2013-01-14

$ES_F : 1459-1470 expected day session range


Expected regular trading session range for e-mini S&P500 futures

Markets at Multi Year high can bring some pull-back. Cautiously bullish.


Markets have been maintaining their bullish stance but in a very narrow range. So far it appears that the control is in the hands of longs and therefore any pull-back is being bought however there has not been a high energy breakout on upside. Given that markets are at multi year high a pull back to 1450 area is warranted before next up move can be built. If the upward momentum can be maintained, 1500-1526 is next target area for emini.

Today I would expect 1456-58 area acting as support and 1461-63 area as minor support. I will update the comments section as the day develops. However the following are some concerns.

  • Markets have now touched multi year high level which were last seen in Jan 2007 and its setting up a double top, which can bring a temporary pull-back. I would expect some selling in that area, especially in the early part of the session. For bullish case to remain, the area needs to be breached convincingly.
  • VIX is at multi year low and the term structure is steepening (predictably in anticipation of another drama related to Debt Ceiling in coming months). Any pick up in VIX can halt this rally temporarily.
  • The rally which started from 31st Dec 2012 has met its initial target at 1468. If this rally is not extending, we are due for a pull back.
S&P is showing the pattern that after early attempts to bring the markets down, the selling is absorbed either by new buying or short covering. Indicating that so far the shorts have lacked the power to bring a reasonable pull-back. However another point to note is that its mainly a chop type narrow range conviction less trading for most part.

Today also my initial bet is to expect continuation of move up. I would expect the low of the regular trading session in 1456-58 area which is the support consisting of next measured move long. Minor support is expected at 1460-63 area. Expecting the usual 10-12 point day session range gives the upside target as 1466-70 area. There could be some stop driven move above 1470 area in case the bullish energy is high.

If after breaching 1457, the market is unable to rise above 1466, I would need to reject the bullish case temporarily and a move to 1452 can start which is due for some time.