The ES, (S&P futures) gapped open today under the November 739.00 low and there's a good chance it's going to close below that. Yesterday, in my first post on this board, I commented on an inverted head and shoulders formation on the 60 minute chart for the ES/S&P. Price went right up to the breakout point but didn't break out. It was a beautiful formation and probably baited a lot of longs to jump in prior to any confirmation of a breakout. Now those longs are feeling stuck if they didn't get out at the gap fill today. So, the formation turned out to be a bull trap for aggressive bulls.
The next thing to watch for, imho, is trading below that 739 price on the ES, (741 basically on the S&P), long enough to get the bears feeling confident. Then watch for a bear trap as the market makes a move back up through the Nov. lows. If it happens, it could be after a week or two or as soon as early next week. There is RSI and MACD divergence so far on today's lows, which is indicating the possibility that a rally could occur from here if we don't go lower in the ensuing weeks, bringing the RSI/MACD lower than the Nov lows.
Addendum: If a rally is to occur soon, you want to watch for a capitulation day where there is a strong downdraft on higher than avg volume. That would be a good sign to watch for a bear market rally. Ultimately though, I don't see how any rally at this point is going to start a new bull rally. Everything I read is saying there's more rough going ahead before things start to get better. Just my opinion!
Hope this makes sense/helps.
Have a great weekend.
Rich
Unless otherwise stated, any and all information I post is my opinion which is subject to change. I accept no responsibility for anyone who chooses to take any action based upon anything I post.
AI
