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

The Consolidation Ahead 

Today’s session was fairly interesting based on the battle of the shorter intraday timeframes vs. the longer timeframes such as hourly and daily. First things first, as some of you already know the Hourly Extreme Overbought “A+ Tier” signal was confirmed overnight at roughly 1:45AM when I posted about it this morning at 8:57AM EST. That set the tone for day as long as prices stayed below 1905 along with the overnight lower high pattern.

When the day session opened, the micro charts were really shaky because the 5m+15m timeframes had double top vs. double bottom within the first 35 minutes. This created the shakefest for the morning session and most traders were probably feeling frustrated with the range. Once the bears broke below the 1886.50 level they had a clear shot at 1882 to accelerate the bear train. However, a 15m bull engulf quickly cemented the temporary bottom when bears couldn’t decisively break below 1882 that got sticksaved by the bulls. Fast forward, at 2:00-2:30PM everybody and their mother probably saw the clear flush setup with the consecutive lower highs rejection. Overall, pretty shaky day except the afternoon breakdown that stemmed from the massive feedback loop setup.

What’s next?

Daily closed at 1871.5 and back below daily 8EMA. The high was 1904.25 from Sunday night vs. the 1907 major resistance we discussed in the weekend report. This means that bears are actually stronger than we expected as they rejected the bulls’ attempt of breaking above major resistance like clockwork.

The Hourly Extreme Overbought “A+ Tier” Signal

As mentioned this morning, the targets are 1860 and 1850 and it invalidates above 1905. ES is trading at 1867.5 as of writing; bears should not let bulls retake 1877 if this is going towards the initial targets. This means that we should use 1877 as an ideal trailing stop.

Current Projections/Road map:

1842-1860 is a major support area for tomorrow and the bulls have a chance of being sticksaved there if the bears fulfill the extreme signal targets. Assuming this key zone holds, we expect a temporary bounce back of at least 25 points based on short-term oversold conditions. Eg. if sticksaves at 1855 then bounce to 1880, if sticksaves at 1845 then bounce to 1870.

The daily roadmap would be back to 1925~ which is the daily 20EMA resistance assuming the major supports hold the next couple days as it’s setting up for a 1-2-3 trend change pattern here.

The alternative scenarios are that this turns extremely bearish by breaking below 1836.25 and then we resume the daily 8EMA bear train. Or even the bears can’t break below 1865 and bulls manage an overnight sticksave back above 1877.

P.S. Targets from the Extreme signals are not the same as immediate targets so do not be misled.

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

The Weekly Bear Train Shorts Re-entry

Friday’s session was fairly slow if traders missed the overnight rally that busted the 1883.25 resistance with the 1HR 20EMA bull train into an accelerated 8EMA by the day session open. During the day session, the bulls got rejected at the 1900 major resistance level on the first try and the bears tried for a reversal pattern on the hourly chart. However, the intraday bears failed to confirm the breakdown as the 1881.75-1883 key support level held and bulls grinded higher. It wasn’t an easy money session for  traders  if they missed the optimal entry from Thursday’s overnight entry and looking to hop on the train given that there’s major resistance ahead. Overall, we decided to take the rest of the day off around 10:30AM as we couldn’t spot any high probability setups left and didn’t want to partake in a potential shakefest setup.  Always remember cash is a very great trading position to be in.

What’s next?

Daily closed at 1899.25, the bulls got their bottom wick hammer but it did not close at the exact highs.

Current Facts:

Daily chart is no longer an accelerated 8EMA bear train. Weekly chart still an established bear train. Monthly has 5 days left for the candle to close.

Recall last week’s report, we gave a little rant about how “everyone” became bearish in the long term (3-12months out) based on the previous two weeks action. The market has now formed a temporary bottom at 1804.25 and bounced almost 100 points. If you remember, the 1800 vs. 2134 range was the 3 year trading channel we discussed. Now, we are treating the current rally as a daily deadcat bounce vs. the established weekly bear train context. We will be using this thesis until bulls can at minimum clear above the 1967 resistance level which is roughly the half way point of the trading channel. Also, it is just slightly under the 61.8% fib retracement of the December high of 2075 vs. Jan 20’s 1804.25 low.

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Based on current projections, we expect the deadcat bounce to be rejected near the daily 20EMA which is currently 1937 (this number will change at 6PM Sunday open) paired with major horizontal resistance at 1907 and 1927. This means that if the weekly bear train is still strong as we expect, then the bears should reject it at this major resistance area coming up.

The current 100% measure move on the hourly chart for the bulls has a target at 1908. Funny thing is that our initial projection from the Wed Jan 20 report turned out to be fairly accurate. We were off by roughly 3 points as we expected the bulls to hold the overnight pullback at 1833, but instead they held support at 1836.25 and started the higher lows rally. Then, the next day the bulls continued the breakout with the sneaky overnight rally – goes to show that following a plan is much harder than it looks as we did not have much conviction trading on Friday after missing out the optimal entry.

The Upcoming Hourly Extreme Overbought Signal “A+ Tier” setup

We’re waiting for the signal to confirm on Sunday night or at Monday’s day session open to potentially short this deadcat bounce for quick 40-50 points down. We will update this in real time when the signal confirms, but our current expectations are anytime inside the 1907-1927 major resistance region.

Hypothetical Trade Plan/Road map

Run up to 1910-1920~ major resistance -> short back down to 1880-1870 based on deadcat bounce thesis -> see if makes a higher low or continues its way down to retest 1804.25.

(Obviously, a close above daily 20EMA would be unexpected and we would have to reassess in real-time and adjust our plans accordingly.)

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TLDR: Short-term wise we expect up first until 1907-1927 and we plan on shorting this deadcat bounce on the daily chart based on weekly bear train thesis.

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

Daily 8EMA Bear Train vs. Temporary Bottom Part 2

Today’s session started off with last night’s pullback to the 1841 and 1833 support area as expected by our projection chart. Then, the overnight bulls the pullback and proceeded with the short-term relief rally. An hour before the day session had opened; the market made a double top vs. the Jan 20 high on the 15m chart. However, the bears were unable to break below the overnight lows and the bulls sticksaved back to the highs when the day session opened.  This paved the way for the 1878.5 breakout level (Jan 20 high) that bulls were looking to squeeze to the immediate target of 1890. However, we soon learned that the intraday bull train quickly failed as it could not sustain above 1880 and moments later broke below the trending 5m 20EMA. Overall, the session was just a shakefest as our plan from last night was to trade small sizes.  In hindsight, that initial breakout of the 1876-1878.5 level was a great false hope rally that trapped intraday bulls (including us) and the daily 8EMA bear train once again proved their worth.

What’s next?

Daily closed at 1861.5 and it was a spinning top candle showing indecisive action. This means that we are still expecting the shakefest to continue as long as the market trades in the 1883.25 vs. 1836.25 range. Above or below those levels, then the market should become much easier to trade and whipsaw less.

There are no immediate targets or projections for tonight because it’s just a shakefest and there’s no edge. Remember, this is still an 8EMA accelerated bear train, but the momentum of price is shifting with how bulls managed to sticksave on Jan 20 off the 1804.25 vs 1800 major support level.  The market is trying to change the daily bear stance into a neutral to short-term bullish with this basing pattern.

Current Plan for tomorrow:

Same as last night, keep position sizes small as the shakefest continues. When above 1883.25 or below 1836.25, then it should become easier to trade by having an edge. 

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

Daily 8EMA Bear Train vs. Temporary Bottom

Today’s session started off with last night’s overnight breakdown below last week’s low of 1849.25. This provided the bears with the bearish breakdown continuation targets of 1834 and 1805.

When the day session opened, the bears got a chance to board the train using the 1HR 20EMA resistance. Shortly after, the hourly candle closed as a top wick rejection bar that engulfed the previous bar. Basically, the 1HR 20EMA bear train accelerated into 8EMA and as noted in the pre-market post about the major support levels. If 1831 breaks during the day session, the flush setup was in place and the major levels were 1813 and 1800 after. If 1800 broke, then the flood gates would open up 1775 and 1750.

When the bears fulfilled the 1805 measure move target from last night, it paved the way for bulls to have a deadcat bounce to 1820. As noted in our intraday comment, the bulls had a defined risk vs. reward trade using the major support level of 1800. However, we soon learned that this deadcat bounce was more than expected as the 30min and hourly closed as bull candles. At this point, we noted that if bears are unable to maintain the train below 1839 then a reversal bull train would be in the works. It was also apparent that if we had a 5min or 15m close above 1842 then the measure move for the reversal bull train targets 1865-1870 with the 1HR 20EMA feedback loop squeeze.

What’s next?

Daily closed at 1852 as a massive bottom wick candle, this means that the bulls most likely found their temporary bottom and setting up for a short term relief rally in the daily chart context.

We are currently projecting a potential pullback back to the 1841 and 1833 support levels (50% fib retracement 61.8% fib retracement) then bounce. However, the most ideal case for the bulls is to hold the 1850-1855 area if they want to setup an accelerated reversal pattern instead.

Technically, this is still an 8EMA accelerated bear train, but the momentum of price is shifting with how it closed today from the sticksave off 1804.25. If bulls are able to hold support tomorrow then we could be in for a short-term relief rally back to at least 1892, 1900 and 1905 in the next few sessions.  

Current Plan for tomorrow:                                                                                             

Keep position sizes small as we could potentially shake inside the 1878.5 vs. 1804.25 for the entire session as most of the “easy money” has been made already.