ES 1099.25

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(click image to enlarge chart)

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The bulls have broken through the last of the trendline resistance and are sitting just below the major resistance band (1096 to 1103).  That resistance is centered around 1099.25, which is now a short-term structural pivot, and the place where many resting buy stops are now likely located just above.  The resting buy stops are from bears who will capitulate and buy to cover–and from tactical momentum buyers who will buy the first breakout of a new higher low/higher high sequence.

The pros are now in position to light off quite a few buy programs with a push above 1099.25.  It is an obvious setup, though, and so we could see some trickery here if too many traders are trying to front run a breakout.

ES 1099.25 has the potential to become another stop sweep/reversal play–if this push from the last major stop sweep reversal play ay 1031.75 has been designed primarily to squeeze the bears.  If price eventually moves above 1099.25, then that line will become the new bull/bear line for VST (very short term) positioning trades (VST trading bias would be long above/short below).

The real trick is to come away from the S&T primary trend lines on the right side of the macro trend and it will be interesting to see what happens if/when the buy stops are triggered at 1099.25 +…or, if that heavy resistance band turns back the rally before triggering the pivot breakout stops.

If the resistance area holds here—then the primary trend lines and the rising support trendlines underneath become the downside targets if they decide to shake out the bulls with tight stops hoping for an easy trade ahead of the pivot resistance area.

This has been a pressure move to squeeze the bears and the key is to watch carefully to see if the bid evaporates after a major objective is achieved.  The ultimate objective could be the resting stops, or it may have just been breaking the trendline resistance on the first push.

If a pivot breakout (should one occur) is sustained and bought after the first pullback–that would imply that a higher target is desired.  If, on the other hand, the buying wanes above the breakout once the stops are triggered and price falls back below the bull/bear line…we could see a stop sweep reversal.

The initial objective was taking out the trendline resistance, and that has now been achieved.  It remains to be seen whether the pivot high at 1099.25 is eventually taken out—or if will become just another lower high in a macro bearish sequence…which would likely surprise a great many people, if that were to happen.

The intermediate bear market is not going away quietly here, and this two week long fight at intermediate-term resistance is critical in working out which side of the macro trade the pros are on.  ES 1099.25 could serve as a good VST barometer of their intent and their positioning going forward (bearish below/bullish above).

…my .02