ES Update

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(click image to enlarge chart)

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Yesterday’s ‘gap and trap’ rally likely took out most of the bears who shorted at 1157 and below.

The push stalled near the S&T intermediate primary trend line and so that is the line in play right here.  The last red arrow shows an ideal IT short entry–and that position is protected by trailing profit stops above the descending gray trendline.

That gray trendline can also serve as a VST bull/bear line to keep a bias intraday should they decide to push back above and possibly attack the yellow rectangle area between 1176 and 1184 that bounds a potential back-kiss of the broken VST trendline support, which I mentioned yesterday.

The next likely target below is a gap fill at 1107.50.

So long as price hovers near the IT and ST primary trendlines–another jam higher is possible, which could reverse the trends.  There are several places to trip the bullish alarm should that occur–the VST trendline, IT primary trend line and then the ST primary trend line.

If bears want to open up a large move lower, then they are going to need to eventually break through the lower green trendline under 1055 area to really gin up some panic selling.  If that were to happen, then under the key pivot low at 1036 would be the spot where the macro bullish structure would be eventually broken.

On the other hand, if a major low is already in on the quick sweep down–then we could start to see the shorter trends roll over to bullish if the rally continues higher.  The initial target in a bear 2 rating is long-term primary trend support, and that has been achieved.

It is important (in my opinion) to always stay on the right side of the trends (in other words to only initiate short trades in bearish trends and to only initiate  long trades in bullish trends)–no matter how ‘wrong’ it feels at the time.  The only buying that should occur in a bearish trend is buying to cover short partials at downside profit targets.  Conversely, the only selling that should be done in a bull market is to take partial profits at upside targets.

ST trend is down < 1173
IT trend is down < 1157
LT trend is up > 1080

…my .02