S&P 500 Futures Update

Stops and Targets S&P 500 Futures
Stops and Targets S&P 500 Futures Summary

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The week has opened with a gap down (note the dashed blue line on the chart above showing Friday’s close).  As I pointed out in my last post the S&P 500 Futures are now short-term bearish under 2351.

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S&P 500 Futures short-term strategy
S&P 500 Futures short-term strategy

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Stops and Targets is showing the next support lower at 2296, but price is currently outside of the ideal entry zone (2337.50 to 2351) for short trades.  Note how the pros gapped below that 1:3 risk/reward ratio range, which means they have an advantage here on the short side over those who missed the entry late last week.  That advantage allows them to squeeze any new shorts who entered late in the current session, so that is important to understand.

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S&P 500 Futures Daily Bar/Range 3-27-17
S&P 500 Futures Daily Bar/Range 3-27-17

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Looking at the Daily Bar/Range chart, we can see the short-term bearish channel (dashed red lines) I pointed out in my last post.  Price has lost the support of the center of that channel, which has been guiding the action since the election night low on November 8th.  That is a significant development –so long as price remains below that centerline.

The descending bottom rail of that channel is currently aligned with the open gap at 2309.75, which is the next target lower.  There is now an open daily bar gap above at 2344.75, as well.  That would be the ultimate bounce target off the overnight low at 2317.75 if the pros decide to give up the advantage of the overnight move, which they would likely do only if there are significant numbers of new bears who chased this move at the open…who automatically become forced buyers (to cover) at higher prices.

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S&P 500 Futures hourly bars
S&P 500 Futures hourly bars

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Moving in to 60-minute bars, we can see that ES is currently challenging VST (very-short-term) resistance at 2332.25.  The VST trendline break was at 2337 and  the hourly bar breakaway gap is just above at 2342.75

Though I absolutely loathe Congresscritters infesting both wings of the uniparty vulture with equal gusto–the Republicans truly are the party of stupid.  That foot-shooting maneuver on healthcare last Friday was a real face-palm moment and is likely the news driver of this current market hiccup.  I pointed out recently that the market configuration has been vulnerable to a news-driven event and the debacle on Friday certainly casts some uncertainty about whether President Trump will be able to drain the swamp in DC as he has promised–and thus casts doubt on whether the market-anticipated advantages of a pro-growth and pro-jobs government can actually be realized.

For today, let’s keep an eye on the resistance targets I pointed out above: right here at 2337 (VST trendline break) and then the hourly gap fill at 2342.75.  Of course, the really important number is the short-term primary trend line at 2351.

You have to understand how the pros think and operate to get what is going on here…they created an advanatge for themselves with the opening gap–so odds favor that they will resume the pullback once the late-to-the-party bears have been squeezed out.  That all changes if we get a move back above 2351, however, so lets see how it goes for this bounce off the lows today.

…my .02

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