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ES Morning Update June 5th 2017

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ES Morning Update June 5th 2017

Looks like the futures are forming another bull flag this Monday morning.  The MACD's on this 60 minute chart have dropped from +5 to almost zero now, where turns back up are common.  I've drawn a new rising trendline in green, which if we did have a pullback that should be the target.  I actually think we'll more likely just chop sideways all day and make a stronger bull flag.  Then by the end of the day or afterhours the rising green trendline should be up around the level the futures are currently trading at.  It's at that point where the bulls will get the best support to push up higher again.

Of course a failure to hold that rising trendline will be bad for the bulls as it will make the bull flag invalid and they would have too start over again with another bullish pattern I guess.  If that happens (again, probably not today... but maybe Tuesday once the green trendling rises more) I'd look for first support at the 2428.75 low on Friday, and worst case I'd look for the 2405-2415 prior trading zone to be tested.  This is all looking out into Tuesday of course as today I just see more sideways trading until the close where the rising green trendline will intercept with the current sideways trading zone.

Overall it does indeed look like we are in some degree of wave 3 up, so pullbacks are likely small (and we already know that to be true as we've seen very small ones from the 2344 low on 5/18).  This wave 3 up (again, assuming that's what it is?) could take us to just under 2500.  Common things for the market to do is to get just close enough to a big even number to turn all the bears into bulls and then drop back down to shake them all out.  This would suggest 2460-2480 area would be the "exhaustion" point where there are no more bears left to squeeze as everyone is now bullish.  That's the bigger picture of course... for today I just see sideways chop.

ES Morning Update June 2nd 2017

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ES Morning Update June 2nd 2017

The cup and handle pattern played out yesterday and cleaned the bears out that were short from that sideways trading range of a week or so.  After-hours the market went flat but pre-market they rallied up about 5 points or so.  But the jobs report came out and we now see a pullback from it.  I'm not sure if this pullback will be small and then the usual sideways trading occurs the rest of today or if the bears get lucky and see yesterdays' rally get erased... but odds are for the bulls as well all know too well how controlled this market is.  But if the bears get to eat some today I'd look for the prior sideways trading zone as big support, which 2405-2415.  It would shock me to see that broken, but I'd be happy as I'm still short.  On the upside I'd say yesterdays' high will be resistance, so it's likely we stay below that level today as clearly the futures didn't like the jobs report.

Wave count wise yesterdays' big squeeze up acted like some kind of C wave or wave 3 up of some degree but I really am not an expert in Elliottwave and would be just guessing.  So I'll leave that open to others much better then me to figure out where we are at in the waves.  But I will say that it is common to clear out bears (or bulls) stops just before turning the other direction.  So possibly it was an ending wave of some degree and a pullback of at least 3 waves is coming.  Whether we see that all today or not is unknown as it's options expiration on the weeklies and the market makers tend to pin the SPY where it does the most damage to the put holders.  And that is probably still above the 241-242 trading range the SPY was in for a week or more.  I'm rooting for the bears but the bulls don't give up very easily, so we'll see how the market today but right now I'm thinking small down and more sideways chop into the close.

ES Morning Update June 1st 2017

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ES Morning Update June 1st 2017

Finally, we saw a small pullback yesterday after I "just about" threw in the towel on it.  But, it all reversed back up into the close and after-hours, so we are back to where we started at... nowhere!  This market seems to trade sideways more now then it ever has in history.  The algo trading from the bot's (SkyNet) with free money from the Fed has completed changed the game.  Patterns and wave counts that used too work just are worthless now it seems... at least on the short term.  Maybe the bigger picture they work but the constant Fed intervention everyday to keep the market from pulling back like a normal market should is certainly making it hard to forecast.

Obviously everyone now see's the recent low of 2345 with the "V" recovery rally looks like a weird "cup" and the last week or so of sideways trading makes a nice "handle" for that cup.  We all know that "Cup and Handle" patterns project a strong move up at some point, so that's the fear the bears should be worried about right now as this could happen at anytime now.  The most logical time would be from some "market moving" news report, which could be Friday mornings "Employment Situation" (the old "Non Farm Payroll Report").

There's some news out today but most of it doesn't look like they are huge market moves, so tomorrow has better odds I think of creating a strong move.  Of course we never really know as this year we've seen the market trade sideways for a lot longer periods then are current one... meaning we could do this crap for another week if they decide to make it happen?  I still think a down move is much needed but that's going against the cup and handle pattern.  Anyway, for today it looks like more range-bound trading.  I see no clear advantage for the bulls or bears today as charts look mixed everywhere.  Therefore there nothing more to add that hasn't already been said.

ES Morning Update May 31st 2017

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ES Morning Update May 31st 2017

Still no pullback yet, and instead we've rallied up some this morning.  Looks like the bulls where forced to move up or they would have lost support from the blue rising trendline, which they obviously did not want to give up.  So, are we going to have another face ripper day with a 20+ point rally?  I wish I knew the answer but unfortunately I don't.  I will say that the opportunity is certainly there for the bulls to just put the pedal to the metal and get a short squeeze going on the bears today.  I really don't see much in the charts though, meaning nothing clear to suggest a big move up down.  Some are bearish and others bullish, so I'm just going to wait it out to see what happens today and leave you guessing about the market along with me.  Good Luck.

ES Morning Update May 30th 2017

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ES Morning Update May 30th 2017

I hope everyone enjoyed their long weekend as it's now time to get back to trading... hopefully that is!  This week we should see some action I believe as the mutual funds jockey their positions around during the last two days of the month of May.  And considering how far up the market has run I'd think they would take some profit and wait for lower prices to get back in for the next big leg up.  How low is another story as the bulls have lots of support below.  First support would be the 2395-2400 area, then the 2380 level.  I'd be surprised if we see that today, as it's the first day back from a long weekend and usually those days are light volume days, which favors the bulls of course.

Chartwise though the 6 hour and this 60 minute chart could support a nice pullback as they are both looking bearish too me.  Of course we know from past experience that the bulls can turn any bearish chart back up whenever they want it seems, so I'm not getting too excited about the MACD crossing below zero as I've seen it turn back up from there too many times in the past.  I'm just going to wait and watch today to see what happens.  I'm already positioned short but not so confident on the pullback just yet.  There was a FP on the SPY from Friday showing 239.87 around 5:30 pm, which could be the pullback area.  Certainly the gap on it needs filled and that would do it... and then some.  However, there's good support in that area so if it's hit I'm sure I'd be looking to exit my shorts.  On the upside the bulls are pretty much unlimited I guess, so what's the point on projecting targets there?  LOL.  Anyway, that's all for now... I'm looking for a pullback to the "Fake Print" on the SPY and hope to see it today.

Are Mass Killings Real Or False Flags?

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Are Mass Killings Real Or False Flags?

Ever wonder about all the school shootings, bombings, train killings, etc...?

I mean, they can't all be "False Flags" can they... or are they?

If you believe things must happen randomly then certainly the events in the image here clearly aren't random at all, and therefore logic dictates they are False Flags.

ES Morning Update May 26th 2017

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ES Morning Update May 26th 2017

Looks like the Russell and the DOW are the only one's left that haven't made a new all time high.  If they manage to make one the bears probably should go back to sleep, but if they don't make one then the bears still have a shot at a decent down move in the next week or so.  Long term I still think we are in a bull market and will make another higher high, but that's some end of the year move I think, and into 2018.  For next week though I think we'll get that pullback just when everyone gets super bullish and the bears fall asleep.

For today though I don't see much as we are going into a 3 day holiday weekend (Monday is closed for Memorial Day) so while there some be some selling by traders not wanting to hold long over that long weekend I don't see much on the downside.  On this ES Futures chart you can see nice support from a rising blue trendline but I think the best support is the retest of the 2400 horizontal level.  MACD's are pointing down on this 60 minute chart and are just now crossing over to the downside on the 6 hour chart.  There's NO negative divergence though, which could lead to another higher high?  However, I don't think it's as important on the 6 hour chart to create the negative divergence as it is on the 60 minute chart, which does have a negative divergence.

On the SPX Cash Index daily chart the Full Stochastic's have reached overbought in the 80%+ area as well as the MACD's making lower highs to create negative divergence.  While this doesn't mean a pullback will happen it does leave the door open for one just based on the technical's.  We all know as traders that the market can stay overbought for a lot longer then we think possible, but generally speaking the market will not rollover if the MACD's are point up from oversold conditions and the full stochastic's are also pointing up.  Meaning the only hope bears seem to have is when those technical's get overbought... which is where we are at now.  So next week is the bears best shot at getting a decent pullback.  Today looks like another boring day with some small selling.  Have a great holiday weekend everyone.

ES Morning Update May 25th 2017

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ES Morning Update May 25th 2017

Well, so much for the pullback. Up again afterhours and premarket in the ES Futures. We have hit the 2410-2415 area where it should stall out at. Whether is does it before the holiday weekend or not is another story. It's looking like they have the bears trapped and will make their puts expire worthless this coming Friday. Seems like the bears are treated like illegal aliens in this market and looked down upon big time. It reminds me of a song back in the 80's by Phil Collins called "It's no fun being an illegal alien"... and that's certainly the case for the bears over the last several days. The bulls might as well be the duracell energizer bunny as they just keep on going, and going, and going, and going.

On another note it seems that there was some computer glitch (probably a future signal to the insiders, what I commonly called "fake prints") showing GOOGL down afterhours 125.53 points (-12.84%) to 852.08 at 5:24 PM Eastern Time with a volume of 112,908 shares. And another glitch on AMZN showing it down 130.01 points (-13.26%) at 5:24 PM Eastern Time to 850.34 with a volume of 70,899 shares. Now I never saw this on my Think Or Swim charts with TDameritrade but apparently it was reported on CNBC by Leslie Picker but it never actually happened ( https://t.co/Lnx78ONxZI ). So is this what Trump calls "Fake News"? LOL... I call it "Fake Prints", which are signals for the future price of the stocks. But only the insiders can read the code to know the exact date the price levels will be hit.

Moving on... the market today looks very overbought, but we know that never seems to stop the bulls. My thoughts are that we'll chop around between the current high and the 2400 level. On the SPY it shows a lot of interest in the 240 and 241 strike prices, so they might just chop today and tomorrow to pin the market where the most puts expire worthless, which leaves next week open for a move down (this assumes we aren't going to continue this nonsense rally all the way up into mid-June). Anyway, I wouldn't expect too much today but more sideways rangebound trading. Next week is another story as I really doubt the bulls can go up much further without some more bears to squeeze, and unfortunately for them I think they've squeezed them all out this morning.

ES Morning Update May 24th 2017

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ES Morning Update May 24th 2017

Not much to add that wasn't said yesterday or Monday.  I'm still looking for a small pullback before ripping through 2400 but it's certainly not listening to me as the word "pullback" seem to be a word the market doesn't understand.  I would find it odd to pullback later in the week because Monday is closed for Memorial Day, so with a long 3 day weekend you'd think they would keep the market up?  That's what they used too do all the time to trick the sheep into thinking everything is "ok" and that they should go spend all the money they don't have on products they don't need to keep the retail stores in business.  Maybe this time we'll hold this area (or push through it?) and then do the pullback on Friday, but not a big one.  Just a small one to "not scare" the sheep from spending over the weekend.

On another note, I have to say that the market over the last few years has changed a lot, as it used too move in waves that were countable but now it's like there's just one long wave straight up, then sideways chop for a month or so, a quick flash crash drop (maybe not always a limit down move, but a good drop), and then another one long wave rally back up... then rinse and repeat.  Anyway, if we pullback today then I'd look for support between that 2380 area and 2387... which is a big range, but let's face it... any pullback will feel like a bear victory at this point.  Upside resistance is the same as it has been for awhile now, which is the 2400 level up to the recent all time high.

ES Morning Update May 23rd 2017

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ES Morning Update May 23rd 2017

The grid up continues it seems.  I was really looking for a small pullback to maybe the 2380 area again, and then a rip through 2400 to new all time highs by this Friday.  But the bulls are certainly making it hard for bears right now with today starting off up again a few points.  Of course the day isn't over and there's still today and tomorrow for that small pullback to happen, so let's give it some time.  Today is "Turnaround Tuesday" after-all, and while not as accurate as it used too be it might just work today with the futures banging on heavy resistance again.  A move back to that 2380 area would setup a perfect "Inverted Head and Shoulders" with the head at the 2345 low last week and the left shoulder at the 2380 low on 5/11... so we just need that right shoulder to form today or Wednesday.

Looking at possible projections on how high it will go if this IH&S pattern forms and plays out the move should equal to the length of the head to base line.  The head started at 2345 and the baseline is right about where we are now... let's call it 2397 roughly.  Ok, the length of the head is about 52 points, so if we add that to the 2380 area where the left shoulder top is (remember it's inverted, or upside down) that would forecast a high of 2432 on the futures.  Yes, that's higher then my original thoughts of 2410-2415, but let's just play this by ear before we jump to any conclusions.  We still have yet to drop to 2380 to form the right shoulder so we don't know for sure this will happen or not?  And we still don't know if the 2380 area will hold as support if/when we do pullback.

Remember, a lower high here could just be a setup for a nasty C wave down with this whole rally up from the 2345 low making the B up.  And if that's the count then the C wave down should be a minimum of 100% of the A wave, which started at the 2405 high and ended at the 2345 low, so that's 60 points at least from the current opening price level high (about 2396/2397 right now).  But C waves are usually more like 161.8% of the A wave up to 261.8% in some cases.  It's some Fibonacci multiple of the length of the A wave.  It's rarely "just" equal too it.  Anyway, this is what I see as "possible"... an "IH&S" pattern where we drop to around 2380 by tomorrow and back up to new all time highs going into Friday, or a nasty C wave down that takes out 2380 and keeps going.  Odds favor the bulls (of course), but we must be aware of both scenario's.

ES Morning Update May 22nd 2017

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ES Morning Update May 22nd 2017

Well, I'd love to tell all the bears out there that we are going to top out Monday or Tuesday and tank into a nasty C wave down but the bulls pulled off another miracle on Friday busting through overhead resistance and getting back into that annoying 2380-2400 zone again.  Yeah, it sucks as it means we are likely going to go back to the chop zone this week again... at least the early part.  But later in the week I could see another push higher to probably pierce 2400 by 10-15 points as I've discussed in the past as possible.  So I'm expecting small weakness early in the week and then some strength later on to get up to that level.  I still don't think the bulls have the strength to reach 2450-2480 yet but we'll take it one day at a time.  For now I'm standing pat in cash and waiting for either a nice pullback to go long or a top out by this coming Friday in the 2410-2415 area to short at.  Looks like another week of range-bound trading to make it hard to everyone to make money.

ES Morning Update May 19th 2017

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ES Morning Update May 19th 2017

The picture is getting a little clearer now on what "I think" SkyNet is going to do.  In the past when we saw a big drop (they were "limit down" days then, whereas this past drop was about half) we'd see a huge rip back up.  It was called a "V" recovery, and it kept on ripping higher until it made a new high.  This time we see a rally back up that might appear to look like another "V" recovery but it's not nearly as strong and did not come up from a limit down day.  This all has the makings of a big trick on the bulls, whereas we'll keep rallying up (call this scenario one) today and into Monday where we will top out with a lower high... but one close enough to make everyone bullish again expecting the rally to continue up through 2400 with no problem, and bull dreams of 2500.

I said in the chatroom yesterday that I saw a problem with another "V" recovery move up as I did not think the charts were oversold enough to support it.  Meaning that if the bulls would have let the market drop a little yesterday, today and Monday I'd then think the charts would be oversold and allow another big rally to start.  All they would need to do is drop down to the 4/27 prior low to make a double bottom and then I could see a rally start back up to take out 2400 with a real shot at 2500 (which is scenario two).  But they did the exact opposite and rallied up yesterday, and they are continuing that rally this morning.  If they close up today and on Monday all they have likely done is set themselves up for another big drop... and this one should be double or even triple the prior one last week.  It should take out that 4/27 prior low as well.

Why you ask?  Because a lower high being made on this rally back up into Monday would clearly mark a trend change from up to down.  It's means the high was put in on 5/16, which ended the 5 wave series up from "not only" the 3/27/2017 low but possibly the 6/27/2016 low.  I say possibly as that's yet confirmed.  But if we take out the 11/4/2016 low (not on the futures, but only on the SPX cash index) then it's confirmed.  But we won't get that bearish as that's a big drop.  For now we will just keep it simple and call the move down from the 5/16 top last week to the 5/18 bottom a big A wave, with the big B wave up happening right now... which should end with a lower high on Monday.  That sets up a big C wave down that should be double to triple the length of the big A wave down.

Why double or triple?  It's because it will likely catch everyone off guard with few bears short and a ton of bulls long.  They will think the 3/27 will hold and it will likely fail.  A big C wave like this will be coupled with news and what do we everyday now on TV... the media trying to impeach Trump.  And what's a great way to make Trump look bad to the public... crash the market!  I'm not saying a big crash like the 2008 one was but another flash crash (mini crash I like to call them) is totally possible.  If they want Trump out then just tank the market hard and blame it on him... that looks to me like the current game plan by the criminals hiding in the shadows who wanted Hilliary elected.

This is my scenario one and the path the market is currently one.  Scenario two was a drift lower each day (into Monday/Tuesday) with a double bottom hit from the 3/27 prior low... which presently looks off the table.  It could be back on the table as a modified version of it if we drift down today and close red, then the same on Monday and maybe Tuesday.  It's not 100% out of the picture but the more the bulls climb today and Monday the more likely scenario one will be in play.  Monday is also the 22nd, and you know how the elite love their "numbers", and multiples of "eleven" are their favorite.  So keep that in mind as well if we top out with a lower high that day.  In conclusion I'm simple putting out a warning that a slow grind higher today and Monday could (will likely) setup the market for another large drop that will be a C wave of some degree with enough power to be labeled another flash crash if it falls fast enough.  Bulls should want a down day today and Monday to avoid this setup.  Bears... will, you could be eating a feast if the current rally continues.  Have a great weekend.

ES Morning Update May 18th 2017

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ES Morning Update May 18th 2017

WOW! They bears certainly kicked some butt yesterday!  It was unclear at the open yesterday whether or not the 2380 horizontal support area would hold but by the end of the day that level was long gone.  Gaps have been filled on most all charts now that were created on 4/24, and it looks like we've had a series of 5 waves down in total.  So we should be nearing a bottom today or tomorrow I believe, and then we'll have to play it by ear to see if the market runs back up to 2400+ in some super strong rally over the next few weeks or just puts in a lower high and drops again for a lower low.

Right now I'm trying to pick the bottom for a long entry.  At the open we should see the SPY fill its' 4/24 gap, as well as the SPX.  On the short term this market is quite oversold and ready for a bounce but on the daily there's plenty of downside left... so I'm not getting overly bullish for sure.  I'm only looking for a short term squeeze and then I'll have to re-calculate on whether the selling is done or another lower low is still coming.  But for today I'm not yet seeing a strong enough bottom, maybe we start some A wave up in the morning and B wave down into the close, where I'd then be interested in going long on the C wave up into Friday.  Today my attention will be on whether the futures hold the current low or not.

All in all I'm expected some up's and down's near the low most of the day and late in the day I'd expect a move up to start and close green... but how green is unknown?  Today will probably just setup tomorrow for a stronger rally up.  If I see a good spot to go long at where I think I've seen the A up and B down then I might jump in long, but if not I'd look for tomorrow for a better entry.  Anyway it goes though I don't see much more on the downside and a rally should start soon... like today or tomorrow.  But again, this might only be a move up for a lower high before another flush lower in a week or so.  It's just too early to know if this move up will squeeze and keep on squeezing the bears beyond 2400 or just some halfway point, or prior support now resistance level.  Anyway, today will be interesting to what I think but tough to trade.

ES Morning Update May 17th 2017

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ES Morning Update May 17th 2017

Looks like the rising wedge finally gave way last night as the futures fall back down to horizontal support around the 2380 area, which is super important right now as if it fails the big move down is likely started.  But if it holds I'd expect another run back up by the bulls to try once again to get past that 2400 area of major resistance.  Usually the bulls win as they have the Fed on their side.  So I'm really looking for a tease around the 2380 area several times today but no serious break.  Yeah, a quick pierce is likely but a real break would need the futures to close today below that level.  Therefore the bulls will want to dance on the line early in the day to tease the bears and then turn back late in the day and close over it.  The bears want a rally back up to start near the open that then can rollover later into the day allowing the downward momentum to carry afterhours where the 2380 could really be broken, not just pierced slightly.

For today I'd look to go long (small) if we the bulls tease the bears in the morning dance around 2380.  We should probably know by noon time I'd think but it really depends on how many bears take the bait and load short, therefore placing stops overhead... and that's the fuel the bulls are looking to build up so they can start another squeeze for the run to 2400 again.  If the bulls instead try to reverse this opening gap down early in the day we should see it stall out at some Fib. Level of 50% or 61.8%, where I'd be interesting in short it.  That's my plan of action for today.  While I'm not yet positive the high is in I'd still take these trades into tomorrow if they appear, and only small positions.  I'm still waiting the bigger setup to appear and I think it will be to the downside.  But I can't rule out some quick squeeze of 2400 that adds 10-15 points on to it, not just a point or two.  Looking back at prior drops like this (on the 6 hour chart) they usually reversed and went higher to shake out the bears, and then they rolled over.  Anyway, that's my plan for today.  Good Luck.

ES Morning Update May 16th 2017

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ES Morning Update May 16th 2017

Yippee, the bulls finally hit 2400 and scored a touchdown... it's about time!  So were are we at now?  Yesterday's strong rally, with the small pullback afterhours and then rally up again this morning looks like a wave 3 up, 4 down, and 5 up, with the 1 up and 2 down starting around 2380 at last weeks' low.  Since the market moves in waves, sometimes 3 waves patterns like ABC's and other times 5 wave patterns, I'd say that the next series of moves will be a small ABC move down.  This could end up looking like some choppy sideways move but this 5th wave up should end today and then odds are good for that small move down.  I wouldn't expect much though as after all this time it took to get up to the 2400 level the bulls won't likely give up very much ground this early in the week.  And after this sideways or small pullback I'd expect another attempt by the bulls to go higher later this week... like Wednesday or Thursday.  It should be just a stop run to clear out all the bears shorting again at 2400, so again I'd look for 10-15 higher.

As for today, I'd just take the day off as it's probably going to be a boring day of sideways action or small chop that even a daytrader won't want to play.  You can see the black rising trendline that started at the 4/26 high of 2390 and connected the high of 2399 on 5/5... which is now resistance this morning as the futures are banging on it around 2403 or so.  Below that you have a red rising trendline from prior lows and a blue rising trendline just be it.  That's your support and with either one of those trendlines coupled with the black trendline of resistance above you have a nice rising wedge now formed.  So the setup in the charts is there for a nice drop of 80-100 points, all we need now is some news event to get blamed for it.  Not sure what that could be but if we top out by this Thursday (or Friday morning?) then that news event could show up over the weekend when all the bears are sleeping... again!  LOL!  Anyway, that's my thoughts on the direction this week and I'll be shorting heavy if it plays out like I expect.

ES Morning Update May 15th 2017

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ES Morning Update May 15th 2017

I hope everyone had a great mother's day weekend and spent quality time with your mother as I got the chance to do over the last 3 years of being back home close to mine.  While I love Florida and enjoyed spending 25 years there it was also about 700 miles away from my family.  I guess the old saying is true about kids leaving the nest egg as adults and going to other cities, but later in life they get that call to come back home again.

Anyway, as for the market... the ES broke out of the triangle over the weekend and almost hit 2395 before falling back down again into the triangle.  Now this morning they are back above it just a hair.  That kind of movement doesn't look very bullish too me, which again tells me that the odds of a strong breakout over 2400 by 50-80 points are very slim.  We've seen the bulls make moves like that in the past but I just don't see it this time around.  In fact I'll lower the odds of 2410-2415 being hit as well.  When I look at the monthly and daily charts of the SPX the bulls have had the advantage with a neutral or bullish setup on them.  Only the weekly chart looks bearish too me.  So this sideways chop for the last month might seem bullish as it clearly makes a bull flag, but the failure to bust up strong on it weakens it as every day passes by.

It's kinda like a clock at a football game whereas the bulls have had the ball for a very long time and are at the 10 yard line on the bears.  They've had several 4th downs turn back into first downs but time is running out and the offense is tired.  A touchdown needs to be scored here soon to mentally defeat the bears as right now the bears are getting more and more pumped up with every failure to break 2400 from the bulls.  The bears might not win the game but holding the bulls back has got them very excited.  You could even say that this week the bulls will put in their star quarterback (as it's the monthly options expiration week, that's normally bullish 80% or more of the time) and bears feel strongly that nothing will change and he too will fail.  But failure from the star player will be a victory for the bears as mental defeat sets in for the bulls.  It's do or die time this week I believe and the first half is the bulls' best chance.  If 2400 isn't pierced by Tuesday or Wednesday I think it's time to short this market and look for a drop of 80-100 points as the bulls get toasted in mental defeat.

ES Morning Update May 12th 2017

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ES Morning Update May 12th 2017

Yesterday we did finally drop to the 2380 area of support to fulfill that "MA" pattern and then quickly recovered back up to the red falling trendline, still staying inside the triangle (just a bigger triangle now with the lower part of it being the horizontal trendline around 2380 with the upper part being the red falling trendline pointing to 2390 at today's close).

When will we ever breakout of this range of trading?  Will it be to the upside or downside?  A break over 2400 will cause a nice short squeeze that (at this point in time) should do a whole lot more then 10-15 points higher... probably 50-80 points!  I say that because of how much time has went by while being range-bound.   The longer you trade sideways the more powerful the breakout... or breakdown.  However, it's really hard to imagine a 50-80 squeeze higher with the VIX so low!  It's already pierced the 10 level and went into single digits thsi week.  Where will it be at 2450-2480 SPX... Five, Six?  There's someone I follow on Twitter that tracks "Dark Pools" noted several times yesterday about big blocks of selling on the SPY from the dark pools.  This has to make you wonder as usually that kind of activity is done by insiders after-hours so that the public doesn't see it.

And then there's the Elloittwave count, which again I'm no expert but I do understand that the market moves in waves and when you see certain "waves upon waves" setup a big break is usually coming soon.  Now I've already went over wave count suggesting the futures ended some smaller 5th wave up inside medium wave C up at either the 2399.25 high or the 2400.00 on 5/9... which leaves us starting the next series of waves down.  Now the problem with the bulls is I can look at the daily chart of the SPX and count a 5 wave pattern up from the 1810 low on 2/11/16, with the end of the wave 3 up being on 3/1/17 at 2400.98, then wave 4 down (sideways) ending on 3/27/17 at 2322, leaving us in the final 5th wave up currently.  Granted there's no telling how long a 5th wave can last as they do extend from time to time... but that's on the daily chart and it's a large wave pattern that's coming to an end soon!

On the medium time frame starting at that 3/27 low (which started the large "final" 5th wave up) we did medium wave 1 up to 2378 on 4/5/17, medium wave 2 down to 2328 on 4/13/17, medium wave 3 up to 2398 on 4/26/17, sideways medium wave 4 down to 2379 on 5/3/17, and medium wave 5 up to 2403 on 5/9/17... and that my friends should have the bulls worried!  That's 5 medium waves inside a larger wave 5 up, which completes the pattern cleanly.  Again, that 5th wave up could extend higher, but with the VIX so low already and the dark pool selling I have to be very cautious on any longs I might take.  Sure, if they can get through 2400 again they "should" be able to squeeze the bears hard by running their stops.  But I'm just not seeing the usually 50-80 point run that again "should" happen when you trade sideways for so long building that base to launch from.  I get the feeling that "if" they can make some fast move up through 2400 again it will be shorted lived and might only do 10-15 points as I previously thought.

So, what's the wave count now... meaning "assuming the current 5th wave up is finished" you ask?  Well, on the futures it's looking like it's done a wave 1 down, wave 2 up and starting on the wave 3 down (or C down?), with the first smaller wave 1 and 2  inside that 3 down (again, or C down) already being completed yesterday and after-hours.  If they hold this market around this current range all day today we could see a very nasty wave 3 down next Monday that takes out that 2380 level like a hot knife cuts through butter!  First target down I'd think would be to fill that gap from 4/24 around the 2345 area.  From there we'd just take it day by day.  So, what's my plan for today?  Wait and watch to see where they close this market.  I doubt if I take any trades in the morning as I expect range-bound trading in the triangle all day, but I might take a short over the weekend if I see the right setup.  Good luck to everyone and have a great trading day and mother's day weekend.  Today is my mother's birthday.  She would have been 76 if she didn't die last November.  So don't forget your mother as she's the only one you have and will be missed sorely when she's gone.

ES Morning Update May 11th 2017

Red
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ES Morning Update May 11th 2017

Still chopping up and down with no clear direction.  I exited my short yesterday at a breakeven on the rally back up the second half of the day.  I guess I should have held from the looks of this morning but I'm fine with being safe instead of sorry as if I don't get high odds of some direction I prefer not to trade it.  This morning the pattern I see right off the bat is a nice "MA" with the right leg of the "A" going down right now, but also at support.  If the pattern works then the expected move down is equal to double the height of the "M", which is about 10 points from 2390-2400... so that means a move down to 2380 would fulfill the "MA" pattern.

Here's the problem though... there's a ton of support from various trendlines between 2380 and 2390, so the bulls shouldn't be too worried about any bigger move down unless those support lines break.  And that would probably take some news event to cause the futures to drop through them before the open on the cash session.  It's always easier to gap over or below any support or resistance levels, which makes manipulating the SPX Cash Index so much easier.  Without the futures market the Fed's couldn't pull the stunt's they do each day that defy odds as extremely bearish closes turn into gap up's the next day.  Anyway, it is what it is and we traders have to adapt.

Ok, so for today there's no clear direction.  Futures are at/near rising support from blue and red trendlines.  The "MA" pattern is bearish and suggests a move to 2380 area.  There's also a triangle forming with the current 2388 horizontal support as the lower trendline and the pinkish falling trendline from yesterday's high and the 4/9 high, (which is pointing to around 2394 or so) making the top of the triangle.  If the bulls run back up to that falling trendline today they could push this breakout or breakdown until Friday or afterhours.  This triangle is also a bull flag, which is why it's tough to see a clear direction today.  Some things look bullish, others bearish.

Next and last is the Elliottwave count.  It's still just a guessing game with EW counts as although it's very likely that the 4th wave was the sideways action between 4/26 and 5/5, with the 5th starting late last Friday with the run up to 2399.25 afterhours, we still don't know for sure if this 5th is finished or not?  After that high there was move down to about 2390 and then back up to 2400 on the penny on 5/9... so is that the real end of the 5th wav up or was it the 2399.25 high?  It's unclear but after the 2400 high we pulled back to make the right side of the "M" with a move to 2388, then back up to 2397 for the left side of the "A" and now we are down again.  I'm just not sure at this point on the wave count so I'll just skip it and wait for clearer signals... meaning I'm neutral right now with no position.

ES Morning Update May 10th 2017

Red
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ES Morning Update May 10th 2017

Well, yesterday was a nail biter as the futures made a new higher high of 2400.00 versus the May 5th high of 2399.25, and the SPX Cash beat out the March 1st high by a hair as well.  So, is this double top going to hold and allow a pullback?  Presently it looks like we could be in some pullback mode and may have already completed a smaller ABC move down.  That suggests today we'll chop around some and make some kind of smaller ABC up, but not take out yesterday's high.  It would actually be in the bulls' favor to flush out some longs with a drop for a couple of days as that would get the bears positioned short so they could be fuel for the next squeeze up that should rip through 2400 nicely and get a powerful rally going.  If the bulls decide to make another attempt today without pulling back more I think they will stall out within 10-20 points as they are still too overbought and overloaded with longs in the market.

As you can see there are a ton of trendlines of support in the 2380-2385 area, which need to be tested I think.  The MACD's on this 60 minute chart should struggle if they get back up to the zero level and will probably rollover again... which will likely be later in the day near the close.  But between then and now we should see some chop, and if the bulls get back up to the horizontal resistance around 2395 I'd expect some bears to pile on short there and keep pressure on the market.  This is the 2nd week of the month and in the old days (before the weekly options came into play) the market makers would run the market down into a Thursday/Friday low to sell puts to the retail bears so they could rip the market back up on the monthly options expiration week (always the 3rd Friday of every month... aka, the 3rd week), and make those put options expire worthless so they could keep all the money from the dumb sheep.  So, we might see that happen this week as well?  But I will add that the weekly options have changed that old pattern to where it's not nearly as accurate.

My thoughts are to re-short if we get back up into that 2395 area with the MACD's getting overbought again and some type of clear smaller ABC up pattern appearing.  Time is also a factor as I'd like to see this happen into the noon time period to early afternoon.  This is so the market will be ready to rollover into the close and start a drop for the next ABC down... which should be stronger then the Monday/Tuesday drop.  It should be the drop that takes out the 2380 horizontal support area, but might do that overnight?  Ideally I'd love to see that hit at the close today and have all the bulls buy that support only to see it do it's bounce afterhours/premarket, therefore allowing the open tomorrow to gap down below that zone.  That's an ideal scenario, which I rarely get... but here's to dreaming!  As for the bullish side... breakthrough the 2395 area and I'd exit all shorts and see what happens.  I'd probably go long if 2400 is broken but that's a decision I'd have to make at the moment so that's not written in stone.

ES Morning Update May 9th 2017

Red
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ES Morning Update May 9th 2017

Yesterday we discussed the late move up on Friday as likely being a 5th wave inside a larger C wave up, that should finish the rally up from the 3/27 low.  Then I suggested we'd start an ABC down, then another ABC up, etc... until we setup a big drop.  This morning we are dancing around the over the weekend new all time high, so it's unclear if that wave 5 up inside a C up is finished or not?  If it doesn't go up much farther, maybe a slight pierce of the prior high, then we could still be on track with the 5th wave up finishing over the weekend and the ABC down starting Monday morning.  That would still suggest the A down finished at yesterdays low and we are in the small B up right now.  This again suggests small C down is coming and that the most likely target is for the futures to fall back into the 2370-2380 trading range.  Then we'd look for another small ABC up into Wednesday/Thursday, that again SHOULD NOT take out the current high.  "If" that happens we should then see a bigger wave C down as the first smaller ABC down would make a bigger A down, and the second ABC up into Wed/Thurs would make a bigger B up... leaving a move down on Thursday/Friday that should take out the trading range and head toward gap window and/or gap fill.

Ok, that's the current scenario but let's also look at what might happen if the new all time high over the weekend gets taken out today by more then just a pierce.  The line in the sand is not exact but 2410-2415 is the area I'd become worried.  I'd then look at other indexes to see how they are preforming as well.  The Russell is still in a downtrend after peaking on 4/26, and the Nasdaq is still up around its all time highs after continuing to push up day after day so it's hard to get a feel on those two so I'll look at the DOW, which is not too far away from its prior 4/27 all time high.  I'd say my "line in the sand" on shorting the S&P500 (via the SPY) would be if the DOW makes a new all time high again.  If it stays under the 21,169 high today (and hopefully we see some weakness in the Nasdaq and not much strength in the Russell) then there's still good odds that today's move up ends the whole rally up with the 5th just extending some or already ending yesterday and the small B wave up (assuming we are in a small ABC down pattern currently) just pierced a little higher then the start of the smaller A down yesterday.  So, there's still hope for the bears but if the DOW hits a new high I'll flip to becoming bullish.  It's going to likely take all day to see how this plays out but by the close I think the next direction will be chosen.

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