ES Update

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I mentioned in my November 18th post that a break below 1208.50 could target the rising dashed green trend channel bottom.  There is also a second potential trend channel that I have drawn in teal.  (Those two channel rails along with an open gap target at 1155 are also shown in the hourly bar chart below)

Just to review my analysis shown in the chart above… there was a true bearish breakdown that initially bottomed at 1071 (detected by a bottom spotter) followed by a long consolidation where bears shorted heavily.  A double bottom was set at 1068 (again detected by a bottom spotter) followed by a tremendous squeeze back through the consolidation zone and into a second distribution zone (bright yellow rectangle).  The pros got bearish capitulation at 1289.25 and continued to shake the trees above the top of the original range at 1224+ until buyers evaporated (bears stopped covering).  The break below 1208.50 was accomplished by an opening gap which trapped the late to the party bulls who entered an extended rally above that line.  The present bearish thrust is designed to force selling–to create the other side for optimum buying (to cover shorts established from 1224-1289).  Once sellers evaporate, we could see a bear market rally–but the trick is to find the spots where pros might try to set a technical line to again entice buyers once they have finished covering and are ready to run back in the other direction.

The bears are in full control under 1208.50, and we’ll have to watch and see where this move goes–and whether it bounces near the bottom of the trend channels or slices through to set a lower target at IT trend line support (which lines up with Stops and Targets’ next IT target lower at 1086) or the bottom of the dashed red channel.

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The chart above shows the next three bearish targets below… at approximately 1163, 1155, and 1148.  VST bears are fine under 1208.50 as we await the building of a minor high to anchor the next descending VST trend line and the stop/reversal line that will ultimately mark a change in character.

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S&T shows a fully bearish market under 1216.50 and the intermediate timeframe is in play.  If the trend channel rails fail to elicit a bounce, the next S&T target lower is near IT trend line support.

…my .02

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