Blog | Red Dragon Leo - Stock Market Trading on the Darkside | Stock Market Trading on the Darkside

ES Morning Update February 2nd, 2017

Reds Daily Updates

Red

-

February 2, 2017

Charts are looking a little mixed this morning with the different time frames for both the ES Futures and the SPX Cash. Pattern wise we are making a nice "Head and Shoulders" on both indexes. But I don't think they have a very good track record of playing out now like they did before everyone had access to chart the market via computers. Today I doubt if their accuracy is better then 50% odds.

I can't remember how many times I shorted a right shoulder on the big rally up since the 2009 low only to get smoked as the right shoulder just kept on going up and took out the head of the pattern forcing me to sell at a lost. Normally you'd project the move down from the neckline of the head and shoulders pattern to be equal to the length of the head, which in this case the neckline is around 2265 and the head at 2285, or about 20 points. That suggests the move down should go to about 2245, which is just below the prior lows on the 12th and 23rd of January as well as in the middle of the blue and yellow falling trendlines.

So, my thinking is this... if we rollover early in the day without rallying up much then this head and shoulder could play out. But if we rally up to the black falling trendline around 2281 or so, where everyone will see a beautiful right shoulder on the pattern I suspect that will be the "fake out" play by SkyNet. Meaning that I think the black falling trendline will stop the rally and we could (should) see it rollover there to head back down... but the trick comes in when afterhours tonight they turn it back up and gap over the black falling trendline into Friday morning to take out all the bears that shorted the top of the right shoulder. The move up then could (should) fill the 2288 gap from over the weekend. And then we'll be setup for a nice drop next week that should easily hit the 2245 area and lower.

But of course all the bears will have been taken out and the bulls will be holding long, and that's the way SkyNet tricks the sheep! That's my best guess out how I'd play out today... meaning again, rally up to the falling black trendline, rollover to back back down some but not to break the rising black trendline (pointing to around 2269 by the close), and then run it back up tomorrow to clear out the stops and close the 2288 gap. This is my preferred scenario and only a "best guess" one at that. Naturally if we break the 2265 neckline today then we could be on our way to the 2245 target for the head and shoulders pattern. My gut doesn't think that will happen and it's mainly because the Fed's never like to take the blame for anything they say... meaning they want the market to be flat or up a little for a least a few days after they have their FOMC meeting so people won't blame them for the move down and just say it was a technical move that started the week after the meeting and not really the direct fault of the Fed's. Anyway, that's my update for this morning.

ES Morning Update February 1st, 2017

Reds Daily Updates

Red

-

February 1, 2017

0

Ok guys, it's looking like we'll run into resistance from a falling trendline around the 2285 area and rollover if we hit it early in the day. Today is FOMC day so we should expect some crazy moves if anything is said from Janet Yellen that is "unexpected", which is certainly possible. I'm not sure what the market is really expecting or pricing in... a rate hike or NO rate hike, but whatever is said we have a market that is overbought early this morning and will likely be overbought into the 2pm meeting unless it rolls over early and heads for the lower rises trendline around 2267 or so where it could turn back up at the meeting time period. Of course those upper and lower targets are an actual hit of each trendline but the market doesn't have to hit either... they are just resistance and support levels.

I'm not sure how they are going to play this out today? Will they hold the current zone and grid sideways to slightly up into that 2285 falling trendline area, or will they rollover and reset the overbought conditions by going down to the 2267 support area? If up into the resistance and the meeting then we should expect the first move to be down after the meeting. If down first into the meeting then the first reaction should be an up move. The wildcard on the up side is a slow grind all day into the meeting where we are hitting the falling trendline around 2pm and then something is said that causes a fast squeeze up through the trendline that fills that 2288 area gap and then rolls back down. It's really a guessing game here guys as this market can and will very likely be moved by the "news" coming out from the Fed's about interest rates, so I don't have any suggestions on how to play it.

Overall I'm still expecting a high that can be shorted by this Friday, but whether that is a higher high or lower high I just don't know. Short term (as in this morning) the market is overbought, but if a fast pullback happens it could reset the chart enough to push on up into Friday where the medium term charts will be overbought enough to put downward pressure going into next week. For today though I'm just waiting and watching to see what will happen. Just too risky to short it and up too high to go long.

ES Morning Update January 31st, 2017

Reds Daily Updates

Red

-

January 31, 2017

0

Today is a little mixed in the charts as I don't see any clear direction. That makes sense actually as it's the first day of the two day FOMC meeting, and the market is usually in a "hold and see" pattern until the minutes are release Wednesday after 2pm. So there's not much point to try to forecast the market today as I suspect we'll just chop around all day. However, I do think that we'll see another move up tomorrow after the meeting that should top out by Friday. If you're a bull I'd be looking for a good support level today to sell on Friday, possibly Thursday. A retest of the low yesterday with a slight pierce would be my best guess on what the plan is for today, but I'm not shorting looking for it. Instead I'd just consider going long if it happens.

Support is in the 2260 area give or take 5 points, but a close below the 2265 level would be bearish for tomorrow. I could see a pierce but a turn back up to recapture that level before the day ends is likely I think. Upside resistance is around the 2288.50 level from a gap over the weekend. There's also a falling trendline there. I don't see that hit today, but if it does it would be bearish into tomorrow. The best setup for the bulls is to chop around down near the low today and close slightly down. A retest of the current low from yesterday would be great for them and a slight pierce even better. But they should close red a little today to setup the next move up into Friday.

ES Morning Update January 30th, 2017

Reds Daily Updates

Red

-

January 30, 2017

0

Good Monday Morning to everyone. Looks like we are getting a decent pullback this morning. I don't think it's start of any big move down yet. I'd find it very strange if they didn't make another run back up to tag 2300 on futures like they did on the cash, and 20,000 on the DOW again (this assumes we'll break it at some point today). Everything tells me that we are still in a strong uptrend but just overbought and in need of a pullback. We know there's massive support in the 2260-2270 area so that should stop the bears on this move down... if it gets that low?

I really was looking for some exhaustion move up with big volume but we haven't got it yet. That tells me the pullbacks are likely to be small... like 30-40 points, and then back up again. And considering that this is the last 3 days of the month the pullback we are currently have could be the window dressing the mutual funds do as they shift positions for balance sheet. Maybe by the end of this week we can see a clearly picture of the direction but right now the bulls have control and are just taking a breather I believe. They should make another run back up after this pullback ends. Any big move down probably won't happen until we get a high volume day that finally wears out the bears. I don't see them wore just yet.

Targets on the upside aren't know at this point as I don't have anymore FP's on the SPY for the upside other then that 230 FP from November of 2015, and it's probably fulfilled now as we got pretty close to it last week hitting 229.78 intraday. We also hit 2300.99 on the SPX Cash, so that FP is done and over with I think. So, the upside targets are not know yet but of course a double top would be the first resistance. From there it would probably be based on how many stops are overhead.

Do note that there is an FOMC meeting this Wednesday, so a high could come within 1-2 afterwards. That's been the pattern I've noticed in the past. That would suggest this Thursday or Friday we'll see some kind of exhaustion move up to give the bears a nice correction into February and possibly March. But I wouldn't get too excited on this first move down if I were a bear. Better moves are likely to show up later this week.

ES Morning Update January 27th, 2017

Reds Daily Updates

Red

-

January 27, 2017

0

Volume today is extremely low, which is a clear sign that we've had NO exhaustion move up. This is just consolidation and not some blow off top. I do not see a short here. Closing down today just sets up another push up next week. Therefore I will not be shorting as I want to see some high volume exhaustion move up, and we don't have that today. So, I'm doing nothing over the weekend and will wait to see what Monday gives us.

ES Morning Update January 26th, 2017

Reds Daily Updates

Red

-

January 26, 2017

0

So far so good. Looks like we ended some kind of wave 3 up yesterday and should have a smaller wave 4 today and possibly into Friday morning. After that we should see another run for the current high for the smaller wave 5 up. That should take us into the close Friday if all goes as planned. Of course SkyNet is tricky and change anytime but I do think this plan has good odds of playing out.

As far as support on the pullback... we can clearly see the futures are currently riding the black rising trendline that they busted through yesterday. Typically what I'd expect here is the futures to either "A" hold that trendline all day as it rides it back up a little until the close, or "B" pierce through the trendline to find stronger support at the green rising trendline. If "A" then I'd still expect the drop to the green rising trendline but not until Friday morning. I would look like a small ABC wave down to the trendline at that point, which should end some degree of a wave 4 pullback. Then the wave 5 up into the close Friday should end the whole move up and setup the next week or two for a 70-100 point pullback. There's NO negative divergence yet on the MACD's so that helps to support this forecast for another push up to make at least a double top by the close Friday, but most likely a higher high.

All in all it looks too me like the best short setup for swing traders will happen on Friday. Today should be a "pause" day with the futures trying to hold that black rising trendline all day long. Even if they lose it at some point today they will likely come back up to it again and leave the "touch of the green trendline" for Friday I think. We had the newest FP on the SPY from several weeks back now that shows 219.26, so that might be the target low in the coming weeks. Do note that I personally don't always catch these FP's and am very grateful that I have a team of like minded traders to look for them too and share them with me and others. I post them in the chatroom when I get them and we all together try to figure them out. Anyway, that's my thinking for today.

ES Morning Update January 25th, 2017

Reds Daily Updates

Red

-

January 25, 2017

0

Well gang, we finally got our breakout yesterday it seems. Today we see a continuation of that move up and an old rising trendline that should come into play as resistance. I'm not sure how far this is going of course but it looks like it's pretty overbought and could peak shortly right after the open. If so I'd look for a small pullback before trying again to go back up. A common thing to do though is just to trade sideways to make a bull flag for another push tomorrow or Friday. Overall though we are getting close to a top here, but I think we need a small pullback first and then another move up, which puts my best target date to short as this Friday.

Daytraders can nibble here but the strongest move looks over with. From here on up we should see some exhaustion. A small pullback and then another attempt back up is needed before the top is really "in" I believe. Today should be a day where the bulls try to hold this gap up open, but should give up a few points at some point today. I just added a new green rising trendline that should be support for any move down today, but don't be surprised if we just chop sideways to slightly down all day until the close and touch the trendline afterhours or tomorrow even.

Wave count this looks like a 5th wave up from the 2252 low on 01/23 and inside it we should see 5 smaller waves. I'm not sure what smaller wave we are in but I think it's still the 3rd wave with the 1st up ending in the 2260 zone and that sideways chop being the 2nd smaller wave. I'm not some expert at elliottwave of course as I think it's manipulated too much and has too many alternate counts. But I use it some with other stuff. So I think when this smaller 3rd wave up ends (probably early today) we'll see a sideways to slightly down wave 4 and then the wave 5 up on Friday to end all five of the smaller waves inside the 5th wave up from that 2252 low. At that point I'll be looking for a pullback into next week of 70-100 points.

ES Morning Update January 24th, 2017

Reds Daily Updates

Red

-

January 24, 2017

0

Looks like Ground Hog day again too me gang. Nothing has changed, it's the same as yesterday. I'd love to tell you something of value but until the market breaks out in one direction or the other there's just nothing much to say. So we wait some more for some kind of news event to move the market. I'm still looking for a move up first before any move down of depth. The need to run the bears first and their stops are of course right above the center line of 2265 that we seem to crawl back to day by the close regards of whether we gaped up or down that morning. Stops probably go up to at least 2285 if not higher. Run them and I could see a pullback start.

Remember that we have a Legatus meeting this coming 26th-28th, and my past study of the meetings indicated that "turns" in the market happen about 70% of the time around those meetings. And we have the mutual funds "3 day rule" which is the last 3 days of every month. No one knows if they will be buyers or sellers at this period but they need to "sure up their accounts", which done so they can send out a report to their clients telling them they traded the safe stocks of "whatever" to make them money. Of course the other 27 days of the month they gambled with high risk stocks, but their clients don't know that. Anyway, I'd think there would be a little selling then to lock in gains. I can't see them buying up at these levels but anything is possible I guess. That's all I have to share guys.

ES Morning Update January 23rd, 2017

Reds Daily Updates

Red

-

January 23, 2017

0

Well guys, I'd love to tell something new but nothing has changed. The market is still in a sideways chop pattern and has yet to breakout or breakdown. It's dipped a few points this morning but there's no sign that this is going to be some big move down yet. And every dip seems to be bought up as no one wants to sell yet I guess. The only hope for the bears is probably going to be the last 3 days of the month when the mutual funds could do some selling to lock in some gains. Other then that, today might just be another boring day.

It does have a bear flag on the futures so possibly we'll drop a little more today. But I just can't see much right now. If we revisit that 2253 low from 1/19 that would be the first support. After that we have the 2248 low from 1/12 as support. Basically I just don't see anything to give us any big move up or down yet. If we drop to one of those support levels by the close today then I'd guess that we'll rally back up from that level on Tuesday. However, keep in mind that the market has been repeatedly coming back to that 2265 level everyday by the close. So it's more likely to see that happen versus a closing low at one of those support levels. Overall this market is just in a pause mode as the bulls rest a bit and the bears sleep. So it's still a "buy the dip" market until it's not... and I don't know when that is going to end.

ES Morning Update January 20th, 2017

Reds Daily Updates

Red

-

January 20, 2017

0

Ok gang, as discussed in the chatroom yesterday... if for some reason we do not go up and tag that 2300 area but instead drop I'd look for the move back up to happen mid-late next week. Remember that while most all eyes are focused on today being the "big turn" day we few know that there is a more important period next week. It's the meeting place of the criminals and it's called Legatus. There's a meeting on the 26th-28th of January and that's really the most important dates I think. So let them shake out some longs or shorts today but I would not be getting heavy short until that take out DOW 20,000 and SPY 230. Failure to do it today or Monday sets up the Legatus play.

For support on the way down (if we rollover without hitting 2300 first) is the 2255 area, then 2248 and down to 2228 bottom from 12/30. I don't think they will go that deep and then run back up to 2300 but we've seen that before with the 3 mini flash crashes last year. Charts look bullishly aligned this morning so today would be a great day to ram it up if they chose to? I hope they do something soon as it's getting tiring with all the choppiness. A nice drop should setup a nice long into next week or a nice rally will setup a nice short. So far we have neither. If nothing happens today then I'd look for the close Monday to give us more clues. It's coming... but when is the tough part.

ES Morning Update January 19th, 2017

Reds Daily Updates

Red

-

January 19, 2017

0

Not much to add today... still waiting on the 20th when Trump gets into office. I'm looking again for the 2285-2295 area to short at but I also want some volume in that move, or else it might go through 2300 to 2310-2320 before it ends. Not sure of course of the exact target it stops at as all we have is the 230 FP on the SPY, which is about 2300 SPX and the futures are running pretty close to the SPX Cash right now. So 2300 on the cash might be about the same on the futures or just a few points lower. Remember that while FP's are targets for the insiders that "they" plan to take the market to at some point in time they don't always stop right at that level and commonly pierce through it a little before stopping and turning. So just look for the big volume squeeze day gang, as it could come today, tomorrow or Monday but it's coming soon.

SIDENOTE:

Trump is very similar to and is the perfect scapegoat just like Herbert Hoover was in 1929.
1. A rich Republican business owner.
2. An outsider never elected to office until inauguration.
3. Came in after the Federal Reserve blew huge asset bubbles in stock market and real estate from easy money policies.
4. Pissed off the Mexicans by sending them back in droves.
5. Created large infrastructure projects eg Hoover Dam.
6. Imposed tariffs on foreign goods entering the US to protect businesses.
Within 7 months after taking office the US and the world enters the Great Depression but it wasn't his fault!
Source: Nick Giambruno

ES Morning Update January 18th, 2017

Reds Daily Updates

Red

-

January 18, 2017

0

Looks like we made that right shoulder yesterday and rallied up from it into this morning. I'm still not expecting some huge move up today as we are 2 days away from the 20th when Trump takes office. It's pretty clear that the market is waiting on that event so until then it's likely to stay rangebound again today.

The MACD is around the zero level which gives me little clues to the direction. I think it will grind up a little early in the day and rollover a little later in the day. Overall though the price level is probably not going to change much. Maybe up 4-5 points to down 4-5 points? Just a whole lot of nothing I guess?

The forecast for today... same as it was yesterday. LOL! Basically I'm still waiting on the Trump breakout this Friday to look for a short. Since I'm not too much into daytrading (I do from time to time, but rarely... especially when the range is so tight) I'm not doing anything until I see a better opportunity.

ES Morning Update January 17th, 2017

Reds Daily Updates

Red

-

January 17, 2017

0

Hope everyone had a nice holiday. Now it's back to the grind it seems. But fear not as the market doesn't look like it's going to do much until it's closer to the 20th when they swear in Trump as president. So from now until then I'm not expecting much downside or upside. Of course I don't know the exact day they will breakout to the upside and tag that 2300 level (or get really close?) but it's acting like it wants to do on Friday and use the "news" of the new president as the reason for the rally. If it happens before then I'm ok with that too as I'm just looking for a good short entry and once the bears' that are short over the current zone (about 2260-2270) get taken out then the market should be ready for a nice correction into February.

On the short term we have a nice little move down this morning already in process. Possibly this is to make a right shoulder of an inverted head and shoulders pattern? The head is of course at that 2250 area low on the 12th and the left shoulder around 2255 from the 11th. If this move down takes out the head then the pattern has failed and we'll look for something else. But right now I don't see it as this appears to be just a small pullback to reset the overbought short term charts before another move back up. It might take awhile for the bottom to form today but we should be turning back up at some point. I would not play it unless I see this 60 minute charts get oversold (it NOT) and the 2260 (maybe the 2255?) area hold. I'm more inclined to sit on my hands today and see what happens. The charts are overbought and this move down should be happening. There's currently NO sign of the MACD's turning back up. Therefore I don't go long. I'd rather wait for the rally to end and short it. I don't see myself doing much until then, and I expect this chop to continue until Friday.

ES Morning Update January 13th, 2017

Reds Daily Updates

Red

-

January 13, 2017

0

Welcome to Friday the 13th! A day where freaky things can happen. Unfortunately I don't see much happening the market this morning, so I guess it will have to happen outside of our playground. There's nothing much to add this morning that hasn't been said already. Yesterday had a nice drop for what was probably some kind of C wave down and then we rallied the rest of the day. I was slightly bullish but never took any position. Got that call wrong early on as it clearly went against my thoughts that we'd bounce up and down between about 2260-2270.

But if you would have slept through the day you would have been fine at the close as everything that was lost early on was recaptured later that day, closing around the same level we started off at. This 2265 area has been a point of interest for over 2 weeks now, which makes it hard to make any forecasts when it's Ground Hog Day over and over again. At some point soon we'll breakout to the upside or downside, but I honestly can't tell you "when" based on the charts as they are clearly bearish on the big picture (daily) but refuse to breakdown... or breakout.

This basically leaves one to guess on possible "days of importance" where news event can move the market, and/or FP's (fake prints) where the insiders are told where "they" plan to take the market to at some point in the future. For the FP's we have the old one from November 13th, 2015 showing 230 on the SPY and the recent one from last week showing 219.26 (which never happened that day... hence the reason it's likely a FP signal for the insiders).

For days of importance, we of course have the 20th next week when Trump comes into office. He will be 70 years, 7 months and 7 days old... which could refer to the old movie "Unstoppable" from a few years back with the runaway train that had the number 777 on it? Maybe Trump is the unstoppable person? Rituals are done all the time the market but I'm only one person that can't possibly catch them all. After that we have the all important "Legatus" meeting where all the criminals that rule the world meet together to plan/agree/execute what dirty evil deeds they have on their agenda.

Of course they are never for the benefit of us sheep but always for their benefit. Naturally this includes "turns" in the stock market but doesn't always mean that. Sometimes it's just a plan to steal money outright like they did with the Cyprus bank robbery some years back. Just demand payment on a loan to bankrupt the country and "BAM" you stole everything from them! Anyway, it's hard too know what they have planned but I fully expect to see more of these quick "Flash Crashes" or "Limit Down" days this year... just like last year, only likely worst this time.

For the short term forecast... none. There's no clear direction today that I can see. I'm waiting on that 230 print or something clearer in the charts to show up. Have a great weekend!

ES Morning Update January 12th, 2017

Reds Daily Updates

Red

-

January 12, 2017

0

After-hours yesterday there was a nice FP on the SPY showing 226.45 and low and behold it looks like we are going to open around that level... LOL! Chart-wise the cash index looking slightly bullish today on the open but could delay any breakout move up for another day. The "Full Stochastic" on the SPX Cash are overbought up near the 80 level and have backed down a little over the last few days. However, they are trying to hook back up. This supports the thought that they still might go up to that 2300 level before any real correction starts. The MACD's are still drifting lower too from peaking just under the 30 level back in December. The Histogram bars have come up from the -8 area to the -2 area, so there's still some room for them to hit zero where turns commonly happen.

Now the ES Futures are harder to read on the short term as they are mixed this morning but slightly bullish. However, their daily chart looks similar to the SPX Cash index... bearish but could support another move up. This is clearly a game of "plug the holes" for SkyNet as rotates around to support quick drops where the market wants to tank but has someone save it every day on each drop. We all know the target is the 230 FP on the SPY as it was told to us back in November of 2015. We also know the next downside target is the new FP from last week of 219.26 on the SPY. The question of course is... "when"? So people think the market will sell off in front of the January 20th swearing in of Trump but so far that hasn't happened. There still another week left of course so we don't know yet if the correction will be before it or after it.

My thoughts are that we need a big volume up day to take out all the bears with stops overhead. There's been almost 2 months of sideways action in the 2250-2275 area and a whole lot of stops could have accumulated 10-30 points over that zone. Take them all out in one day (and hit the 230 SPY print) and I'm a mega-bear. Otherwise we are just stuck in a range where the 2265 level seems to be the middle point and magnet that the futures go back to each day after going below it or above intraday. That leaves the market available for day-traders only as most swing traders just can't seem to make a profit from such crazy moves.

Today's forecast... more of the same. Wild moves up and down but it's looking more and more like we'll see some squeeze up to the 2300 area soon, whether that's today, tomorrow or Monday I just don't know? Resistance is still overhead from the falling blue trendline around 2270 and support is at 2260... not a game I want to play. I'm just a patient bear setting on my hands right now.

ES Morning Update January 11th, 2017

Reds Daily Updates

Red

-

January 11, 2017

0

Well, the futures are resting on the edge of cliff where support has been at for quite some time now. Will they breakdown is anyone's' guess but charts suggests they are running out of time. The SPX Cash charts are very bearish now but as we know they use the futures to keep the cash from collapsing, therefore manipulating the charts. But that's probably why they invented the futures in the first place I'd guess. Everyday after the market closes they drive the charts on the futures down into oversold territory so by the open the next day they will want to go up. This fights with the cash charts that are overbought and want to to down. If they do this game for long enough they can get the cash charts oversold without actually letting the price level drop that much. Then they can start another rally by getting the futures oversold too therefore aligning them together the next day point up with the cash index. This is where these gap up and squeezes all day happen.

Right now though the SPX Cash index is still pointing down and want to take the price level down with it. The futures are mixed right now as they aren't really that oversold or overbought, which leads to a day where you can really see any good setups. I've drawn a new falling trendline (in blue), so if the bulls get control of the market and stage a rally that blue line is where I'd look for it to stop at. Doesn't mean I'd go long as again... I don't see any edge for either side this morning. Of course if the bears get control then the first support going down is the double bottom from the 5th at 2254.00 and then the 2245 zone of support. Best support is the double bottom at 2228.00 from 12/30.

Considering how light the volume is every day now I have to just sit on my hands here as bulls usually win during such periods as it easier to rally on thin volume. But the charts are still bearish and suggest a breakdown is coming... but when? Will they allow it to happen today or will they chop around all day and push out any drop until Thursday? I don't know of course but I'll remain bearish against that blue falling trendline as I see lower prices in the coming days ahead. Timing the exact day and minute that the drop starts is like playing Russian Roulette... you just never know when the next one is "THE ONE".

ES Morning Update January 10th, 2017

Reds Daily Updates

Red

-

January 10, 2017

0

Ok guys, the futures have fell since Friday as I mentioned in the chatroom that we could have put in a temporary top. But this morning they are hanging around at horizontal support in the 2265 range. The MACD's on this 60 minute chart are coming up from oversold afterhours and near the zero line, so there's no clues there as it could rollover or continue up. The 6 hour chart shows a little more though... and it looks bearish to me. This leads me to think that 60 minute MACD will rollover at some point today and only allow the futures to put in a "lower high" then Friday.

Put simply... based on the various charts I study I think we aren't done on the pullback but today is short term bullish. Meaning that early in the day the bulls have the charts in their favor but at anytime we could see them rollover and support in the 2265 zone break. It's just more of the same old grind where the big boys are selling lightly everyday and once they are finish we'll see the market pullback nicely. I'd certainly like to see DOW 20,000 get hit to make the bulls happy so we could get some decent selling started. But SkyNet doesn't give me what I want. In fact it always tries to trick me... hence the reason I stated on Friday near the close that I thought we'd pullback (NOT hitting the DOW 20,000 mark but getting really close) and then make another run up later this week or next to finally hit it.

So, here we are on day two of this week and not much has happened. I'm thinking that if today does turn out to be a "pause" day (slightly green, but NO new high) then we might see the rest of the pullback into a Thursday/Friday low this week. Anyway... one day at a time. Todays' forecast is slightly bullish in morning and bearish later in the day with a possible "green close" today that would likely led to a breakdown of the 2265 support on Wednesday.

ES Morning Update January 9th, 2017

Reds Daily Updates

Red

-

January 9, 2017

0

Almost everything I see is at extremes now. Of course the market will sometimes push a little farther to make it even more extreme from time to time. But this week should be the real challenge for the bulls as if there is going to be a pullback it should happen this week. And let's not forget that Trump gets sworn into office on the 20th, which is the week after this one. Traders ran up the market after he won back in November and should flip and do the opposite just before it's official that he's our new president.

So, I'm looking for a top early this week (like today) or it might have been put in last Friday. Personally I think it was put in Friday but since the DOW never hit 20,000 I'm giving the bulls another day or two to reach that important milestone. However, many times when everyone is looking for a level to short at the bulls fall just shy of it and start the pullback without the bears on-board. This could be the case here as the DOW was just .37 cents shy of it's target hitting an intraday high of 19,999.63 on Friday. That's a lot of "nines" in that number we all know that "nine" is the number of "completion" in numerology... and the rulers of this stock market like to use numerology in their rituals. Remember that on March 6th, 2009 the SPX hit 666 as it's intraday low. On August 25th, 1987 the intraday low on the SPX was 333.33, and that marked the day the high for the year was put in on. Of course just 2 months later the market crashed with Black Monday, (October 19th)... so make no mistake about it, numerology is used in the market. Whether last Fridays intraday high on the DOW was part of it or not is still unknown.

For short term I'd look for a move down today early and then a slow grind back up to make a lower (or possibly tag that DOW 20,000?) and then if all goes well we should see a "more steady" decline on Tuesday.

ES Morning Update January 6th, 2017

Reds Daily Updates

Red

-

January 6, 2017

0

Not much to add that wasn't said yesterday. The bulls are still in control and should make another run for 2270 today with good odds of busting through it and running stops. If the fail today odds will favor the bears next week as we should start a nice pullback into the 20th when Trump gets sworn into office. Then I'm guessing we'll have another rally back up into the end of January. So if today they don't run the stop above 2270 and try to touch 2300 on the futures and 20,000 on the DOW then that leaves it open from them to revisit again either toward the end of this month or some summer rally. Either way the bulls aren't going to just died and let the market drop 20% without tagging DOW 20,000 and SPX 2300. When it comes is still unknown? There maybe too many people waiting to short that level right now so SkyNet might decide to just start the pullback next week just double topping the futures around 2270 leaving the 2300 level for a future time.

Meaning... I'm a not a bull after today as next week we should pullback. Now that doesn't mean I'm a strong bear, it only means I wouldn't be buying any more "call options" and would rather start slowly by selling "call credit spreads" with the mindset that it will just start slowly down next week and be choppy as it starts its' decent down. With options you really only want to short the "C wave" or "wave 3" down as the other waves just chop you to death and eat away the time value of them. Anyway, after today's attempt at busting through 2270 I'll be throwing in the towel on the bulls reaching 2300, or more specifically the SPY reaching its' old FP from 2015 showing 230... which is about 2300 on the SPX Cash and maybe 2290 or so the ES Futures. I'd like to see it hit today but SkyNet see's how many bears are waiting to short that zone and very well could decide to start the pullback at a lower level (like just a double top of 2270) and make them chase the move down.

Pattern-wise nothing has changed we still have an inverted head and shoulders pattern that points to about another 30 point move up from this area. Its' formed a 2nd rising wedge but the first one just barely dropped 8 points from it's breakdown point. Historic pattern only show that the week prior to the 3rd Friday of the month there's usually a low put in on the Thursday or Friday. That's next week of course. So there you have it... have a good weekend everyone.

ES Morning Update January 5th, 2017

Reds Daily Updates

Red

-

January 5, 2017

0

Ok gang, as you can see the bulls have pushed above the yellow trendline of support and the black trendline of support that was intercepting it. The sharp rising black trendline that made the wedge has been broken but with the other two trendlines of prior resistance now acting as support I don't hold much weight now to the breaking of that wedge. The sideways movement is making a nice bull flag that could play out later today or Friday.

On the MACD's of this 60 minute chart we can see them dropping from +2.5 to about zero right now. But the price level just chopped sideways, which is common with light volume. It's also the common way a bull flag sets up. Once the MACD's get oversold enough (happens a lot around the zero line, but you have to also look at the 2 hour, 4 hour and 6 hour MACD's) it should turn back up and the bull flag should then break to the upside.

So, for today I'm expecting more sideways chop early in the day and possibly all day long. Then tomorrow (or late today, but odds favor Friday) we should see that breakout run to the upside to hit the 2270 prior top and most likely run the stops overhead of it. That's commonly 10-20 points of stops... meaning we could see it tag 2290 if there's enough stops to run. So I'd just wait if you are a bear and if you are a bull there's likely another push higher coming and it should happen into Friday.