The S&P 500 futures chart (ES_F) rocketed higher at 2pm eastern yesterday and broke through resistance into highs near the first week of November. With all my commentary about buying support and buyers holding control in the futures market, this is most reasonable to assume as probable motion.
These moves do not often hold at the first pass, though, so watching the retrace will be key. Lots of economic news releases pepper the weeks ahead including FOMC and OPEC meetings upcoming. I still look to stock market seasonality to prop smaller names up, but if the rate hike moves in, watch global conglomerates to shift lower in the near term.
As buying support continues to be strong, look for pullbacks to be bought. However, I do not believe the price expansion upward will hold, but will instead exhaust –into potentially higher support.
Near term S&P 500 futures support still lies beneath near 2095 region and near term resistance near 2107.25 region. Because we are under tepid momentum readings, breaches on either side of those levels should test and return to their breach levels before continuation. Steep pullbacks remain buy zones in these formations as buyers continue to exert more control. Watch for the lower highs as a tell tale sign of exhaustion in the futures market.
Short time frame momentum indicators are mixed, and higher than Tuesday. Longer cycles are still bullish, but momentum is weakening upside. Most indicators on longer time frames at this point show buyers still in charge, but their strength is not aggressive.
See today’s economic calendar with a rundown of releases.
RANGE OF WEDNESDAY’S MOTION
Crude Oil (CL_F)
Crude Oil remains bearish in formation, and is currently struggling at support. OPEC meetings are clearly in view here – but the Saudis surely won’t bend. They have nothing to lose and everything to gain at the end of the game. The secondary support zone near 41.45 has also been broken in the futures market. For an intraday trading formation, we see a range event between 41.85 and 41.30 today. A breach and retest of these levels on either side will create an expansion of price based on the formation. Oil traders have become quite skittish and uncertain. Above a 41.87 retest sends us near 42.1, then 42.35 and 42.78. Below a 41.3 retest sends us to 41.18, 40.85, 40.14, and 39.9. Momentum on short time frames is negative.
S&P 500 Futures (ES_F)
Chart Key Levels For The Week (if we breach 2107, a new chart will be created)
Upside motion is best setup on the bounce off the support line near 2098.5. Congestion support lies near 2094. If the buyers have limited power, the chart will fail to breach and hold 2107.75. A hold of 2098.75 should deliver 2100.25, 2102.25, then 2105.25, 2107.5, 2110.25.
Downside motion below the failed retest of 2097.25 , or at the failure to hold 2102 opens a short (watch momentum on tight time frames- that would be an aggressive short). [BIG PICTURE NOTE => Short trades should be staged into S&P 500 futures support and then cautiously watched after some profit is taken, until we fail 2045 on a retest- that level represents a very strong buying support zone and will keep the chart essentially bullish on larger time frames.] Buyers are still in charge, though patterns look very tired. Retracement into lower levels from 2097.25 give us the targets at 2094.75, 2091.75, 2089.5, then 2087.25, 2085.5, 2081.25. Expansion levels can be found in the Platinum Level protected content.
As long as the trader keeps himself aware of support and resistance levels, risk can be very adequately managed to play in either direction as bottom picking remains a behavior pattern that is developing with value buyers and speculative traders.
Thanks for reading.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.