Weekly Market Update: ES Waking up from a Bearish Slumber?
Recently, the market has been reluctant to give back any gains over the course of the last three weeks.
But is that changing now?
Price action is a function of trader sentiment. Knowing that, every morning I wake up and ask myself, “WHY would any trader (fundamentally or technically) want to own stocks right here”? Seriously, there is no case to be made either on a fundamental or technical basis. Nonetheless, that is not how price patterns form. You need someone to take the other side of your trading thesis. Without that liquidity, I think the market would have other (more serious) issues.
Technically, I have the ES having just completed its D-wave in a triangle pattern that started on December 22nd. That means we should decline in a 3-wave pattern in our E-wave for completion of our larger B (as shown on the chart). This retracement down should ultimately complete around the area of BEST CASE: ES-4005 and worst case (if the triangle pattern is correct) ES-3877. However, determining that as a legitimate bottom will be whether we can decline and maintain positive divergence on the MACD indicator.
I’ll conclude by keeping this simple. If at anytime during my expected decline into the 4005-3877 area, MACD prints lower than the red-line on the chart... That is a clue we will get continuation…and we will continue to do so, until we can build a pattern of bottoms on positive divergence. Keep that top of mind over the course of the next couple weeks.
But is that changing now?
Price action is a function of trader sentiment. Knowing that, every morning I wake up and ask myself, “WHY would any trader (fundamentally or technically) want to own stocks right here”? Seriously, there is no case to be made either on a fundamental or technical basis. Nonetheless, that is not how price patterns form. You need someone to take the other side of your trading thesis. Without that liquidity, I think the market would have other (more serious) issues.
Technically, I have the ES having just completed its D-wave in a triangle pattern that started on December 22nd. That means we should decline in a 3-wave pattern in our E-wave for completion of our larger B (as shown on the chart). This retracement down should ultimately complete around the area of BEST CASE: ES-4005 and worst case (if the triangle pattern is correct) ES-3877. However, determining that as a legitimate bottom will be whether we can decline and maintain positive divergence on the MACD indicator.
I’ll conclude by keeping this simple. If at anytime during my expected decline into the 4005-3877 area, MACD prints lower than the red-line on the chart... That is a clue we will get continuation…and we will continue to do so, until we can build a pattern of bottoms on positive divergence. Keep that top of mind over the course of the next couple weeks.
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