Mission Accomplished – Finding a Reentry Point

ES Weekly

Micro e-Minis (MES) started trading this week, seems like an excellent product (except for the commissions), and is quite liquid. I made $40 or so on my inaugural trade (long) yesterday – should have bought the e-mini.

The e-mini ES has a similar triple top formation to XLI. The triple top sounds and looks ominous but more than likely this won’t be anything much worse than settling into a trading range – 2600-2800 would be deja vu all over again. Ordinarily I would expect a formation like this to collapse and go to 2300 or so but that already happened in December, so the market is predicting something that already happened. To use another Bushism, the jury is still out, but I like the elegance of that explanation.

The 52 week moving average at 2778 has to be a key target and I’m not expecting a breakout over the recent top anytime soon. Buying here is not dumb (my life insurance agent uses that term) sort of betting that this will be the low end of the new trading range. Anyway, this should be a good period for swing traders.

ES Daily

The current level is intersecting the important March 21 (and March 22) candle. A further drop to around 2790 will make the March through April advance dubious. That would put it at the top of the major congestion area that provoked so many delightful conversations last year.

I’m trying to set up a rate of change study but having a little bout of programmer’s block. However, over 50% of candles are green, about 25% of candles are blue, and white and yellow split the difference, with white having a slight numerical edge. On the chart there are no yellow candles and there was as many white as blue until the last 4 days.

It seems the initial selling bout has almost run it’s course, usually blue sequences don’t last more than 8 consecutive candles. The last week and a half has given us a crash course on not buying dubious candles, and how good the market is putting lipstick on pigs . Days where closes are lower than the open are usually not good buy points.

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