Let’s take a look at the current broad market configuration using the S&P 500 Futures summary analysis from Stops and Targets as a proxy…
In the screen capture above take a peek at the range envelopes indicator at the top center (outlined in orange). Next to all three timeframes, we see sideways ↔ green arrows, which tell us that the market remains rangebound (currently NOT trending).
Using the ‘last range signal’ dates trick, start with the oldest date and work forward to get the following range update… 1) Market started a long-term pullback at 2883.50 signaled on 29-Jan-18. 2) We next got an intermediate-term countertrend rally signal at 2535.25 on 06-Feb-18. 3) The latest signal is a short-term countertrend pullback at 2805.25 on 12-Mar-18.
So, here we are still inside the trading ranges and continuing to work-off the big pullback from 29-Jan-18 to 06-Feb-18.
Bias is up in all three timeframes above the intermediate stop/reverse line at 2713.50 as we continue to watch and wait to see when the short-term timeframe will eventually start trending again. For the bullish trend to restart to the upside what we will need to see is price action that will eventually cause the bottom of the short-term range channel (currently at 2668.75) to cross ABOVE the current stop/reverse line (currently at 2706.75). The opposite is true to restart a bearish trend… the top of the short-term range channel would need to cross BELOW the short-term stop/reverse line. What makes a market ‘trend’ bullish is a sequence of higher highs and higher lows–and vice versa for bearish trends. See how that works?
For the short-term bullish trend to reassert, we will need another 2-3 days above 2706.75.
Let’s take a look at Stops and Target’s numbers plotted out on my charts to see things from a slightly different perspective…
I have color-coded the range envelopes using three degrees of yellow shading. Light yellow is long-term, medium yellow is intermediate, and bright yellow is short term. See how all three ranges are currently nested one inside the other?
The big trading range (long-term) was created by the takedown from the exhaustion top (Top Spotter alert) at 2883.50 on 29-Jan-18 to the bounce off long-term stop/reverse line at 2563.25 on 06-Feb-18, with a futures Bottom Spotter on that date at 2534.
As I have said here previously–that was the precise spot where bears should have covered and I pointed it out in real-time here on my 06-Feb-18 post.
I also pointed out the huge number of Russell 3000 Bottom Spotters at the double bottom on 09-Feb-18, which was where the pros undoubtedly loaded up on the long side.
For Spotter fans, take a look at this link to all active confirmed spotter signals. Scroll down the Net% column and take a gander at the fats gains on the symbols that confirmed after -06-Feb-18: https://stopsandtargets.com/members/signals/spotter.php?param=BSbuy
The symbols on that link above are your market leaders and it is a great source to find trading opportunities in a market like this.
So, that brings us to today…
Notice on the chart above that the rally off the bottom at 2534 stalled at 2794.75 on 27-Feb-18. That set up a short-term pivot high and if we take another look at Stops and Targets’ short-term analysis tab, this is what it says there…
Stops and Targets is showing a partials target has been achieved at that same 2794.75 pivot. So, it’s time to ring the register for sharp traders as we watch to see what happens here at this line of resistance. Basically, what is happening here is a stop run above the pivot at 2794.75. Above that line, pros knew they could find buy-to-cover orders resting from out of sync bears who shorted the last pullback to a bounce off the bottom of the short-term range envelope (along with momentum bulls who haven’t figured out yet that the market is still range-bound).
So here we are…a rally into profit-taking above 2794.75 is now experiencing mild selling. It’s all good for bulls on any pullback that stays above the short-term stop/reverse line at 2706.75 –but if this initial selling were to accelerate, then the next target lower would be the rising bottom of the short-term range envelope. Otherwise, if buyers step in after this profit-taking here then the next target higher would be the long-term range top with an eventual resumption of the BULL 10 rating.