Today is ‘Options Rollover Day’ and Futures Options have now rolled over from the September 2020 to December 2020 contract with a difference of -10.25 points from ESU20 (September) to ESZ20 (December).
All previous chart numbers have been adjusted to reflect the new continuous contract pricing—so, for example, the Long Term stop/reverse line from the expiring September contract at 3,254.75 now becomes 3,244.50, and so forth.
click image above to enlarge
The screen capture above shows weekly bars for the S&P 500 Futures.
On my last post I pointed out the trend channel shown above as the most bullish option at that time. Note that price precisely touched that top channel and then retreated. We have a lower high and lower low on the weekly bar currently–so the market is vulnerable to intermediate-term downside weakness going forward from this configuration until/unless we see a new weekly higher high.
The screen capture above shows daily bars with range envelopes and stop/reverse lines for three timeframes. The daily bars will show the way for the next move–so keep an eye on the short-term timeframe. A move back above the short-term stop/reverse line signals a pause/end to the channel top pullback shown in the weekly bar chart at the top–whereas a move below the short-term range envelope bottom would resume the descent from the channel top. There is a large gap in support under the long-term stop/reverse line at 3244.50 (next target lower would be 2973.25) so keep that in mind should that support level be breached.
The good news for bulls is that the recent pullback satisfied the minimum pullback to create a higher 4-bar pivot low in the ongoing Weekly Bar Paradigm that I have been pointing out here since 2009–so if the recent low holds and we get a continuation higher then all is well–but as I said above–the key is to watch where the short-term is leading and to be cognizant of the potential for weakness underneath should this current bounce stall and start to head south again.