ES Update

There is an interesting flurry of activity in the media surrounding a guy by the name of Navinder Singh Sarao, who is being held up as the sole cause of the infamous ‘Flash Crash’ on May 6, 2010.

This link to an article from Bloomberg is worth a read…

http://www.bloombergview.com/articles/2015-04-21/guy-trading-at-home-caused-the-flash-crash

This lone wolf day trader, who reportedly lives at home with his parents in a relatively modest flat in London, is being held out as the sole villain in this tightly orchestrated media barrage.

The media machine has it right that rampant futures manipulations have occurred, which influence trillions of dollars of assets–but isn’t it a bit curious that they ignore the giant elephant in the room, like how the ES has been made to do this since 2009, for example…

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Perhaps Mr Sarao is being held up as an example of what happens when outsiders try to muscle in on the action?

I have been asked many times over the years if I think that the market is rigged and I always reply the same.  I can’t prove that there is intervention–but the market certainly behaves as if there is.  That is why Stops and Targets works so well as a tool to find and anticipate upcoming pressure points.  Those are the places where supply/demand imbalances occur–and where better for the pros to go when they want to force as many traders as possible to the other side of their trades?

😉

</rant>

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This is now week six inside the 2110.25 to 2030.75 range from the top spotter move that stopped just short of breaking under the key 2029 threshold that would have enabled the technical minimum pullback to establish a higher low in the ongoing weekly sequence.  I thought that quite curious at the time, and I still do.

The pros have also stopped the white candles short of taking out the all-time highs > 2110.25, so the stops are being saved on both sides for a yet to be unveiled campaign, it seems.

The market paradigm defaults to ‘up’ until we get a shift caused by a break of the last higher weekly pivot low that does not reverse.  The pros passed on the opportunity to paint a higher weekly low under 2029 and so you can see the seven week accumulation of bull stops under that ledge.  Hmmm

If it were me pulling the levers; I think I would go up and take out the bear stops and see what kind of move higher I could get on a breakout.  If and when the buyers are finally exhausted–then those bull stops under 2029 sure might look tempting for an engineered swoon down to either another stop/sweep reversal–or perhaps even the long awaited wave 4 equivalent extended pullback to the major trendline supports.

The pros are setting up something big here, methinks.  I have said it many time before…first they bore you to tears and then when most least expect it…whammo!

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The daily bar/range chart above shows the now >30 trading day sideways consolidation inside of a contracting range.

The vertical line at April 29th shows the date of the next FOMC announcement.  It seems almost silly to expect anything but another torching of the bears in the general vicinity of that date.

The pros have a lot of time invested in this particular consolidation, so I would expect something fairly clever to occur when they are ready to finally make a trending move.  Lots of stops > 2110.25 and <2030.75, so let’s see how it all shakes out.

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Fine tuning a bit further, the hourly bar chart above shows the VST support and resistance for those who like to play in traffic inside of the range.  You can see how they popped the stops under 2075.75, as I speculated in my last post, and then gapped it up to trap the bears who sold that small break in the middle of the range.

The last few days have just been a squeeze and hold on those guys as we wait to see if that VST low at 2064.50 can morph into a new higher ST pivot in the next couple of days.

We haven’t had a new higher ST pivot form above the primary trend line at 2034 since 12/1/14…so it has been a very long time without a trending move higher!

Stay attentive from here on as we watch for the next act of the show to open.  Something about this Navinder Singh Sarao thing strikes me as being orchestrated.  The pros like to capitalize on diversions in the news to mask intent (in my opinion), so perhaps this is intended to come off as a reassuring gesture to relax the fear of another significant pullback as the market has remained stalled?

To me, this market really needs a correction to eventually bring new money into the market.  The pros can move the market wherever they please but they need to entice outsiders with real money to take the other side of their trades to cash out.  Pro A can trade shares back and forth with Pro B as much as they want to move the price–but until they can entice a sucker to come along and buy what they are selling at the price they ask, then it is just a paper profit.

Supply and demand, coupled with pressure built upon fear and greed is what has always driven the market.  You can see clearly on the charts above where the pressure points exist (>2110.25 and < 2030.75).  Buyers above and sellers below.

As I mentioned above, if it were me pulling the levers I think I would drive it into the guaranteed buyers above to sell out all I could.  If the breakout proves unsustainable with real cash from outside investors–then I would sell as much short as I could and then drive it back down under 2030.75 and then cover into the panic selling underneath that level (and perhaps lower).

Pros could decide to go the other way also by driving it down first and then executing yet another of the signature stop sweep reversal paradigms we have seen since 2009 before heading back up again to new higher highs.  And, of course, it could just pop out and keep going on yet another breakout run higher in what is already a surreal trajectory.  Either way, this next big move should be interesting…

…my .02

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