After Sunday night’s grind up, Monday’s regular trading hours session was just a very tight consolidation overall range of 3083-3072.5 on the S&P 500, trapping and baiting traders as it gets ready for the next move. Price action could not gather enough strength yet to break above the 3085 key level and force a mini squeeze towards the 3100 major short-term level.
The main takeaway from this session is that the market is still showcasing the ongoing acceleration phase from last week’s breakout above 3029.5 (prior all-time highs). However, the market is battling against the 3085/3100 resistance zone and, based on the current odds, showcasing another temporary top setup before ramping higher. If it does not, then it opens up a rare scenario where the 3193.75 target could be reached directly with a vertical squeeze to erase all doubts/odds. Know your timeframes because ultimately a temporary top/consolidation setup allows the market to backtest significant trending supports in order to reset the internals and ramp higher at a later date.
Monday closed at 3075.75 on the Emini S&P 500 and nothing significant has changed from Sunday night’s report. Our key points:
- Immediate trending supports have moved up to 3072 and 3065. All micro dips are considered buyable when above 3055 depending on your timeframes, but the risk exposure has increased greatly as price action battles against 3085/3100
- Based on the current odds, the first try against the 3100 area should play out as a temporary rejection/taking a breather consolidation. However, if that does not occur, then bulls are considered much stronger and could open up an acceleration on top of the existing acceleration phase that eclipses the current momentum in order to force a quick squeeze towards the 3193.75 macro target from months ago.
- To be a legitimate bear and not a mythical creature, we need to see a daily close below 3000 to begin looking for downside follow through setups. Otherwise, odds are too low to attempt as you need to take quick 1:1 profits or you will be stuck with a bracket stop as demonstrated.
- Short-term, if below 3030 decisively would confirm more consolidation ahead and price may be just stabilizing before another attempt to ramp up higher (see daily 20EMA playing catch up).
Ricky Wen is an analyst at ElliottWaveTrader.net, where he writes a nightly market column and hosts the ES Trade Alerts premium subscription service.
Equities Contributor: Ricky Wen
Source: Equities News