For a more in-depth longer term analysis into next month on the S&P, check out my SPY post linked below. Otherwise, same idea as that analysis just applied to ES with the modified price targets. Maybe some new information. Not really sure.
Otherwise, he we go for futures:
Recap:
Monthly
For the moth, SPY reached its first monthly bull target, and immediately rejected. It then free fell down and broke below its monthly trading range, where it closed the month, closing at 3,601.50.
In hindsight, I should have been more attentive to futures in this regard. Because it appeared that SPY found rejection before hitting its monthly high target, but had I referenced futures it would have made more sense. SPY chart below:
We had many negative news releases this month, from the FOMC to PCE, GDP, it was a never ending onslaught with very little positive news being released.
We did actually observe dramatic responses to these news events. Especially last week. The week started fairly stagnate and range bound and completely tanked and continued to tank with the proceeding news releases released throughout the week. I am not generally one to subscribe to the news matters thesis, so whether this was the news or not that caused the tankage is irrelevant. The fact is, it tanked and news was bad. Which brings me to the next recap:
Weekly
So last week, ES failed to really gain true bullish momentum, falling short of reaching any of the weekly high targets.
However, it wasn’t particularly bearish either, only hitting its first bearish target and finding support within the low trading range:
While severe bearishness may have been absent (I define severe bearishness as when ES can actually break out of its weekly mathematical trading range), ES and the market as a whole remained extremely heavy and failed to really gain and/or maintain bullish momentum.
I think the failure of overt, heavy bearishness comes from the over-extension of the stock to the short side. ES is quite oversold and its pushing deeper and deeper with every passing day.
You see on the hourly chart, ES is pushing oversold on both the RSI and on the Z-Socre (currently almost -2).
You also see that the Z Score gave 2 buy signals recently this week, indicating deep oversoldness. These buy signals tend to be extremely reliable on the 1 hour chart. We did get a bit of a bounce, but not the type of dramatic bounce that is traditionally associated with these deep buy signals. This really plays into the whole heaviness this stock has. People are not buying this up.
No matter which time frame you look at, this looks extremely bearish and like more selling is to come. However, we also seem just about ready for a technical bounce to relieve some of this oversold pressure. So what are the targets?
Well, thankfully for us, futures opens at 6 pm so we have live targets for ES!!!
For those who trade SPY, unfortunately you will need to wait till tomorrow, but for you ES traders, you get the deets now. So let’s go over our weekly, monthly and also intra-day targets.
Intra-day
Let’s do intraday first, because these are the pressing targets you will need if you are about to jump in to an ES trade:
Bullish: 3632, 3649, 3667
Bearish: 3573, 3551, 3530
My preference is for the lower targets here because I am actually anticipating a bit of a gap down on SPY tomorrow in order to finish the bearish flush and lead into a technical bounce. But, I guess we will have to see how that plays out. We did have a strong bearish close on Friday and I think leading into the ES trading session tonight, there will be a lot of fear and position exiting.
Weekly Targets:
Bullish: 3655, 3759, 3707
Bearish: 3556, 3494, 3432
Weekly targets, I am thinking we need to see both, at least the first high be hit. This would begin to relieve the over-boughtness and is supported by probability assessments (HOWEVER, these probability assessments are done on SPY and not ES, so please take this with a grain of salt). As such, I am expecting for us to be testing the first bull target on SPY this week, so its only logical we should probably test it on ES.
Monthly:
Monthly is also posted in the main chart.
Bullish: 3856, 3945, 3900
Bearish: 3403, 3323, 3243
Again, probability assessments conducted on the SPY equity support testing both. How this translates over to ES, I am not sure because obviously the targets are different. ES hit its first bull target on the monthly in September but SPY did not. While the underlying may be the same between SPY, SPX and ES, the math that predicts the targets and ranges are very different and we can’t use these models interchangeably. SO its good, if you follow my targets and ranges, to follow both independently and pay attention to both ranges and the stocks response to them accordingly.
Verdict:
What I really love about ES is the trajectory is quite clear. This still is very much in a downtrend with a very strong linear regression Pearson correlation. Aside from Sept 12th, it has not attempted or been successful at breaking out of its downtrend channel.
That said, we are coming up to a time when ES would traditionally move outside of its trend momentarily:
ES seems to like to do these runs for between 1.2 to 1.5 months and we are pretty much there now. We should see ES start to try to do something different and new.
For actual time series model targets, view my SPY post.
Looking at Heikin Ashi, we see some stagnation developing on the 1 hour (when the wicks align) which tends to be a bottoming pattern, indicating a trend reversal is incoming.
Summary and Key Take Away:
Overall, its smart to maintain a longer term bearish bias. There is more to come for this longer term downtrend. That I can guarantee you.
However, short term, I would assume some slight bullishness, if you are playing either on a day trading basis or a short swing trade term (like 2 to 1 week max).
The targets are above, I won’t re-iterate them here because there are 3 separate sets of targets for 3 separate types of traders. Review which ones matter to you, but you should pay attention to all because its never great to trade the short term without understanding the long term.
Otherwise, he we go for futures:
Recap:
Monthly
For the moth, SPY reached its first monthly bull target, and immediately rejected. It then free fell down and broke below its monthly trading range, where it closed the month, closing at 3,601.50.
In hindsight, I should have been more attentive to futures in this regard. Because it appeared that SPY found rejection before hitting its monthly high target, but had I referenced futures it would have made more sense. SPY chart below:
We had many negative news releases this month, from the FOMC to PCE, GDP, it was a never ending onslaught with very little positive news being released.
We did actually observe dramatic responses to these news events. Especially last week. The week started fairly stagnate and range bound and completely tanked and continued to tank with the proceeding news releases released throughout the week. I am not generally one to subscribe to the news matters thesis, so whether this was the news or not that caused the tankage is irrelevant. The fact is, it tanked and news was bad. Which brings me to the next recap:
Weekly
So last week, ES failed to really gain true bullish momentum, falling short of reaching any of the weekly high targets.
However, it wasn’t particularly bearish either, only hitting its first bearish target and finding support within the low trading range:
While severe bearishness may have been absent (I define severe bearishness as when ES can actually break out of its weekly mathematical trading range), ES and the market as a whole remained extremely heavy and failed to really gain and/or maintain bullish momentum.
I think the failure of overt, heavy bearishness comes from the over-extension of the stock to the short side. ES is quite oversold and its pushing deeper and deeper with every passing day.
You see on the hourly chart, ES is pushing oversold on both the RSI and on the Z-Socre (currently almost -2).
You also see that the Z Score gave 2 buy signals recently this week, indicating deep oversoldness. These buy signals tend to be extremely reliable on the 1 hour chart. We did get a bit of a bounce, but not the type of dramatic bounce that is traditionally associated with these deep buy signals. This really plays into the whole heaviness this stock has. People are not buying this up.
No matter which time frame you look at, this looks extremely bearish and like more selling is to come. However, we also seem just about ready for a technical bounce to relieve some of this oversold pressure. So what are the targets?
Well, thankfully for us, futures opens at 6 pm so we have live targets for ES!!!
For those who trade SPY, unfortunately you will need to wait till tomorrow, but for you ES traders, you get the deets now. So let’s go over our weekly, monthly and also intra-day targets.
Intra-day
Let’s do intraday first, because these are the pressing targets you will need if you are about to jump in to an ES trade:
Bullish: 3632, 3649, 3667
Bearish: 3573, 3551, 3530
My preference is for the lower targets here because I am actually anticipating a bit of a gap down on SPY tomorrow in order to finish the bearish flush and lead into a technical bounce. But, I guess we will have to see how that plays out. We did have a strong bearish close on Friday and I think leading into the ES trading session tonight, there will be a lot of fear and position exiting.
Weekly Targets:
Bullish: 3655, 3759, 3707
Bearish: 3556, 3494, 3432
Weekly targets, I am thinking we need to see both, at least the first high be hit. This would begin to relieve the over-boughtness and is supported by probability assessments (HOWEVER, these probability assessments are done on SPY and not ES, so please take this with a grain of salt). As such, I am expecting for us to be testing the first bull target on SPY this week, so its only logical we should probably test it on ES.
Monthly:
Monthly is also posted in the main chart.
Bullish: 3856, 3945, 3900
Bearish: 3403, 3323, 3243
Again, probability assessments conducted on the SPY equity support testing both. How this translates over to ES, I am not sure because obviously the targets are different. ES hit its first bull target on the monthly in September but SPY did not. While the underlying may be the same between SPY, SPX and ES, the math that predicts the targets and ranges are very different and we can’t use these models interchangeably. SO its good, if you follow my targets and ranges, to follow both independently and pay attention to both ranges and the stocks response to them accordingly.
Verdict:
What I really love about ES is the trajectory is quite clear. This still is very much in a downtrend with a very strong linear regression Pearson correlation. Aside from Sept 12th, it has not attempted or been successful at breaking out of its downtrend channel.
That said, we are coming up to a time when ES would traditionally move outside of its trend momentarily:
ES seems to like to do these runs for between 1.2 to 1.5 months and we are pretty much there now. We should see ES start to try to do something different and new.
For actual time series model targets, view my SPY post.
Looking at Heikin Ashi, we see some stagnation developing on the 1 hour (when the wicks align) which tends to be a bottoming pattern, indicating a trend reversal is incoming.
Summary and Key Take Away:
Overall, its smart to maintain a longer term bearish bias. There is more to come for this longer term downtrend. That I can guarantee you.
However, short term, I would assume some slight bullishness, if you are playing either on a day trading basis or a short swing trade term (like 2 to 1 week max).
The targets are above, I won’t re-iterate them here because there are 3 separate sets of targets for 3 separate types of traders. Review which ones matter to you, but you should pay attention to all because its never great to trade the short term without understanding the long term.
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