ES Trying to Top

ES has Recrossed its Blue Megaphone Top and is Trying to Draw a New Top on its Red Megaphone Before a Trip to its Bottom

ES has Recrossed its Light Blue Megaphone Top and is Trying to Draw a New Top on its Red Megaphone Before a Trip to its Bottom

ES has reentered its light blue megaphone.  It’s topping for a drop to the bottom of the red megaphone and a retest of at least the navy blue megaphone VWAP at 2150.  If it breaks through 2150 it’s going for the navy megaphone bottom and possibly beyond.

Here’s what the light blue megaphone looks like on the 60-minute chart:

ES has Recrossed the Top of the Light Blue Megaphone - 60-Minute Chart

ES has Recrossed the Top of the Light Blue Megaphone – 60-Minute Chart

ES could retest the top of its light blue megaphone from inside and then start on a plunge all the way into year 2011 price territory.  But since ES is redrawing the red megaphone top, it is likely to spend more time drawing a small top up here before the plunge to the light blue megaphone bottom.

ES could return to the light blue megaphone top again after that but the larger formations make that unlikely.

So, we’re watching for a small top to form up here.  It will likely be a small megaphone top that makes you redraw the red megaphone top a couple of times.  Then ES is likely to start a move down that’s at least a serious try at the critical decision point at 2150.

 

 

Quick Top Could Be Important Top

ES Soared to the Top of its Red Megaphone Yesterday & the Top Here Could Be Quick

ES Soared to the Top of its Red Megaphone Yesterday & the Top Here Could Be Quick

I mentioned two days ago that Neely is looking for a fast, startling plunge to below 2200 to kick off the start of a multi-year bear market that will retest ES 1000.

Now ES has made it to the top of its red megaphone.  The break through the bottom of the megaphone on the last trip down was fast, so the top up here could be fast as well.  (Don’t get too excited.  It could also take forever.)

The top here could also be the tippy-top of the entire move off the 2011 crash (purple scenario).  Or a pullback to 2150ish could launch the market into a blow-off top.

ES could also start a new megaphone across the red or blue megaphone VWAP that could keep the price in a stall moving sideways for a good while before a big move down.

Megaphone and Neely

When Different Systems Call for the Same Thing

ES is Working on the Blue and Red Megaphones

ES is Working on the Blue and Red Megaphones

Neely put out another public call over the weekend for a major drop in the S&P. He called for an initial violent decline to below 2200 to “jolt” the markets and establish the pre-jolt high as the top for the next few years. He says the bear market will end with a retest of 1000 three to five years from now.

It just so happens that the violent decline to below 2200 scenario is virtually required by my own charts.  ES is working on the blue and red megaphones on the daily chart above.  It is redrawing the red megaphone top, which means it will need a trip to the red megaphone bottom after it completes the move out of the March 27 low.

ES also requires a retest of the navy blue megaphone VWAP at roughly 2150.  And a fast move to 2150 would complete both the mandatory retrace of the orange rising megaphone and mandatory retest of the navy blue rising megaphone bottom.

The Critical Decision Point

My trading system would then require a retest of the red megaphone VWAP at 2350.  From there, my system could put ES into a drop to some megaphone bottoms at 1800 and beyond or it could send ES off upwards into a blowoff top to 3000.

Neely expects the drop.

Neely put out some charts weeks and months ago that anticipated a top at right about where ES is now.  My megaphone set-ups suggest a top a bit higher, and taking a bit longer to complete.  But since ES is establishing a brand new top on the red megaphone, it could turn any time.

ES is retesting the top of some very long-term trading formations today (the navy blue line I keep writing about).  If it gets through 2400 today, it’s recrossing that line.

The bright blue megaphone VWAP is at 2385.

Glenn Neely runs a fund that trades his method and offers trading advice at Neowave.com and is author of The Neely Method, a book from which I’ve learned a number of valuable trading set-ups.

New ES Rising Megaphone Means Still Higher

ES Rising Megaphone Means Higher High

New High Puts a New Rising Megaphone on the Chart (Silver)

Alas, ES could not manage a fast stab down before the holiday weekend. Now, with another new all-time high, it’s confirmed a new rising megaphone (silver) on the chart.

Rising megaphones usually top with a head and shoulders that would require still another new all-time high after a pullback.  That means ES is clearly forming a significant top here.

We’ll likely see a head and shoulders form across 2350, and there will be a good chance of a megaphone right shoulder on the formation that extends the move sideways for weeks or months (purple scenario).  If we get a triangle right shoulder (green scenario), it will be a strong favorite to break out downwards to at least 2150 and almost certainly to the 1800ish.