Set-Up for Dip to 2150 Still Alive

ES is Retesting the Top of its Red Megaphone from Inside on the June Contract

ES is Retesting the Top of its Red Megaphone from Inside on the June Contract

ES is retesting the top of its red megaphone from inside on the June contract. That means Friday’s set-up for a dip to at least 2150 is still alive.

Again, a trip to the red megaphone bottom would take ES across the top (navy blue) of long-term megaphones and a price channel or rising megaphone and set up the dip to at least 2150.  Another upwards breakout from the red megaphone could put a larger head and shoulders on top of the navy blue line or launch ES into a price channel melt-up set-up and blow-off top.

IWM Backs Away From Megaphone Top

IWM Backs Away a Second Time from its Red Megaphone Top

IWM Backs Away a Second Time from its Red Megaphone Top

Every time I think the market can’t possibly correct, I look at the long-term IWM chart.

Not only do the 3-year+ red megaphone and blue rising megaphone require a retrace to at least the red megaphone VWAP at roughly 113, but IWM continues to tag its red megaphone top and back away from it.

The market lacks the enthusiasm to even break IWM out of the red megaphone for a topping pattern on top.

IWM could also correct all the way to the red megaphone bottom (purple scenario).  The purple scenario becomes the favorite if IWM breaks through the red megaphone top to put a big head and shoulders pattern on top.

Retesting Critical Line

ES is Retesting the Top of its Big Megaphone and Navy Blue Rising Megaphone/Price Channel

ES is Retesting the Top of its Big Megaphone and Navy Blue Rising Megaphone/Price Channel

ES is retesting the top (navy blue) of its big megaphones and rising megaphone or price channel. It’s a rising megaphone if you count the election night tail. It’s a price channel if you don’t.

It’s best to keep an open mind about tails, and just act on the price action from here.

If ES turns up from here, it’s making either a bigger topping pattern at the big megaphone top (purple scenario), or heading up into a price channel melt-up set-up and blow-off top (light blue scenario).

If ES recrosses the navy blue line, it’s likely going for at least 2150 and could go as far as the red megaphone bottom.  The green scenario, with a smaller top here, would be more likely to reverse at 2150 for new highs.  With the purple scenario’s larger top, we’d be more likely to see the red megaphone bottom.

If ES heads up from here into the purple vs. blue scenario, the critical decision point will be at the gray roll-up price channel top.

Triple Witching Starts with a New Megaphone

Triple Witching Opens with ES Megaphoning Across 2360 (Light Blue)

Triple Witching Opens with ES Forming a Megaphone (Light Blue) Across 2360

ES is starting triple witching with a megaphone (light blue) across VWAP of its red megaphone at 2360. It could bog down here for the week, but Friday’s set-ups are still alive:

ES is Retesting the Top of its Red Megaphone from Inside

ES is Retesting the Top of its Red Megaphone from Inside

Again, a trip to the red megaphone bottom takes ES back inside a megaphone and rising megaphone/potential price channel (navy blue line) that began forming in April 2016.  That would usually mean a trip to at least 2150.

Critical Retest

ES is Retesting the Top of its Red Megaphone from Inside

ES is Retesting the Top of its Red Megaphone from Inside

ES made a legal breakout from its red megaphone on March 1.  It reentered the megaphone on March 6 and is now retesting its top from inside.

Usually that would mean ES is going for the red megaphone bottom.  If it goes for the red megaphone bottom it will be breaking out of the light blue rising megaphone and tagging the bottom of the orange rising megaphone.  It will also be reentering a megaphone that started forming in April 2016 (navy blue line).

Once ES recrosses that navy blue line it would usually keep going to at least 2150, and 1900 or even 1800 are possible.  This could even be the start of a correction to year-2011 territory (Neely is looking for a correction like that, though it would surprise me).

If ES breaks back out of the red megaphone instead of just retesting its top, it means the light blue rising megaphone is extending (purple scenario, and the extension could last longer and go further).  If that happens, I’ll draw up the new scenarios Monday.

Next week is triple witching.  That means if a directional move can get going, it could be huge.  That also means that atypical recrosses of important lines are more likely than usual.

 

ES Topping Update

ES is Going for a Tag of its Megaphone/Rising Megaphone/Channel Top as it Works on a Likely Head and Shoulders

ES is Going for a Tag of its Megaphone/Rising Megaphone/Channel Top as it Works on a Likely Head and Shoulders

ES is trying for a retest of is red and blue megaphone tops and navy blue rising megaphone/price channel top  (all the topmost navy blue line).

If it can actually get there before another new high it could put in a very small right shoulder bounce before reentering the megaphones (orange scenario), which would likely mark the top before a dip with a target of at least 2150 and potentially the 1800 area.

But ES is more likely to go for another new all-time high before reentering those formations (green scenario).  The green scenario could be bigger and take longer than the way I’ve drawn it.

A faster, smaller head and shoulders top here would leave open the possibility of a breakout into a price channel melt-up set-up for a blow-off top.  In that case, ES would likely take a quick stab at 2250 and then blast off.  The target for that could be hundreds of points higher.

ES is moving too slowly for the blow-off top to be a likely scenario, but an event like fast approval of the Obamacare replacement bill could set off a move like that.

Gold Price Channel Update

Gold has Continued Sliding Down its New Red Price Channel and is Now at the Moment of Truth

Gold has Continued Sliding Down its New Red Price Channel and is Now at the Moment of Truth

Gold has continued sliding down the new price channel (red) that confirmed yesterday and is now near the channel bottom where it either breaks out into a melt-down set-up or starts a bottom.

You know that gold is starting a bottom if it reaches the channel top again from here.

Gold Megaphone on Weekly Chart

Gold Megaphone on Weekly Chart

The channel has taken gold back to the VWAP of the megaphone (blue) it began forming in fall of 2014.  That VWAP is at roughly 1200.

That means a breakout from the price channel into a melt-down set-up would be a breakdown through that long-term VWAP with a target of the blue megaphone bottom.

If instead gold starts a bottom here, it is settling in to form a triangle across 1200 (purple scenario) that could break out in either direction.

An upwards breakout would mean a breakout from an inverse head and shoulders bottom with a triangle right shoulder with a target of a new all-time high.

A downwards breakout would target the blue megaphone bottom.

Gold is in New Price Channel’s Critical Decision Wave

Gold has Confirmed the Red Price Channel and is In Its Critical Decision Wave for Starting a Bottom vs Breaking Out Into a Meltdown

Gold has Confirmed the Red Price Channel and is In Its Critical Decision Wave for Starting a Bottom vs Breaking Out Into a Meltdown

Gold has confirmed a price channel (red) for its breakout from the navy blue rising wedge.  The price channel is in its critical decision wave for starting a bottom (green scenario) vs breaking out into a meltdown (purple scenario).

A meltdown would likely stop around 1150-1175, but it could go all the way into the 700s so it’s the kind of set-up you want to play if it occurs.

Price channel melt-down set-ups can also morph into falling megaphones or falling wedges twining along the channel bottom, but these tend to form clear bottoms so it’s easy to get out with at least a small profit when they occur.

The green scenario would likely set up a long period of gold moving sideways to form a triangle across roughly 1200.