9/27 Daily Recap, Outlook, and Trading PlanRecap
The ultra-bearish confluence we found ourselves in last week has continued with the most bearish two weeks of the year seasonally in late September and the breakdown of the ES chart pattern at 4472. This has resulted in a sell-off with a major magnet at the 4335 level. Despite a brief green day and a 45 point bounce, further revisiting of the 4335 level has indicated bad news for the bulls.
Key Structures
The large, multi-month triangle pattern remains the primary pattern. The bulls need to reclaim this pattern at 4485 to set a "sustained bottom". The 4377-83 level has been a significant ceiling and the 4336 level remains the most important level, acting as the backtest of the 9 month base.
Support Levels
Support levels to watch for are: 4308, 4291-96 (major), 4280 (major), 4269, 4253, 4232-36 (major), 4219, 4212, 4205, 4190, 4181, 4165-70 (major), 4147, 4135, 4125 (major).
Resistance Levels
Resistance levels to note are: 4314, 4322, 4335-38 (major), 4351-49 (major), 4360, 4366 (major), 4377-4383 (major), 4391, 4400, 4417 (major), 4424, 4439-41 (major), 4449, 4455, 4467 (major), 4485-88 (major).
Trading Plan
The bear case continuation begins again on the fail of 4290. The best shorts are always backtests on bounces. One possibility would be the loss of today’s low, perhaps 4307 for the final flush into support above. The 4290 breakdown would also be a short, but I’d need extensive acceptance here first then I’d be getting short very high 4270s for a large sell leg again into the 4230s.
The bull case would involve ES holding 4291 as the absolute lowest, then reclaiming that level. I’d need to see 4335-38 test, then a sell at the level. Then I’d need to see price return there to accept it and build a base, after which I’d be looking long, perhaps high 4330s.
Wrap Up
We’re approaching a key support area between 4290 and 4297. This area marks the 50-day moving average and prior swing highs from August. As long as prices hold above 4290-4297, the index may be poised to bounce and put in a relief rally after the recent sell-off. However, if 4290 fails to hold as support, we could see a test of the 4280 level which marks the 200-day moving average. Below 4280, the next major support is around 4232-4236 which was the June low. In summary, 4290-4297 is an important support zone to watch. A bounce from here could signal a relief rally, but breaking below would open the door for a retest of the 200-day MA at 4280 and potentially the June lows.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision
