Chart says it all. It appears to me as if we are in similiar period as late 2000/early 2001. If we break 1400 then we will probably retest the highs, but if we fail at this level then the next level down is the 1100 level. This is a level that has been mentioned many times here on this site...also note the other lower levels which are quite possible as well. How amazing that the high last week was 1399.10. Its almost as if the great index is teasing us. The index will have to find reasons to break past 1400 and the summer usually doesnt bring many reasons...I believe we are setup now to go to 1100-1150 area with that low coming during either the 3rd or 4th quarter.
I posted this chart in another thread. If bulls really want to make a case of how great the economy is (haha), they would push this past 1400 and retest old highs. We're forming an uptrend wedge, which as you know indicates we may get a lower trend now. Volume was also significantly higher, as notated on the chart, which could signal the end to the rally. Doubt it that we'll pass through 1400 and stay above it. More of a chance to hit 1250 again sooner than 1500. I'm short the ES from 1399.50 (minus commissions of course) since Friday and probably will hold up till Wednesday (Fed rate decision).
With lots of support below like 50 day and others and massive rate cuts and clearly a Fed sponsored rally do you really believe this is going to crash down? Those days are gone. There is too much money on the sidelines watching 1400 levels. Money market accounts are paying 2-3 % where those funds will end up going now? Doom and Gloom can only last so long. Your recession has been proven so far. Your bearish ambitions unfortunately are capped at the knees. Stop buying those SPY puts they will end up going worthless. Stop losing money Jackstone you are the lonely one here.
Be aware that levels can be headfaked. A move to 1425-30, for example, would look like a breakout and convince many bears to turn bullish. So IMO it is pretty meaningless. It would take a move to maybe 1450 to really signal a potential new bull, and even then I think it would retrace to 1400 or a bit below first, just to scare people out form the long side again. Basically if you have a stop at 1405 or 1410 or something, be prepared to get taken out even if you are "right" in the long term. Ditto if you are waiting for those prices to get long.
How many actually believe that a close above 1400 would actually mean new highs on the s&p over the next 2-3 months??? This could become one big head fake for many bears looking to turn bullish....
The whole sentiment has changed, shorting the rallies tick by tick and heading to the hills has ended. Your career is over, get on the right side of the market or get crushed. There is too much of bullish momentum and as you know the Feds are rigging the game with various tools and manipulations all along. They will not let you run the Casino. Economic stimulus package is on the way in May and it will kick start at least 100 basis points in the GDP...more flat screen TVs, IPODs, Nike Super dunks, Starbucks Lattes and trips to Disneyland.
Who knows? But it certainly is not going down. Market has shrugged some real bad news lately. Your bear market dreams are done...This is not 2001- 2003.
I studied how it looks in past in similar situations. I believe: 1. 1400 is fake resistance, True resistance is a bit higher 50% fibonacci from high to low and 200 day EMA 2. In similar situations in past these resistances WERE BROKEN but in difference to bull market they did not converted to support. After shorter periode of hesitating market was falling from there. Only if 1420 ES will be broken and we will stay ther as minimum 3 weeks than probably bear trend will end. I do not know. It can happen. However if we look on similar situations from past usually from point where we are now market was falling down as minimum to 100 Ema - it will be somewhere around 1160 at that time and it will need few months. I am in principe bull, I trade better on long side. However shorting immediately now means - I am nearly sure - take a lot of heat. Shorting a bit later and higher will have very good R/R ratio. Study similar situations in past. I did not found any similar situation that was solved immediately continue bull. Honestly said I do not believe that US exonomy is in that fine shape that it will be first time now. Long consolidating, may be. But danger of strong donwturn is very high after few weeks.
Setup for a sharp break to the downside this week is nearly perfect. Doesn't mean it will happen, but the odds are about as strongly in its favor as it gets.
HFT2- You have no method to your one-sided analysis and you are an idiot. Its unfortunate that you probably don't even trade, since its people like you that fill the pockets of the traders that approach the markets and trade rationally. Your post count is probably higher than your account value. Pho - I agree with most of your analysis. I actually have ~1405-1407 as the first significant resistance zone on ES and would not consider shorting anything under this level. The resistance really starts layering on from 1415-1430 though in the form of significant fibs off the daily and wave projections on the 60-min. However my zone is much more compact on the NQ which will make for an amazing risk/reward short ... I've never seen more confluence on a chart level than 1955-1965 on the NQ. The market structure is also primed for an aggressive decline... 5 point stops and 100+ point targets.... cant beat it I just considered attaching my chart, but I won't even give HFT the benefit of learning a thing or two.