$ES_F : 1496-1506 Expected Day Session Range for EMINI

Undecided. Will SPX end the rally or end the 5th consecutive week in green.

No rush picking tops but caution required on long side.

Markets ended the month end in the choppy area as I pointed in this post. For the short set-up to be active, the markets should have closed bit lower. Overall SPX ended the month on bullish note and optimistic start of new year. As of today, two competing set-ups are in play. Short from 1500 is still not broken in day session and measured move long from 1496-94 is also in play. Target area of 1520 and unployment/NFP numbers are broadly in line but unemployment rate ticked up slightly. So far SPX has reacted in bullish fashion.

I am undecided today in terms of trading. Today I would expect 1496-94 as initial area of support. I will update the comments section as the day develops. Factors affecting the rally are:

  • Markets are looking for a pause after successively making multi year highs. 
  • VIX has started ticking up and now above 14 handle. This is a danger signal for bullish side.
  • There are signs of fatigue developing for the bulls.

My initial bet would be for finding support at 1496-94 to hold leading to a build up to 1510. I would expect high of day in the region of 1504-08 area given 10-12 point expected range.

However given the conflicting set-up there is a risk market will develop a bearish tone. Break of intra-day long set-up will give a clue to that effect. Today appears to be one of those days where I might not trade at all or very fast scalps.

If after breaching 1490, the market is unable to rise above 1497 I would need to reject the bullish case temporarily and expect further move down. Similarly the initial line in sand for shorts is 1512 area. Remember we are still in major long set-up and therefore bearish trades, in the initial phase require caution and confirmation from intra-day set-ups. Any profits on counter trend trades needs to be taken quickly before the trend change is confirmed. So far no short set-up has played with supporting follow through so case for shorts is difficult at this time.