Thursday, June 13, 2024

ES Morning Update October 21st 2016


Yesterday we stopped around that 2127 area of support and rallied back to around 2140 where a new green falling trendline stopped the bulls.  From there we played ping pong the rest of the day with that new green falling trendline as the upper resistance and the rising trendline as support.  These two trendlines formed a triangle with the APEX crossing this morning... and "as you can see" the futures have broken down and are now out the triangle and back to testing the 2127 area of support.

Ok, where do we stand for today?  Well, this is the 3rd Friday of the month and option expiration day... which means there should be some strong manipulation of the charts today to pin the SPY where it makes the most option contracts expire worthless.  If you look at open interest for both puts and calls that level looks to be the 215 strike price on the SPY.  But, the charts are very bearish aligned right now and there's not much support below the 2127 area until 2117, which is about 212 on the SPY or 30 SPX points lower then the 215 target for the max pain on the SPY.  This tells you how important the 2127 level is today... break it cleanly and we might be looking at an "all down day" where we drop too far to rally much off the bottom and just kinda chop around near the lows until the close.

My thoughts on this are that the 2127 level needs to break early this morning within the first half hour or so after the open at 9:30 am.  If it does that then I'll be looking for support at 2117, 2107 and 2100 to be the low today.  But if the bears can't breakdown this 2127 support early this morning when the selling pressure is the highest then I'd exit shorts and go to neutral.

Yeah, I know they might rally to the 215 SPY level for the pin (around 2145 on this futures chart) but I just don't see that happening in the charts.  It will have to  be done with heavy manipulation as the charts look to bearish for me to see that move happening today.  I just don't see the falling green trendline breaking on some trip back up for the bulls later today.

Therefore I have to remain bearish until the lower supports are hit.  Which one will hold isn't known yet as that's something that usually happens midday and I will post it in the room if I see it and think that's the level.

Hmmm... as I write this update the futures pierced the 2127 level and hit 2123 so far.  So I'd look to exit shorts (for those that took them yesterday) within the first hour or so this morning based on the support levels given and the the look and feel of the first half hour.  Picking the bottom is more of an art or feel sometimes as it's not just a level as many other factors come into play, and "time of day" is one of them.

As for bullish positions, I wouldn't take anything on that side today... at least from this early look of the charts.  If something changes I'll post it of course and we'll go from there.  Again, time is a factor here, so an early drop to some support might setup a nice bull move back up.  Point being there is that I would go long if certain support levels are hit early in the day and clearly hold with charts getting oversold and trying to turn back up.  We know there's a big squeeze likely coming but I'm sure if it's going to start today.

Author: Red

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