With no major news reports until Friday (Non-Farm), I thought it would be a time to revisit the ES.

Unless we can close at or below 1270 basis cash, the 12-month swing (yearly trend) has still to confirm the Upthrust sell signal. The 13-week (quarterly) swing in the meantime has to complete its Whole Point Count; but since the 12-month line has already turned down, the 13-week would play only a supporting role in the current price action.

This brings us to the 18-day swing (monthly trend). In Figure 1, the 18-day has moved to a low at ‘C’. My best guess scenario is a rally to at least 1373 (to turn the 18-day line up). I’d prefer a rally to above 1396 but below 1406. Why?

FIGURE 1 18- Swing

The 5-day swing (weekly trend) gave an Upthrust Change in Trend pattern (i.e. down to up) at ‘C’ in Figure 1. This projects a target to at least the Primary Sell Zone (we’ll look at these levels next) but generally, unless the market is very weak, we’ll see a breach of the 5-d high at 1396 but we’ll hold below the top of the breakout’s Primary Buy Zone 1406 (basis cash).

FIGURE 2 Market Delta

Figure 2 (basis June) shows the Market Delta shows that the selling volume on Friday in the ES was the largest of the previous 5 days. This suggests continuation of the downmove at least in the early part of the session. The Initial Balance and Type of Open will be important today - they will give us the all important indication of today’s market direction.

In the absence of that, I do have some observations:

The normal 5-d Corrective swing is 70 - 80 points. This projects a target to at least 1290 (basis June). However, Market Profile theory suggests that the bottom of the Value Area (see Figure 3) 1308 (basis June) needs to hold. Since there is a clear pivot low at 1295 (basis June), I am prepared to extend the support zone to 1295. Given this idea, I’d be looking for support between 1308 (bottom of Value) and 1295 (pivot low). The 1295 is close enough to the normal 5-d corrective move.

If 1295 holds, I’d be looking for a test of 1395 to 1406. Acceptance below 1395 augurs a close below 1270.

FIGURE 3 5-d Support and Resistance

Finally, Figure 4 shows that the current Initial Price Movement on a 30-min chart started at 1334. The normal 5-period swing on the 30-minute is at least 30 points (to a maximum of 45). So far we have covered 1334 - 1313 = 31. So it would not surprise to see development begin. If it does, we need to see 1226 hold (point of inflection); if the market accepts above 1226, we can expect to a challenge to 1340.

FIGURE 4 IPM 30-Minute

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