ES Update 6/2/10

(click image to enlarge chart)

ES continues to essentially trade sideways near the S&T long-term primary trendline in a 70-point wide trading range between 1106.75 and 1036.75.   The current price, as I type, is near the approximate halfway point of that range.

The last intraday wiggle up and then down was simply a stop sweep of the previous two yellow highlight ovals and in the grand scheme of things had no importance beyond that.

This market is current flat-lined and awaiting the next trending push…

I have updated the descending trendlines to reflect the narrowing pattern structure and to highlight the growing importance of 1106.75 as a possible marker.  To make that pivot at least symmetrical, we would need to see a minimum time span of five days elapse with price remaining below that pivot.  Today is day three.

Of course, nothing says that pivot has to be built—but if it is, then it becomes important because it could then serve as a ‘marker’ in assessing the macro trending structure.

Two possible scenarios…

1) If that pivot is built, and then taken out on an upward advance in price–it would become the first higher high to go along with the low at 1036.75 and so could form the first possible higher low/higher high structure that is associated with bullish trending markets.  That structure could attract momentum buyers and would be the first confirmed sign for many traders that a new tradable low is in.

2) On the other hand, if the recent low at 1036.75 is taken out (and held) on a push down first–then 1106.75 would become the latest ‘lower high’ in the existing bearish structure (lower highs and lower lows) and then there would be the additional selling pressure of breaking below the key February low at 1036.

There is a tug o war in this range between bulls and bears and the one who breaks out on their side of the line first will likely win control of the trend structure.  Bulls want to see a break above 1106.75–and bears want to see 1036.75 taken out on the downside.

The current trading range is highlighted by a blue rectangle in the chart above.  VST bear stops are likely located just above the descending red trendline and would seem to be fair game since they can be taken without altering the trending structure either way.  VST bull stops are likely under 1055 with the same fair game attribute since those could also be taken without altering the macro trend.

What really matters is an eventual sustained breakout from this range—but for now, this current action (in my opinion) is just small-time operators chasing nickels and dimes in the doldrums.

IT trend is down  < 1134
ST trend is down < 1111
LT trend is down <1083

…my .02