above describing BULL 3 rating sums that all up nicely.

There are powerfully-opposing forces at play here and that is reflected in the stop/reverse lines on the single bar chart above and also by looking at the range envelopes…

The long-term stop/reverse line has recently moved lower in the bear’s favor but things are likely feeling a bit uncomfortable for anyone still short who missed the bounce at the bottom, or who has shorted since and is currently being squeezed.

On the other side of the spectrum–new bottom picking bulls are likely feeling pretty good here with the market moving up over 600 points since that March 23rd low.

Both sides are possibly approaching a major reckoning just ahead.  Let’s take a look at my charts and I will explain that comment…


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Each bar on my chart above represents one month of trading.  This long-term decline began when the last higher monthly bar low was broken to the downside at 3169.75 (you can see a small red dot where that trend change occurred).  Note that when you reference the Stops and Targets screen capture at the top of this post that it also shows that price of 3169.75 as the start of the long-term bearish trend on 25-Feb-20.

Note that when the previous monthly bar closed on 31-March, the long-term stop/reverse line moved down from 3169.75 to the March monthly bar high at 3125.75.  That is what I meant earlier when I said that the long-term stop/reverse line moved in the bear’s favor.

It remains to be seen how the April bar will eventually end up–but so far, we are experiencing an ‘inside bar’ where both the high and low are contained inside of the previous bar range.

Since the long-term is currently trending bearish (as a result of lower highs) that trend cannot be reversed until we eventually get a close ABOVE the last monthly bar lower high.  That last lower high at the long-term stop/reverse line is pretty far away currently, but as time goes by those monthly highs will eventually come into striking range.

Once a bottom has been established, the kind of severe damage that has been inflicted upon this market usually takes an extended period of sideways consolidation as intermediate resistance levels are encountered and eventually assimilated.  It is a long process and like it or not, this is a long-term bear market now and will remain so until such time as we eventually get a breakout above the last month’s high.

On the other hand, if a bottom has NOT yet been established then those resistance levels can become powerful areas of selling where the market turns back down.  To better illustrate that point, let’s take a look at the weekly bars next…


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Each bar on the chart above represents one week in the market and corresponds with the intermediate timeframe at Stops and Targets.

The first point to make is the difference between the individual weekly bar sequence versus the monthly bars.  Note on the chart above that we see three consecutive weeks with higher lows and higher highs... that is the very definition of a bullish trend.

Also note that the previous weekly bar bearish trend was reversed when price crossed above the last lower weekly bar high at 2634.50.  That is where the intermediate-term stop/reverse line currently sits at Stops and Targets.  Note also that in order for that stop/reverse line to move higher and begin to trend–a subsequent bar’s low must be higher than that stop/reverse line.  We will see on the close Friday how the current bar ends up.  See how that works?

Those of you who have been reading my rants here for years are aware of what I long ago discovered and christened what I call  The Weekly Bar Paradigm.  I won’t go into another long explanation about it here but for new readers to this blog–just search for that term using the search box to the right of this post.  Trust me, it is well worth your time and effort to understand the current paradigm if you want to truly understand how this market really works and how it is carefully and very skillfully managed.

So, back to the point–if you look at the red line at 2846.50 that is circled in yellow, many of you will recall that I said back in February and March that line is a VERY important level.  Well, here we are about to revisit that line from the other side now.


Why is 2846.50 important?  For two reasons:

1) That was the last higher 4-bar pivot low on the weekly bars before the takedown.  The essence of The Weekly Bar Paradigm is that it will continue in effect (11 years now since the paradigm started) until such time as price cannot rally and hold back ABOVE the last higher 4-bar weekly pivot low.  In the last 11 years there have been only 10 previous times where a major stop sweep/reversal has occurred.  In every occurrence, that was a perfect buying opportunity for long-term bulls to rejoin the secular (very long term) bull market.  I have also said that if/when price is no longer able to overcome and hold above that line then we will know with absolute certainty that the secular trend has changed.  So yeah, it’s kind of a big deal to watch carefully how this resolves in the coming weeks and months.

2) That line at 2846.50 is also where a formidable band of resistance starts as a result of a previous significant bounce at that line, which later failed.  Take a look at low of the February bar where price bounced at 2846.50 and then the bullish weekly bar that followed.  A LOT of new buyers hopped in there and it is those buyers who represent current SUPPLY that will soon flood the market if that resistance is breached.  Why?  Because all of those buyers ABOVE 2846.50 are currently trapped with losses on the long side.  Many of them are ready and very eager to sell at or near break-even to simply escape the pain–should the opportunity be presented.  The SUPPLY from those sellers can easily overcome DEMAND from new buyers if the poke into those levels is timid.  On the other hand, if we were to see a hard push on the futures with opening gaps higher–that is one way for the pros to leapfrog that supply/demand issue.  We will know shortly what their intent is on that matter–but for now, it is important to be aware that we are approaching a very significant layer of resistance that corresponds to the area between 2846.50 and the open breakaway gap down at 2952.75 which is where those bulls who entered above 2846.50 were brutally gapped and trapped by the pros.


So, to recap on weekly bars… higher highs and higher lows sequence of bars is definitely bullish.  This timeframe would reverse back to bearish on a cross below the intermediate stop/reverse line, which is currently located at 2634.50.  We will see where things stand on Friday at the close to determine the intermediate outlook–but a major resistance test looms just ahead and so this budding bullish uptrend is potentially vulnerable.  Perhaps the pros can blow right through that with the right kind of news and noise (ending of house arrest, for example).  This sort of uncertainty is often the breeding ground for good trade entries.  It is not easy or comfortable to enter at times like this–but it never is at key inflection points is it?

Remember, open gaps are a sign of intent by the pros.  The last open gap was UP at 2482.75 and precipitated the weekly bar breakout and trend change.  The closest leftover gap DOWN was at 2952.75.  See how that works?

That range between 2846.50 and 2952.75 is the band of resistance just ahead as I type… let’s watch carefully to see what the pros decide to do with this setup.  It is long-term bears versus intermediate term bulls.

…my .02


* It was recently brought to my attention that the ‘Get Instant Email Notification‘ plugin had stopped working on this site.  That issue has now been fixed so for those of you who would like to be notified immediately when I add a new post here –> you can add your email address on the right side of this page.


Market Update


It’s been a little while since my last post so thought I would post an update today to see where we are and to answer some questions I have been getting.  Let’s start by reading the tea leaves on the summary analysis tab from Stops and Targets for the S&P 500 Futures.

Many of you have noticed that the long-term trading range and stop/reverse line are different from yesterday.  The reason is because today is the first day of the new trading month (April).  What you are seeing reflected all across Stops and Targets symbols is the updating of the long-term timeframe to reflect the now closed March trading range.


For example, I received an excellent question earlier today asking me why there is a new signal shown for a range bottom counter-trend buy on the long-term range.

A little background information here is very useful to help you better understand how Stops and Targets evaluates timeframes:

  1. Long-term is based upon MONTHLY bars
  2. Intermediate-term is based upon WEEKLY bars
  3. Short-term is based upon DAILY bars

The reason that new signal appeared is because today is the very first opportunity for the algorithms to evaluate current price against the now-closed March bar range…


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Each bar on the chart above represents ONE MONTH of trading for the S&P 500 Futures.

Take a look at the March monthly bar range by examining the low and high of the candlestick ‘wick’.  That range was 2,174 to 3,125.75

…now, look back to the screen capture from Stops and Targets above and note the long-term range envelope numbers.  Yep, the exact same.  See how that works?

So, back to that long-term range bottom counter-trend buy alert..  Since the current price is currently crossing over the March range envelope low, the system sees it as a possible range bottom crossover and therefore as a potential counter-trend rally point.  (Don’t fret too much if that last part didn’t make sense.  That’s why Stops and Targets is so cool.  It works these things out for us that may not seem intuitive at the time–but, nonetheless are absolutely essential when considering trading strategy.)

To fine tune that long-term signal–>look at the long-term tab and notice that the long-term trend is bearish currently and is targeting the range envelope bottom at 2174.  Price may or may not get back down there–but underneath that line is where a huge trove of bull stops is now resting courtesy of the bottom-pickers that have been on a buying frenzy since the bounce.  If the pros want to go down to collect sellers, that is where they are going to go.  If not, then we could eventually get a counter-trend buy setup indication once price gets inside the 3:1 risk ratio window for a counter-trend buy in the long-term.  The alert is warning us that we could get a counter-trend rally from somewhere down in that area most likely.  Of course, if the pros decide to take out that low under 2174 then all counter-trend bullish setups are off.

Bottom line… the long-term trend turned bearish at 3169.75 on February 25th.  Today, the long-term stop/reverse line was automatically moved lower to 3125.75 to start locking in profit on the trend.  As each month goes by, so long as we see a LOWER HIGH in a bearish monthly bar trend the stop/reverse line will move to that lower high on the first day of the new month.

The long-term trend will remain bearish until that line is eventually crossed to the upside.  However, bear market rallies can be very profitable for those who know when and where to jump in–and also when and where to get out.  Those details are just as important for bulls as they are for bears.

To show a great example of that point–let’s move in next to examine the intermediate time frame…



The screen capture above shows the intermediate tab selected for the same symbol at Stops and Targets.

Remember, just as the long-term timeframe is based upon monthly bars–the Intermediate timeframe is based upon WEEKLY bars…


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Each candlestick bar on the chart just above represents ONE WEEK of trading for the S&P 500 Futures.

Note that the current intermediate range envelope is exactly the same as the prior week’s range of 2,174 to 2,634.50.

The current live weekly bar HIGH is presently 2635.75, which was just enough to touch the range envelope top and perhaps tickle some bear stops slightly above the range envelope high–and when that happened Stops and Targets showed a range envelope resistance signal.

When that happened, price was just below the intermediate stop/reverse line at 2634.50 and perfectly positioned inside of the red-shaded ideal sell zone between 2525 and 2634.50. That shaded zone was also the perfect exit for the last counter-trend long signal which was a range bottom rally alert at 2230.50 on 24-Mar-20

We can see today’s selloff launched from within that ideal sell zone setup.

Aha, you say!  That is VERY cool!  Yep, it sure is…  Counter-trend rally alert at 2230.50 up to range envelope resistance at 2635.75 and then back short there with the trend and currently looking for new lows–but with some hefty respect for the potential long-term counter-trend rally alert.

The pros sometimes leave breadcrumbs that betray their intent, and we’ll get into those in the closing paragraph–but first, lets take a peak at the short-term tab next…



The screen capture above shows the short-term timeframe tab from Stops and Targets for the same symbol.

The short-term timeframe is based upon DAILY bars…


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Notice that yesterday’s daily bar range was 2,555.75 to 2,635.75

The short-term timeframe had been trending bullish until today–but once price crossed below the LAST HIGHER LOW the short-term trend reversed and flipped bearish at 2,555,75.

You can read all the details in the commentary on the short-term tab above.  Note that at the close of today’s bar the stop/reverse line will stay right there at 2555.75.  If we get a lower high tomorrow that short-term stop/reverse line will move down to that bar’s high to indicate a bearish trend is underway.

So, in short, lower highs in a bearish trend drags the stop/reverse line lowerHigher lows in a bullish trend drags that stop/reverse line higher

If there is no trending move underway–then the stop/reverse line stays put during a sideways trading environment.

The same thing happens over and over again–and that is how the stop/reverse lines work.  They simply follow lower highs down in a downtrend or lower highs up in an uptrend to lock in accrued profits.  🙂

For a recent illustration… note that the previous bullish trend change occurred on a cross above the last lower high at 2386 on 24-March and then the stop/reverse line followed that trade up to the eventual sell today at 2555.75, which was the last higher low from the previous bullish trend set yesterday.  Now, 2555.75 will remain the stop/reverse line until a new trend eventually drags it away to one side or the other.  

And THAT is how you remain in the trend as long as possible is a particular timeframe.  It works exactly the same for monthly, weekly, daily, and even hourly bars.

And with this post I am hoping to have handled most of the recent questions that have been emailed to me (there were a LOT of ’em in the past week).



One last thing…


Unfilled breakaway gaps often indicate intent by the pros…

Magenta lines on the daily bar chart above show unfilled gaps DOWN.  Now you can see why I was pressing the point here that the pros were INTENTIONALLY forcing the market lower after four unfilled gaps in a row off the top!

Well, looky what happened just after the recent bounce… there was an opening gap HIGHER at 2220.50 on 24-March.  That was a decent hint along with the range bottom  counter-trend buy alert that the pros were ready to go up for a bit.  They ultimately went EXACTLY to the intermediate stop/reverse line and then we got an opening gap DOWN today at 2569.75.

The S&P 500 Futures players loathe unfilled gaps, so those recent two open gaps at 2569.75 and 2220.50 may define the near-term targets and possible restraints for a consolidation zone, if that is indeed the pro’s intent going forward.

Put that open gap lower today at 2569.75 together with the long-term range bottom counter-trend rally alert and the open gap at 2220.50 and perhaps we have a fairly decent roadmap for near-term trading range expectations between those gaps.

Pretty crazy world out there right now, so all the usual caveats apply.

…my .02