ES Update

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(click image to enlarge chart)

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If the selling from the (as yet unconfirmed) spotter alert continues, then today could end up being a payday for some who have been riding the powerful uptrend from the initial July 998 bottom spotter low, the 1035 VST buy signal, and/or the 1155.50 back-kiss buy signals.  All of those ideal buy positions are sitting in large profits.

As I mentioned yesterday, the game recently has been to break minor trendline support and then reverse, and that is what happened initially yesterday.  However, the fast gap move at 1209 quickly took out the stop sweep/reversal line and we got the initial push down through 1197 support to the ST trendline breakout area near 1192 (actual ES low was 1193).  That 1192 area is significant because that is where the most recent bear squeeze began, which ultimately took out the major trove of bear stops that were above 1207.75.

ES bounced before tagging short-term primary trend support (at 1191) and then rallied back to just below the 1207.75 stop sweep /reversal line that I mentioned was in play yesterday.

As I type, ES is just below the spotter confirmation line at 1206, which is where we would need to see a daily bar close to confirm the current spotter alert…and so that line becomes a point of reference throughout the day, and especially at the close.

The countertrend bears have built a series of minor lower highs and lower lows and so I have drawn in that trendline resistance as a purple line to show where bears would lose control of momentum, if crossed to the upside.  That point corresponds with the stop sweep/reversal line at 1207.75, which remains the key line of control since above there was most bear’s capitulation point–and the pros spent six days shaking the trees above that line.  If this fledgling decline is for real, then there would seem to be no reason to revisit that area, which has now been fished out for buyers.  If ES makes a trip back above filling the initial gap at 1214, then the bullish trend would be reasserting after a minor pullback with a hint of higher highs yet to come.

This push lower has not yet broken anything significant in terms of support.  We still don’t have a pullback to primary trend support, for example (though it came close).  I have extended the ST trendline resistance (now broken) to show where a back-kiss test would occur and it lines up almost exactly with Stops and Targets ST primary trend support at 1191.  That is/was the first pullback target, and the line bears really need to cross to potentially get something bigger going to the downside.

On a weekly bar basis, ES 1173 is where stops are resting for higher timeframe traders.  Stops and Targets is pointing out 1203 as partials support and/or an initial countertrend sell signal.

As I mentioned yesterday, the line in play continues to be 1207.75 and the VST bias remains bearish below/bullish above.

All Stops and Targets trends remain up > 1191

…my .02