Monday, December 21, 2015

E-mini S&P 500 Futures: Keep It Simple Stupid Series


The Winner?

Today’s session pretty much went as expected according to the weekend update’s white line projection. The regular “A Tier” hourly extreme oversold signal confirmed at 10PM Sunday night that gave us a quick 10-20 point target to 2010-2020. When we woke up we realized the market made an overnight high of 2013.75 which fulfilled the signal’s target. 

Before the day session opened, we noted that there’s a high probability it’s going to be an inside day. During the open, the market started with two consecutive hourly top wick candles that closed on the 1HR 20EMA support trapping traders on both sides. Shortly after, the bears broke 2005 key level and rolled over to test the grey support area around 1998. Subsequently, the hourly extreme oversold signal “A+ Tier” setup confirmed itself with targets to 2035.75 and 2045.75. This meant that a 40-50 point bounce is likely in the works as long as bulls hold above 1991. The next 3 hours was just a snoozefest shaking inside a 10 point range. When it seemed like everybody fell asleep, the final day session hourly candle closed as a massive bull bar that eclipsed the previous 6 hours in gains. However, daily still closed below all moving averages so this is still considered a deadcat bounce.

What’s next?
Daily closed at 2018 and it was an inside day. The bulls currently have the ball and it’s up to them to score because there’s a very clear double bottom/higher low setup that targets 2033-2035. This coincides with the “A+ Tier” hourly extreme oversold signal targets of 2035.75 and 2045.75.

There is still no clear winner as today was just an inside day. Bulls still need to retrace above Friday’s high of 2029.75 and bears need a break below 1991 to continue the bear train assault. However, our bias remains the same which is the white line projection from the weekend report. If the market is really following our white line projection, then bulls must hold above 2010 in order to march towards 2035-2045. This means that tomorrow/Wednesday “should” reveal the winner for the intermediate roadmap of either Santa Claus Rally or the daily Double Top bear train. If nothing happens, then a rangebound shake between 2020 vs 1995 becomes a real possibility.

Knowing and understanding your timeframes is extremely important as we head towards next year. The weekly chart has a giant bull flag setup and a minor double bottom sticksave. For bears they must absolutely break below last week’s in order to keep the momentum alive for the bear train daily double top setup to 61.8% fib at 1932 and 100% at 1892. The monthly chart still favours bulls based on the large bull candle from October providing the market with the “hold half and go” setup. 

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This is the last KISS update for 2015 as I take a two week break in order to rejuvenate and cherish the moments with family and friends. Admittedly, I wasn’t able to end 2015 on a high note as December has almost always been a tough month for me. Regardless, this year has been fun and intriguing along with great prosperity. Wishing you all a very Merry Christmas and a wonderful Happy New Year! May all your dreams and goals for the coming year be fulfilled.







Sunday, December 20, 2015

E-mini S&P 500 Futures Weekend: Keep It Simple Stupid Series


The Final Reveal

Friday’s session was just a continuation of Thursday’s large daily bear engulfing candle. The overnight session made lower lows and when the day session opened the first hourly candle was a 1HR 20EMA rejection. This kept the train intact and accelerated into an 1HR 8EMA bear train very quickly. The bears didn’t stop until they made it to the 2000 target which was the next major support after 2022 was taken during the overnight.

A quick recap of what occurred this past week:

  • Monday deadcat expected from the hourly extreme oversold “A+ Tier” setup, formed a bottom wick candle
  • Tuesday continuation of the deadcat bounce marching towards the 2054 target
  • Wednesday closed above all moving averages, treating this rally no longer as a deadcat bounce
  • Thursday hit the trendline resistance and rolled over, daily closed as a massive bear engulfing candle that retraced all of Wednesday and half of Tuesday’s gains


What’s next?
Daily closed at 1994.75, this is below 1998.50 which mean the daily double top setup came back to life. Bears must break below 1983.25 to continue their assault and prove their momentum. Remember, the 61.8% fib of the double target resides at 1932.68 and 100% measure move at 1892.

The immediate targets are 1985 and 1970 (same as last weekend) from the bear train. However, the market is facing a very complicated situation with the hourly extreme oversold signal waiting to be confirmed vs. the on trend bear targets. Currently, our bias is the white line projection followed by the red which has a 40-50 point deadcat bounce in the works.
The main difference this time is that the signal has not confirmed yet on Friday Dec 18th as opposed to the December 11th initial confirmation followed by the December 14th morning confirmation.

The first two sessions of next week will likely reveal to us the winner of this year’s final battle between the bulls and bears. The winner decides the fate of the intermediate roadmap of Santa Claus Rally or the daily Double Top.

The Hourly Extreme Oversold Signal “A+ Tier” setup

Last weekend’s projection worked out well as the signal got invalidated below 1995 but confirmed itself again during Monday’s session which led to a 50 point rally that extended into almost 80 points. This meant that the 40-50 point deadcat bounce target was fulfilled easily. 

Now, we have a similar situation with the same support levels at 1995, 1985 and 1970. The signal will try to confirm itself at those levels and give us a 40-50 fast and furious deadcat bounce from the low. (Remember, we treat everything as deadcat bounces when daily is below all moving averages.)

We will see if the signal confirm during the Sunday night session and we have attached a projection chart similar to last weekend’s report. The difference this time is that bears have a slightly better chance at breaking down than last time because this is their 2nd try.

Our executed win rate for the overall hourly extreme oversold/overbought signals remains at 80%~ with over 200 trades across multiple instruments since we started tracking it around 5 years ago. 
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Fun fact: SPX cash index needs above 2058.90 to become a green year.







Thursday, December 17, 2015

E-mini S&P 500 Futures: Keep It Simple Stupid Series


The Final Battle Part 2

Today’s session was fairly straight forward as it was very similar to what was expected from last night’s report. The overnight session made a marginal higher high that tested against the major downtrend resistance line and bears found their footing. During the premarket, we shorted at 2070 when we saw the overnight pattern and the hourly extreme overbought signal confirming again. The trade had an initial risk of 3 for 10 that we trailed into a homerun for the 2054 and 2038 target extensions.

The bears had another chance to hop on the bear train with the 15m 20EMA rejection in the afternoon but unfortunately we had to step away from the office and missed it. Admittedly, we did not expect 2021 to be hit until Friday, but the bear train was impressive and fulfilled it with the second leg by the end of the day. This goes to show you never want to step in front of a train, but rather just hop on and enjoy the ride of high probability setup along with the great risk vs. reward. Overall, it was just a 15m 8EMA+20EMA bear train re-entries day so bears had a field day scalping and intraday swinging short.

What’s next?
Daily closed at 2023, this is below all the moving averages except the 100SMA. It was also a large bear engulf candle, which suggests the “hold half and go” setup/straight continuation down.

Bears did a great job today as we discussed the possibility of a hard rejection in the 61.8%-78.6% fib retracement area last night. The immediate targets of 2045 and 2038 have been fulfilled.

Our thesis remains the same, as long as no daily close below 2022 then the odds favour the bulls here based on the statistics of Santa Claus Rally since 1950. A close below 2022 with follow through below 2000 would be a huge threat to the bulls as the double top setup would come back to life. Remember, double top 61.8% fib targets 1932.68 and 100% measure move at 1892.

Currently, the hourly extreme oversold signal confirmed at 2017.50 around 8PM so it is setting up for a bounce tomorrow.

There is no immediate target for tomorrow as it is monthly options expiration and quadruple witching. If the usual happens, then we expect a quick bounce to find a range high and then range low to kill both sides then flatten at lunch for the decay.

What really matters to us is whether daily closes above or below 2022. Then, early next week Monday and Tuesday shall give us the final battle confirmation of the intermediate roadmap. It should determine whether the market is heading towards 2105 or 1945.

Current plan for tomorrow: trade 8AM – 11AM and peace out.





Wednesday, December 16, 2015

E-mini S&P 500 Futures: Keep It Simple Stupid Series


The Final Battle

Today’s session did not disappoint, the overnight session made a minor higher high riding the 1HR 8EMA bull train. At the day session open, the market provided a high probability short setup that was just below our predetermined important 2054 level from yesterday.  Subsequently, the market quickly rolled a few points to test the 2040 1HR 20EMA which was sticksaved and thus began the anticipated flatness shake from 12PM-2PM. Also, the 2017-2022 immediate bear target from last night had obviously failed as bears couldn’t deliver it by 12PM.

 The initial reaction to the 2PM Fed announcement was a spike down to the 1HR 50SMA support which was quickly sticksaved on the 1minute and  5min charts. Shortly after, the hourly candle closed above 2054 and revealed the winner and demolished the deadcat bounce thesis. Remember, from the weekend update the initial hourly extreme oversold “A+ Tier” signal gave us the 2054 target and in Monday’s report we stated that we are treating any bounce less than 2054 as a deadcat bounce. This was no longer the case as soon as the hourly candle closed and confirmed the immediate bullish sentiment.

What’s next?
Daily closed at 2060, this is above all the moving averages and on the very important 61.8% fib retracement.

Bears’ last chance is a needed hard rejection in this 61.8%-78.6% fib retracement area back to below the daily 100SMA at 2022. This is due to the fact that the weekly candle is trying to do a full retrace of last week’s perfect bear candle. Along with the context of the monthly chart’s October hold half and go upside setup that was sticksaved at the usual 20EMA on Monday.

A pullback is very likely for tomorrow’s session due to the first try at 61.8% fib along with hourly extreme overbought signal. The immediate targets are 2045 and 2038 for the pullback.

The most important support to note for this pullback is to hold the 2022 level as the intermediate roadmap is waiting to be confirmed for the targets of 2078, 2095 and 2105. Remember, the odds favour the bulls here based on the statistics of Santa Claus Rally since 1950. This is bulls fight to lose, not bears.