2013-01-28

$ES_F : 1494-1504 : Expected day session range for EMINI



Market with extending rally.

Bullish until trend change. 1500-1520 in sight.


SPX has 8 consecutive green sessions so far even after bad news on from AAPL. This is showing the euphoria and strength of this bull market. On a quick look I could not find such pattern before on chart but I will have a look later on. The rally is over-extending but we there is not yet a short set-up in play yet. If this is what markets want, this is what they will get.  The next target area of 1500-1520 is in sight now. For trend to change we need to have one established short set-up to run for at least a day.

Today I would expect 1492-94 as initial area of support. I will update the comments section as the day develops. Factors affecting the rally are:

  • Markets are now at multi year highs and many long set-up targets are met. Target for rally from May 2012 remains at 1520 and I would expect that to be met as well. For all its worth, we are in key resistance area and market can correct by 15-20 points without much notice.
  • Even though VIX ticked up yesterday it is still at multi year low. The term structure has started flattening as well (3m spread 2.76). Any pick up in VIX can halt this rally temporarily however so far it seems market is oblivious of any danger.
  • Market is riding on earning optimism as well as forecast for future and so far the bulls are in control.

My initial bet would be for finding minor support at 1494-92 to hold leading to a build up to 1502-04 and higher area. I would expect high of day in the region of 1502-05 area given 10-12 point expected range. 149

Main support for longs is at 1484-87 area.

If after breaching 1480, the market is unable to rise above 1492 I would need to reject the bullish case temporarily and expect further move down.