S&P 500 Futures Option Update

S&P 500 Futures - Hourly Bars
S&P 500 Futures – Hourly Bars

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S&P 500 Futures - Daily Bars
S&P 500 Futures – Daily Bars

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The S&P 500 Futures have just filled the second of two gaps (see blue arrows at aqua blue and magenta gap lines on the charts above).  Both gaps are within the intermediate trading range and I have drawn in a (very) preliminary bearish trident channel (shown as descending dotted lines on the charts above) that shows where price would likely be constrained if that channel were to eventually become confirmed.  A move above the top rail would void that preliminary bearish channel structure and indicate an increased likelihood of new highs.  New selling starting from the gap fill right here, however, would indicate that this might be a very good place to lighten up on the long side.

The first gap at 2347.50 (created on 4/21) was the perfect downside target for the pullback from 5/16 to 5/18, as pointed out in my previous post.  The second gap at 2397 (created on 5/16) was the logical upside target from that bounce at 2347.50 and it was just filled in the pre-market.

If we are going to see selling resume after the gap fill below and the recovery bounce from that event–this would seem to be a very good place for that to happen.

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Stops and Targets - S&P 500 Futures (Intermediate timeframe)
Stops and Targets – S&P 500 Futures (Intermediate timeframe)

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Let’s use 2398 as a bull/bear line right here.  That lines up with Stops and Targets intermediate timeframe setup for the counter-trend sell signal (see screen capture above) and also correlates with the gap fill at 2397 and the preliminary bearish trident channel top rail just above.

Pros like to use gaps and support and resistance so head’s up right here as we watch to see whether the bears or bulls come out on top going forward.

…my .02

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