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Emini S&P500 Entered the Resistance Zone Oct 22, 2015
2015 Oct 22 Thu 20:52:16 | by
As explained on Sunday, Emini S&P500 is about to challenge the first quarter mid zone. Here we are, right there inside the zone. The fight has been messy but it is all expected.
What to Expect from Here
Well, since we are talking about weekly level resistance here, Emini S&P has a tough job this week to stay above previous week high by this Friday close. Even if Emini S&P managed to close positively this week, there is still the chance of a false breakout on weekly basis.
In other words, the stock market is strong, but not as strong as many thinks. The push higher so far are all short squeeze driven and such rally is not sustainable. Only if the squeezes manage to clear the major resistance above, the stage will be set for a year end rally after a decent pullback on daily level.
The key to trading successfully in this environment is to forget about daily level swing trading and focus on day by day intraday moves. Volatility is on the day traders’ side. As long as you have learn to trade properly, there is no reason why you cannot perform well in this environment.
Related Reading Materials
Emini S&P500 Putting Year 2015 In Proper Perspective Oct 18, 2015
2015 Oct 18 Sun 13:13:19 | by
Here is the 15-min RTH only chart of Emini S&P500 since last year’s spike low in October.
Importance of First Quarter Range
The purple STOPD scale highlights the first quarter range of the year.
Notice that the false breakout in 2nd quarter of the year gave us a nice drop to 1st quarter midpoint.
Then the retest of 1st quarter high failed to clear the resistance, it gave us a drop to 1st quarter midpoint and eventually breaking down to 1st quarter low.
The flush back in August simply extended itself to the 200% expansion level off the first quarter range.
Isn’t this amazing?
Battle of the Midpoint
The blue STOPD scale highlights the current year range so far.
Ever since the August low was in place, the midpoint of the year (also approximately the 1st quarter low) has been acting as resistance but no longer.
The next target above is 1st quarter midpoint, 2030-2060 zone.
The mega size bear flag (highlights in green up channel) also points to the same region as potential resistance.
This coming few weeks, late October to early November, together with the resistance zone above (highlights in pink), will be a very messy fight between the bulls and bears.
Related Reading Materials
S&P500 Short Term Market Breadth Analog Forecast Starting Oct 19, 2015
2015 Oct 18 Sun 9:51:13 | by
Review of Forecast for Oct 12, 2015
Pullback of 1.5% capped the drop so the 2% and more decline did not materialize. Volatility uptick happened but not by much. The breadth analog model did a poor job last week.
Forecast Starting Oct 19, 2015
Summary of the S&P500 short-term forecast based on my proprietary market breadth analog model as of the close of Oct 16, 2015:
- Sudden sharp pullback of 2% to 2.5% within the week potential increased
- Volatility spike is expected for this week but not necessary carry into next week
- Weak closing for this week will open door to sell shock the week after
Report Snapshot
Short Explanation About The Model
My market breadth based analog model takes into account the short term volatility, daily market breadth readings and a few other intraday breadth data to identify the current market conditions. Using the information, the model then went through the historical data over the past 20 years to generate its statistical analysis. The model has been pretty good at identifying important swing tops and bottoms over the past few years by providing early warnings about potential volatility upticks.
For the technical explanation of the concept, you can read about it here, Market Breadth Primer: Market Breadth Analog Forecasting Method
To access the market breadth analog forecast report daily, sign up as our paid member now
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