Options Rollover Day

Stops and Targets ES 6-8-17
Stops and Targets ES 6-8-17

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Today is June Options Rollover Day and volume shifts from the June 2017 to Septembers 2017 futures contract with a difference of –2.25 points from ESM17 (June) to ESU17 (September).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the long-term primary trend line from the expiring June contract at 2020.25 now becomes 2018, and so forth.

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I have redrawn all my charts to reflect the new contract pricing….

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S&P 500 Futures Monthly
S&P 500 Futures Monthly

(click on image above to enlarge)

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The monthly bar for S&P 500 Futures (futures symbol: ES) is bullish with a higher high and higher low.  The monthly candlestick body stays white above the May close at 2408.75.  My running thesis postulates that the broad market is being engineered higher using a five wave impulse pattern (shown on the chart above) and that we are likely in the fifth wave now with an approximate price extension target at 2515 and time extension in April of 2018.  Those targets are just for visualization purposes and are not likely to be precise on either axis–but you have to admit, what looked pretty silly to many when I first posted the extension target several years ago is looking pretty darned prescient at this point.

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S&P 500 Futures Weekly
S&P 500 Futures Weekly

(click on image above to enlarge)

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The weekly bar shows ES 2315.50 (September contract pricing) as the hard deck for the paradigm that has been in play since 2009.  It is all good for broad market investors above that line.  The current paradigm will end when we get a move below that last higher 4-bar pivot low that is NOT immediately reversed.  The big boy trailing profit stops for major bullish players are located just UNDER that last higher pivot low line and that is why the pros have been periodically driving the market down to raid those soft targets (see points 1,3,4,5,7,8, and 9 on the chart above).

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S&P 500 Futures Daily/Range
S&P 500 Futures Daily/Range

(click on image above to enlarge)

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The major feature in play is the Trump Trident Channel that I have pointed out previously here.  That channel is shown as parallel dashed blue lines on the chart above and the center of the channel is shown as dotted blue.  Note how price has been pinned to the glide slope since after the election on November 8th.  As I pointed out before, that centerline was support for price action until the first close below on April 5th.  Since then the centerline has acted more as resistance to a market that has been bumping up under that line.  That is a key clue here and what I am watching for is a move down from that resistance, which will break the pattern.  I am much more cautious here as a result of the resistance characteristics of the trident channel centerline but would switch bias on a move back above.  The market is likely extended here from the bear-punishing push up from the gap fill on 5/18 at 2345.25.  At a minimum, we would be looking for an eventual pullback to at least move the short-term stop/reverse line higher.  That line has been stagnant since the gap fill.  It will not take much of a move down to accomplish that minimum target due to the sideways actions recently.

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S&P 500 Futures Hourly
S&P 500 Futures Hourly

(click on image above to enlarge)

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Zooming in to look at the hourly bars you can see just how precise that Trump Trident Channel centerline has been in guiding price.  That’s the key feature to watch.  For speculators, bias is cautiously bearish below but returns to bullish above.  The June contract has rolled over today and expiration is next Friday.  Clearly, the pros have been long up to now and pushing this market higher–but we will have to wait and see what happens once the Quadruple-Witching loot is safely in the bank.

I suggest watching ES price action relative to the Trump Trident centerline for clues.

…my .02

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