ES Update

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Still in a trading range but nearing the ST primary trend line…

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Momentum buyers are waiting to jump in just above the descending ST resistance trend line presently at the 1182 area, which is lining up fairly well with Stops and Targets’ ST primary trend line at 1178.25

If this is a bear market coiling for the next trending move lower, this would be the general area where we would expect to see exhaustion of the counter-trend move from the spotter low at 1071 on 8/9. There are buyers (bears buying to cover mostly) available just above the VST/ST trendline resistance and then just above the local pivot high at 1198. We would expect the pros to take advantage of that opportunity to squeeze out bears before a move down, but it is possible that the pros’ stops are above those lines mentioned, and if so– we could be near a reversal if those lines are defended (by sell programs).

Now, the other side of the situation here is a potential bear market failure setting up, where bears just couldn’t get it done (by missing taking out the key downside target at 1105) and the sideways cycle and trading range may be setting up for an eventual reversal back into bull market territory.   To do so from the current setup, bulls would need to hold 1123.50 on a pullback and eventually take out 1224 to continue the sequence of higher lows and higher highs.

Pros have a nice little uncertainty setup working here around the levels mentioned above–possibly in advance of the FOMC meeting next week.

…my .02