Saturday, July 13, 2024

ES Morning Update June 29th 2016


Market continuing to grind higher from very oversold short term levels.  However, we are getting overbought now on the 60 minute futures chart.  But the SPX cash is lagging behind and might need some more time to get up to the same overbought area.  This suggests that we'll top out early this morning on the futures, rollover some to make a B wave down instead of a 5th wave (which would make a lower low).  This B wave is based on the SPX Cash charts needing more time to get overbought.  So, they should dip some but they should turn back up by Thursday to make another move up in the market again.  Meaning, while this pullback might be good to play as a day trade I don't think it's the big drop everyone is expecting.  I see another attempt back up later today or Thursday before we really get overbought enough again to allow a bigger drop.

The first area I'd be looking for a short is the 2045-2050 zone on this futures chart.  Next would be the 2065 level (should the first zone not show weakness and instead look like it won't hold the bulls back).  Now, since we are in a downtrend on the bigger picture the B wave down could (should) be deeper then most were in the past when we were in an uptrend.  If the charts move like I want them to move we'll rollover later today and head down into the close.  How far I don't know but that 2010-2015 area wouldn't be unreasonable for a B wave down.  Then the futures will get oversold afterhours/premarket tonight and tomorrow so they can be positioned to turn back up shortly after the 9:30 am cash open.  That would be the exit on the short I think and then we'd look to see how the futures and cash are lining up to guess the strength and length of the C wave up into late Thursday or Friday (could be a weak C wave... just don't know yet?).

All speculation of course on that forecast.  For today though let's just give this bull a little more rope this morning to hang himself before we bears attack him.  My target is again in the 2045-2050 on the futures, but of course I'd play it with the SPY.  Again though, I still don't think this move down from that zone will be the drop that takes out the current low.  Naturally I want to short it, but I'll bail by Thursday morning if I see a possible C wave up aligning.  Today though I'll wait patiently for this bull to tire out and show some signs of weakness.  I just can't see it grinding up past that 2050 zone of resistance without a pullback first to make the B wave down.  I am however cautious as we've all be burnt by these squeezes up that never pullback at all but instead grind up every bear that shorts it.

P.S.  I still think at some point before the crash later this year we'll close that 2116 gap on the SPX from 6/9, which could be on this current move up or after the drop to the 1850 area on the move up that will follow it into the August high.  But one way or another they will likely fill that gap as after the crash they won't be up that high again for a long, long time... like a decade or more probably.  Anyway, I'm looking for weakness today before shorting... I suggest everyone do the same.  P.S.S. I'll buy several months of time in case this market grinds higher then expect.

Author: Red

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