Trading plan for May 24, 2013

ESM3 Daily Chart

ES dropped further in reaction to bad economic news from China news during overnight trading, but quickly found support after the market opened. It managed to retrace back up and closed near the 38% fib retracement area.

Based on daily chart, ES just hit its major support level (20ema line) at 1632 area and bounced from it. It managed to close above the 9ema line, which leads us to think this market still remains bullish. The pullback is just one way to release overbought pressure.

Today if ES can go up to fill 1655.50 gap and goes higher up to 1675-78 range, then it is likely to move back up to challenge the long term resistance level again.

Date Added: 2013-05-23 20:38:00
Downloads: 12

Trading plan for May 23, 2013

ESM3 Daily Chart

ES rode strong into Bernanke's testimony yesterday. But quickly faded and sold off from the new highs made during the testimony. Volume was up by 42.9% compared to the prior trading day. At the end, ES lost 10 points for the close.

Yesterday's pullback was the first decent declining days since April 17.2013. Price was countered by bulls at their support level around 1546.50. Today we need to see some kind of follow through to the downside by ES. Without it, ES could bounce back again, and then yesterday's declining is only one day to release the short-term overbought pressure. 1666.75-68.50 is the key zone for ES. As long as ES manages to hold price down, the next major downside will be 1640-38 range or lower to 1627-24 range.

Date Added: 2013-05-22 21:03:37
Downloads: 20

Trading plan for May 22, 2013

ESM3 Daily Chart

ES showed some weakness on the closing. At the same time, short-term overbought conditions and a lack of public buying bring lots of concern to the floor. A negative divergence has been building up between the MACD indicator and price. It indicates that some kind of small pullback (correction) will be on the way soon.

Right now the price is not far from the long-term major resistance level at 1685 level. Also ES has had 22 days of rally without any three-day pullback. As soon as the rally runs out of steam, a pullback into 1620-1615 range for testing should be expected.

Date Added: 2013-05-21 20:26:55
Downloads: 20

Trading plan for May 21, 2013

ESM3 Daily Chart

ES made new highs yesterday in the morning session, but later struggled to hold the gain due to an overbought condition.

The internal indicators were mixed. The put/call ratio hit the lowest level since last Nov when ES made its Nov. low. Short-term overbought could bring concern to many buyers and lead to some profit taking on the way.

Based on the price action yesterday, even though Bulls still hold the 1659-57 support zone, the strength for fighting for the upside starts to decrease. It indicates that a small correction may be seen in the next couple of days. But as long as 1600 psychology support holds up, ES will rally back.

The market has a short-term overbought condition, but is not overvalue in itself.

Date Added: 2013-05-20 21:53:13
Downloads: 17

Trading Plan for May 20, 2013

Weekly Outlook - S&P500 Cash Index (SPX)

The S&P 500 cash index ($SPX) closed at 1667.47 on Friday, up 33.77 points for a 2% net weekly gain.

 It was the third week that S&P500 moved into previously uncharted territory. It made a new high around 1667.47 and extended its weekly winning streak to four.

This week is a pre-holiday week. S&P500 is more than 1000 points above its low in 2009 and we should be concerned about the market's extreme optimism. Profit-taking will be seen at some point.

SPX Weekly Chart

Technical analysis

In the short-term, SPX has now made a 100% extension from its 2011 yearly range. The SPX has also had 1000 points gain from the 2009 low, which an important psychological milestone. Both could lead some buyers to lock in their profit in the coming days.

The short-term indicators are extremely overbought; in addition there is a small negative divergence between the price and the MACD indicator. That indicates a small pullback could happen soon. If SPX fails to break through 1685 level this week , a pullback into the 9ema line (weekly) 1600-1605 zone should be expected.

The long term uptrend remains bullish. Any pullback towards the intermediate-term support lines will be countered by the buyers. 1600-1590 is first major support level. As long as this support stands firm we will continue to see the rally march toward its final destination around the 1734 level.

Monthly resistance 1700 and support 1575; Weekly resistance 1685 and support 1630.00

Daily Outlook S&P500 e-mini futures (ES)

ES had option expiration on Friday. The option squeeze pain pushed the price up to new high territory. Based on Friday’s closing, we may see a continuation high move today. But for this to occur the price needs to go down first and hold above first hour low and then reverse up to breakout first hour high.

Market sentiment is strong, it could remain strong until people realize the risk. So far we didn't see any awakening. Everyone could be steady running into a trap set by the big firms

Date Added: 2013-05-18 22:27:16
Downloads: 23