ES Update

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For the first time since the touch of key resistance at 1467.50, ES has painted a lower low on the monthly bars.  The previous month was an inside bar–indicating a range-bound and indecisive market, but this month we now have a lower high and lower low.  Last month’s low was 1393…so keep that number in mind.

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The weekly chart above shows the price action since the touch of key last resistance.  The chart also illustrates the ‘Obama Rally’ since the start of his first administration.  So far, we have seen a series of marginal lower lows without a breakdown.  It has been a controlled descent up until now–but the pattern has been unmistakably bearish since the touch of last resistance at 1467.50

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Looking at the range chart above–yesterday’s low at 1384 was a direct hit on the rising long-term support trend line.  The break of short-term support came at 1393, so again–keep that number in mind.  I pointed out in previous posts that the decline had met the minimums for time/price to set an eventual intermediate-term structural low.  With yesterday’s dip to the long-term support trend line, ES has now met the minimum time/price for a potential long-term structural pivot, as well.

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On the hourly bar chart above we can see the stop sweep under 1387.50 and the precise touch of long-term support.  Those were the downside targets I pointed out yesterday.  I also pointed out that ES 1393 has become an important number.  It is now the short-term primary trend line for Stops and Targets and remains my bull/bear line at this critical test of support.  If a bounce is going to happen, this would seem to be a good place for it to start.  The stops have been triggered and we are again at a support void > 1369.  The problem with this sort of ‘bottom-picking’ speculation is that it is counter-trend in nature–and is the mirror image of ‘top-picking’ which has devastated the accounts of so many bears in the past several years.  The key line is 1393–price action is bearish below and bullish above.  There is simply no good reason to be VST or ST long under that line.  So caveat emptor for those prone to swinging for fences.  Yes, this is a possible bounce area–but underneath 1393 is great danger to the downside.  If support doesn’t hold here, we can get to 1369 in a hurry and under 1369 is a big void down to the 1320 area.

…it’s all about 1393 now, so trade carefully.

…my .02

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